Why Strategy Inc. (MSTR) Isn’t Facing Bitcoin Liquidation — Despite a 7% Stock Drop

In early November 2025, Strategy Inc.'s stock (MSTR) dropped about 7%. People were worried the company might have to sell off its massive Bitcoin stash if the market tanked. But blockchain analyst Willy Woo and others don't think a sell-off is likely anytime soon, thanks to how the company's debt is set up, its Bitcoin strategy, and what's happening in the market.

Here’s the deal: a quick look at MSTR's business, what caused the drop, why everyone's scared about a liquidation, and why things might not be as bad as they seem. Plus, some important things for investors to keep in mind.

1. Quick Background: MSTR as a Bitcoin Stand-in

Strategy Inc., used to be called MicroStrategy, switched from being a software company to a major corporate Bitcoin holder. Their idea is simple: buy a ton of Bitcoin, hold onto it for the long haul, and let it be their reserve.

Because of this, MSTR's stock is often seen as a way to bet on Bitcoin with borrowed money. If Bitcoin goes up, MSTR usually goes up even faster. If Bitcoin falls, MSTR can take a bigger hit. For example, when Bitcoin fell below $100,000, MSTR's stock dropped about 6.7%, hitting a seven-month low, according to MarketWatch.

But this comes with risks: lots of Bitcoin exposure, issuing tons of stock and debt to buy Bitcoin, and counting on investors to pay a premium for this Bitcoin stand-in.

2. The Recent Dip: Down 7% and Worried

On that day when the stock fell 7%, a few things happened at once:

Bitcoin briefly dipped below $100,000 for the first time since June.

MSTR's stock fell to around $246.99 during the day.

People started wondering if the stock's higher price compared to its Bitcoin holdings could collapse, and if the company might have to sell off Bitcoin to pay off debts.

The worry is that as MSTR buys Bitcoin by issuing stock or taking on debt, it faces the risks of Bitcoin prices falling and its stock being diluted or leveraged. Both of these things make the situation riskier.

3. Why Experts Think Liquidation Is Unlikely

Despite the worries, analysts like Willy Woo and others say MSTR isn't about to be forced to sell Bitcoin. Here’s why:

a) Debt Structure

MSTR has about $1.01 billion in convertible notes that are due on September 15, 2027.

These notes let the company pay off the debt with cash, stock, or a mix of both. So, selling Bitcoin isn't the only option.

Willy Woo says that for MSTR to need to sell Bitcoin, its stock would have to trade below about $183.19. With some math, that means Bitcoin would need to be around $91,502.

Since Bitcoin is trading higher than that (above $100k at the time of writing), Woo thinks it would take a really bad bear market to force a liquidation.

b) Size of Bitcoin Holdings

MSTR holds about 641,205 Bitcoin (according to reports), worth around $64 billion at the time of the article.

Having so much Bitcoin gives them some wiggle room. Even if Bitcoin drops a lot, it would take a crazy situation to put the company in trouble, according to these analysts.

c) No Margin/Loan Problems

Some people point out that MSTR doesn't seem to have loans that are secured by Bitcoin and can trigger quick liquidations. The company reportedly paid off its only Bitcoin-backed loan from Silvergate in 2023.

That means MSTR isn't facing a classic margin call situation. It's more about whether they can stay solvent or find funding.

d) Easy Debt Payments

Because the debt can be paid off with stock, MSTR can choose to push back obligations instead of selling a bunch of Bitcoin to get cash. This gives them some breathing room.

So, overall, the analysts think that unless Bitcoin crashes for years or MSTR can't raise money or refinance its debts, the company probably won't be forced to sell off its Bitcoin anytime soon.

4. Why There's Still Risk

Even with these protections, there are still risks. Investors should keep these things in mind:

i) Bitcoin Price Can Drop

The main thing in the optimistic view is that Bitcoin stays above certain levels or goes up during the next bull market. If Bitcoin doesn't do well or enters a long bear market, MSTR's leverage can make losses worse.

ii) Cash and Business Problems

Some people point out that while MSTR's Bitcoin holdings are huge, its software business is now a small part of the picture, and the company's cash situation isn't great.

If the software business doesn't make enough cash and the company has to raise money, the stock could be diluted, or it could cost more to borrow money.

iii) Stock Dilution

MSTR has been issuing stock and debt to buy Bitcoin. While that can increase their Bitcoin holdings, it also dilutes existing shareholders and makes it more expensive to borrow money. If investors lose faith in the stock's premium over Bitcoin, the stock price could fall.

iv) Timing and Execution

Even if there's no immediate liquidation risk, what happens moving forward is important. When they buy Bitcoin, how much it costs to raise money, potential rules changes for Bitcoin or for companies holding it, and big market events could all cause problems.

v) Long Wait

Some hopes are based on a future bull market. If that doesn't happen or is delayed, MSTR could suffer losses.

5. What to Watch

Since there's both a good buffer and some risk, here are some things for investors to watch:

Bitcoin price: If it drops below certain levels and stays low for a long time, that would increase risk.

MSTR stock compared to Bitcoin holdings: The stock's premium (or discount) to its Bitcoin value is important. If the premium disappears, that means weaker market confidence.

Debt Payments: The next big payment is in September 2027. But until then, any problems in the capital markets or higher borrowing costs could hurt MSTR.

Stock or Debt Announcements: New stock or debt offerings hurt shareholders and can lower the stock price.

Software Business: If this part of the business does poorly, the company will rely more on Bitcoin, which reduces their options.

Market/Regulatory Risks: Crypto-related rules, taxes, or big shocks could hurt Bitcoin's rise, which would affect MSTR.

Market Views: Even if the company is doing well, a change in how investors see Bitcoin stand-in stocks could cause MSTR to do worse than Bitcoin.

6. Summary: Mixed Bag

Basically, while the 7% drop in MSTR stock made headlines about a possible sell-off, a closer look suggests that a forced Bitcoin sale is unlikely soon, as long as Bitcoin prices remain stable and they have access to capital markets.

Strategy Inc. seems protected from immediate problems thanks to its debt structure, large Bitcoin holdings, and the option to pay off its debts in different ways. Analysts like Willy Woo are confident that the risk of MSTR having to sell Bitcoin is very low unless there's a very long bear market.

But this isn't a no-risk situation. The company is still very dependent on Bitcoin's future and how investors feel. If Bitcoin does poorly or it becomes hard to borrow money, MSTR could face significant losses.

For long-term investors, the question is: Do you believe Bitcoin will rise in the future and that people will continue to want a corporate vehicle that accumulates it? And do you think MSTR can avoid stock dilution, maintain flexible financing, and handle problems in the capital markets?

If yes, then MSTR could be a good bet on Bitcoin with potential gains. If no, then the 7% drop might be a sign of things to come.