Benchmark, TD Cowen: MicroStrategy 'death spiral' fears are overblown

Investment firms Benchmark and TD Cowen have dismissed recent concerns that MicroStrategy (MSTR) could face a "death spiral" of selling its Bitcoin holdings and seeing its corporate value plummet, calling the fears exaggerated, The Block reports. Both firms maintained their "buy" ratings on MSTR, assessing its financial structure as robust. Benchmark analyst Mark Palmer noted that the death spiral hypothesis focuses too narrowly on the past week's BTC price decline. "For MicroStrategy to sell its BTC, it would first need to exhaust the $1 billion it has set aside for dividend payments," Palmer said. He added that because the company's structure has no fixed maturity, the likelihood of a sudden surge in selling is low, and numerous steps would have to be taken before any BTC is sold, making the scenario highly improbable. Similarly, TD Cowen stated that given MicroStrategy's cash reserves, its dividend obligations are "sufficiently manageable." While MicroStrategy sold 32 BTC on the first of the month, it also announced last week that it had purchased an additional 1,500 BTC.