Will Strategy Inc. Crash Bitcoin?

I’m not a professional trader nor a finance expert - but as a data person, I like to identify patterns.
And the current Bitcoin ecosystem, especially around Strategy Inc. (formerly MicroStrategy), really reminds me of the 2008 housing crisis. Here’s why.

(Again - not a finance expert. Just sharing what emerged from a deep rabbit-hole analysis.)

The Analogy: Why It Feels Right

If I were to draw a diagram of the abstract dynamic behind the 2008 housing crisis, it would look something like this:

Diagram showing the feedback loop: Prices Can Only Go Up → Max Leverage Everywhere → Dip Starts → Liquidations Fire Off → Market Fear → Bigger Dip → More Selling → CRASH

In the housing crisis, the underlying assumption was simple: house prices don’t fall.
Based on that belief, banks issued increasingly risky mortgages, securitized them, and levered them.
Once defaults began, foreclosures triggered asset liquidation, which triggered price declines, which triggered more foreclosures — a vicious cycle that eventually destabilized the banking system.

The process was slow: banks had to repossess, process, and resell each home — but the feedback loop was fatal.

And now?

The underlying assumption feels similar:

Bitcoin never really goes down — at least not over a 4–5 year halving cycle."
"Bitcoin always recovers."
"I do not diversify. I maximize. Bitcoin is everything.

And Strategy’s entire leverage model is built on that assumption:

Raise cheap convertible debt
Use it to buy Bitcoin
REPEAT

So there’s a structural resemblance between the two patterns, and the question becomes: are we at risk of a Bitcoin version of 2008?

The Cooling Effects: Why Strategy Isn’t as Fragile as 2008 Banks

Despite the resemblance, Strategy’s setup has stabilizers that didn’t exist in 2008.

1. No BTC-Backed Debt = No Forced Liquidation Trigger

Strategy’s debt is unsecured, meaning Bitcoin is not collateral.[1]
No lender can margin-call the company or forcibly liquidate its BTC stack.
That alone removes the primary accelerant of the 2008 crash.

2. Convertible Debt Structure = Wide Safety Margin

Convertible debt gives Strategy a significant buffer.
Bondholders prefer to convert into equity when the stock trades well above conversion price.
If Strategy’s stock stays strong, the company never needs to pay back most of its debt in cash.

This creates a wide “good zone”:

If BTC rises → MSTR stock rises → bondholders convert → debt disappears
If BTC stays flat → low coupons keep cash bleed small
Only if BTC collapses at redemption and MSTR trades below the conversion price will bondholders choose cash.

3. Long Maturity Ladder = No Near-Term Stress

Strategy’s debt stack is spread across 2027 to 2030, with no large maturity before 2027.
Interest costs are tiny relative to their software cash flow.
First significant put options (bondholder “give me cash now” rights) begin in 2027–2028.[2]

Side Note - Why Investors Accept “Bad Terms”? Meet Convertible Arbitrage

Many investors (mostly hedge funds) don’t buy Strategy’s debt because they love Bitcoin.
They buy it to run convertible arbitrage:[3]

Go long Strategy’s convertible notes
Go short MSTR stock
Hedge price movements
Capture the yield + discount + volatility premium

For them, the debt terms aren’t “bad” — they’re part of a predictable arbitrage trade.
This is why Strategy can continually issue low-rate notes.

Current Risk Consensus: Low for Now, But High if Conditions Align

Credit analysts converge on the same point: a forced Bitcoin sale is extremely unlikely today.

BitMEX Research calls it “highly unlikely.”[4]
According to S&P, Strategy’s debt profile is relatively benign in the short term - no near-term maturities and low interest costs.[5]
Most notes are convertible, making equity conversion more attractive than cash, as long as the stock is high.
Software operations cover basic obligations.

Low Short-Term Risk

As long as Bitcoin holds or rallies, bondholders will convert to equity rather than demand cash.
Strategy can sit comfortably until 2027+.

Where Risk Appears

A real threat emerges only if multiple conditions collapse simultaneously:

A deep, prolonged Bitcoin bear market
Strategy’s stock falls to or below its Bitcoin NAV
A put date (2027–2030) approaches, forcing bondholders to choose cash
Strategy has insufficient cash on hand
Stock-based fundraising becomes too dilutive to be viable

S&P explicitly warns: in a steep decline, Strategy may “have to sell bitcoin to repay obligations.”[6]

In other words:
low probability today, but high potential impact in a perfect storm.

The Broken Engine: Equity Premium Collapses

For years, MSTR traded at a large premium to its BTC NAV — sometimes nearly 2× NAV.
This premium created what many called:

The infinite money glitch.

Sell $1 of stock → buy $1 of BTC → instantly raise more than $1 in market value.

Glitch Broken (Nov 2025)

In November 2025, Strategy’s stock fell below its Bitcoin NAV.
Bankless highlighted the moment MSTR’s market cap ($62.6B) dipped below its BTC holdings ($64.3B).[7]

This matters because:

When stock > NAV → issuing shares is easy and value-accretive
When stock < NAV → issuing shares becomes impossible without punishing dilution

Once Strategy trades at a discount, its equity-funding engine shuts down. If Bitcoin then drops → Strategy can’t issue stock to stabilize or repay debt.

This is the precondition for a liquidity spiral.

The Actual Death Spiral: Liquidity Pressure + Put Dates

Even without collateralized loans, Strategy’s convertibles include put dates — moments when bondholders can demand cash.

Example: the 0.625% notes due 2028 - bondholders can force Strategy to repurchase for cash on Sept 15, 2028 at 100% of par.[1]

This creates a pressure point:

If BTC is low
If MSTR stock is below conversion price
If cash reserves are insufficient
And if equity issuance is non-viable (stock < NAV)

At that moment, Strategy must sell Bitcoin to meet its obligations.

While this scenario depends on several ‘ifs,’ we can assume that these variables are highly correlated - deep market dips tend to come as a bundle: falling BTC, falling MSTR, equity trading below NAV, and corporate cash positions tightening across the board. In other words, it’s not as far-fetched as it sounds.

If this happens during a broader bear market → forced selling hits thin liquidity → a cascade begins.

The Flash-Crash Scenario (A “1987” Moment)

Here’s the nightmare chain reaction:

Bitcoin dives
A macro shock slams BTC toward $50K or below.
MSTR stock collapses
It trades at or below its BTC NAV.
Bondholders trigger put options
2027–2030 notes get redeemed for cash.
Strategy needs liquidity
With stock issuance impossible, it must raise cash elsewhere.
Forced Bitcoin selling
Tens of thousands of BTC hit the market — in a falling environment.
Market anticipates the sell-off
Traders front-run Strategy’s liquidation risk, dumping BTC even before the sell actually happens.
Feedback loop
More selling → lower prices → more panic → more selling.

This wouldn’t look like 2008 (bank contagion).
It would look more like 1987’s sudden liquidity crash — fast, brutal, mechanical.

And while 3% of all Bitcoin doesn’t sound like much, it’s a much larger share of the Bitcoin that actually trades day-to-day. Yes, the market once absorbed a $9B sale of 80,000 BTC without breaking[8], but that was in calm conditions. Strategy is highly visible, and any forced selling would hit during stress, when liquidity is thin. When it rains, it pours.

Final Thoughts

The data suggests Strategy cannot crash Bitcoin under normal conditions.
There are no margin calls, no collateral chains, no bank-to-bank contagion.

But if a perfect storm gathers in 2027–2030: deep BTC bear market + MSTR stock below NAV + put dates + bondholder cash demands — then Strategy could be forced into a massive Bitcoin sale at precisely the worst time.

(Presumably) low probability.
High impact.
And the pattern… oh, the pattern… feels uncomfortably familiar.

Let’s see what 2027 brings.

Sources

[1] - https://www.strategy.com/press/microstrategy-completes-1-01b-offering-of-0-625-convertible-senior-notes-due-2028_09-20-2024

[2] - https://www.sec.gov/Archives/edgar/data/1050446/000095017024051230/mstr-20240331.htm

[3] - https://www.investopedia.com/articles/investing/111313/multiple-strategies-hedge-funds.asp

[4] - https://www.bitmex.com/blog/microstrategy-bonds-can-mstr-get-liquidated

[5] - https://www.ccn.com/news/crypto/microstrategy-mstr-ratings-bullish-bearish/

[6] - https://www.coindesk.com/markets/2025/10/27/saylor-s-strategy-the-first-bitcoin-treasury-company-rated-by-major-credit-agency

[7] - https://www.bankless.com/read/news/mstr-breaks-premium-streak-trading-below-nav-for-first-time-since-january-2024

[8] - https://financefeeds.com/80000-btc-from-satoshi-era-wallet-sold-for-9b-in-historic-crypto-trade/