Report says Strategy’s biggest risk is funding costs, not a BTC price drop

Strategy’s biggest risk is not a decline in Bitcoin itself but whether it can keep tapping capital markets to cover $1.76 billion in annual financing costs, including dividends and interest, Regime Intelligence said in a recent report, according to Cointelegraph. The report said roughly $22 billion in debt and preferred equity claims sit behind Strategy’s 840,447 BTC holdings. It added that external financing is essential to sustain the company’s Bitcoin accumulation model. Because the structure is not backed by collateralized loans, the report said a drop in Bitcoin’s price would not create a risk of forced liquidation. Under its stress test, Strategy’s Bitcoin holdings and cash deposits would fail to cover convertible notes only if Bitcoin fell by about 96%, it said. Market analysts advise watching preferred stock price trends and the company’s dollar cash reserves, which currently cover about 2.6 times its annual financing costs.