Strategy (ticker MSTR), led by Michael Saylor, has become the world’s most visible corporate Bitcoin proxy. Instead of just holding Bitcoin on the side, Strategy has built its entire capital strategy around accumulating BTC, using equity issuance, convertible debt, and long-term conviction.

But after a 66% drawdown in MSTR shares, investors are asking a simple question:

If Bitcoin drops below $75,000, can Strategy survive – or does bankruptcy risk suddenly appear?

Let’s unpack whether Strategy (formerly MicroStrategy) is facing bankruptcy risk after MSTR’s sharp value collapse.

Strategy’s Business Model Explained

Before diving into risk, it’s important to understand what Strategy actually is today.

Strategy is no longer valued primarily as a software company. The market treats it as:

• A leveraged Bitcoin holding company
• With public stock, debt, and access to capital markets
• That aims to increase Bitcoin per share over time

Strategy has spent years buying Bitcoin and has funded purchases mainly through:

• Selling stock (ATM offerings)
• Issuing convertible notes (a type of debt that can turn into shares)
• Issuing preferred stock (pays dividends)

Because of this, MSTR often moves more violently than Bitcoin:

• In bull markets: MSTR can rise faster than BTC.
• In bear markets: MSTR can fall much harder than BTC.

That’s not “mystery manipulation.” It’s how leveraged, finance-driven structures behave.

As of December 31, 2025:

• Strategy holds 672,000 BTC.
• That Bitcoin is worth tens of billions of dollars.
• MSTR stock now trades at or below the value of its Bitcoin holdings.

This structure creates outsized upside in bull markets and outsized volatility during downturns.

Why MSTR Crashed: The Real Drivers in Late 2025

1. Bitcoin pulled back, but MSTR fell even more: From Bitcoin’s October peak to late December, BTC fell 30% while MSTR fell 57%, a classic “leveraged proxy” effect.
2. Dilution fears exploded in December 2025: Strategy kept buying BTC using equity issuance and raised about $2.67 billion from selling 15.1 million shares (around 6% of its market cap at the time).
3. NAV premium collapse (and why it matters): A simple way to think about “NAV premium”: Strategy holds a giant pile of BTC. The stock can trade above (premium) or below (discount) the value of that BTC after considering debts/claims. When the premium collapses, MSTR can drop hard even if BTC doesn’t. In late 2025, investors increasingly focused on whether MSTR should trade at a premium at all or whether dilution and financing complexity justify a discount.
4. Index risk became a serious headline: In December 2025, MSCI was consulting on potentially excluding “digital asset treasury” companies (firms whose digital assets exceed 50% of total assets) from major MSCI equity indexes. The final decision is expected January 15, 2026. If an index provider removes a stock, passive funds that track the index may be forced sellers. Even the risk of forced selling can pressure shares. Strategy publicly pushed back on MSCI’s proposal. 

In a sobering assessment of MSTR recent market performance, X user @NoLimitGains argues that the company has evolved from a simple corporate entity into a systemic risk for the entire crypto ecosystem. 

• The core of the concern lies in MSTR’s massive accumulation, holding over 672,000 BTC, or approximately 3.2% of the total supply, coupled with a catastrophic price divergence in 2025. 
• While Bitcoin has seen a relatively modest year-to-date decline of 6%, MSTR shares have cratered by 49%, recently hitting a 52-week low of $151.83. This suggests that the stock is currently crashing eight times faster than the underlying asset it is meant to track.

The primary driver of this collapse appears to be the evaporation of the “NAV Premium.” For much of the recent bull run, institutions were willing to pay upwards of 2.5x the value of the company’s Bitcoin holdings to own MSTR shares as a high-leverage proxy. 

However, @NoLimitGains notes that the market landscape has shifted; institutional investors are now bypassing the middleman and rotating into Spot ETFs, where they can own Bitcoin at par value without the premium. 

As the stock approaches a critical support level at $150, the warning to investors is clear: buying the current dip isn’t just a bet on Bitcoin, but a risky gamble that Wall Street will return to overpaying for an asset they can now acquire more cheaply elsewhere.

Peter Schiff vs. Michael Saylor: “Bitcoin Destroyed Shareholder Value”

One of the loudest critics of Strategy’s Bitcoin-heavy approach in 2025 has been Peter Schiff, a long-time Bitcoin skeptic and frequent critic of Michael Saylor.

As MSTR shares continued to slide, Schiff pointed to the stock’s performance to challenge Saylor’s core thesis.

Schiff’s Key Argument

Schiff noted that Strategy is not even a member of the S&P 500, but argued that if it were, its performance would be among the worst in the index.

According to Schiff:

• MSTR is down roughly 47.5% in 2025
• That decline would make it the 6th worst-performing stock in the S&P 500 this year
• All while the broader index remained far more resilient

Schiff used this comparison to directly challenge Saylor’s repeated claim that:

“The best thing a company can do is buy Bitcoin.”

Schiff’s criticism cuts to the heart of the debate around Strategy’s model. He argues that:

• Strategy did not meaningfully grow its operating business.
• Instead, it concentrated almost entirely on buying Bitcoin.
• And the result, in Schiff’s view, was massive shareholder value destruction.

In Schiff’s framing, MSTR serves as a cautionary example: A company that tied its corporate identity to Bitcoin exposure and suffered far worse losses than the broader equity market when sentiment turned.

Why Schiff’s Comments Matter (Even to Bitcoin Bulls)

Even for investors who disagree with Schiff on Bitcoin itself, his critique highlights an uncomfortable truth:

• Bitcoin volatility doesn’t just affect price. It affects capital access, dilution, index eligibility, and investor confidence.
• And public companies are judged relative to traditional equities, not just crypto assets.

However, according to an X account, @AssetMarketCap, with enough long-term patience, the strategy could still grow into a top-25 asset by market capitalization.

Still Schiff’s argument isn’t about whether Bitcoin eventually goes higher – it’s about timing, leverage, and corporate responsibility to shareholders.

That’s why his comments gained traction during MSTR’s drawdown: they reframed the debate from “Is Bitcoin good?” to “Was this the right way to run a public company?”

How Much Bitcoin Does Strategy Hold as of Dec 31, 2025?

Strategy is the largest public corporate holder of Bitcoin.

Notably, between Dec 22–28, 2025, Strategy bought 1,229 BTC at an average price of about $88,568, bringing total holdings to 672,497 BTC.

Strategy has disclosed average purchase price around $74,997 per BTC and cumulative purchase cost around $50.44B. 

Strategy’s Late-2025 Bitcoin Purchases and ATM Funding

To understand sentiment, it helps to look at what Strategy did right into the drawdown:

• Barron’s reported that the late-December BTC purchase was funded by selling an equivalent amount of common stock via the ATM program, with $11.7B still available for future ATM sales.
• MarketWatch emphasized the scale: $2.67B raised in December alone through share sales.

This reinforces why the market is laser-focused on dilution and the premium/discount debate.

MSTR vs Bitcoin Performance Since Strategy Began Buying BTC

Since Strategy (MSTR) began buying Bitcoin in August 2020, its performance relative to Bitcoin has varied widely depending on the timeframe examined, but the pattern is clear: MSTR has been far more volatile and has often amplified Bitcoin’s moves, both up and down.

• When the strategy was young, the amplification effect was dramatic: according to analysis of August 2020–August 2025, $10,000 invested in Strategy would have grown to about $324,000, compared to about $102,000 for the same investment in Bitcoin, illustrating MSTR’s higher return and higher risk as a leveraged proxy for Bitcoin exposure.
• A slightly different snapshot covering December 2020–December 2025 also shows Strategy outperforming Bitcoin over a full five-year window: in that period, Strategy returned roughly 332.4%, while Bitcoin returned about 230.2%, underscoring how the stock has historically amplified gains relative to pure Bitcoin exposure.
• However, short-term and recent performance tell a different story. In 2025 alone, Bitcoin has significantly outperformed Strategy: data indicate Bitcoin was down about -6.6% year-to-date, while Strategy was down roughly -47.1% in the same period, reflecting how recent BTC weakness and MSTR’s financing dynamics have hit the stock harder.

Over even longer horizons that include periods before the Bitcoin strategy or when MSTR was less tied to Bitcoin, pure Bitcoin often shows stronger long-term annualized performance. 

For example, over a 10-year lens, Bitcoin’s annualized return has been notably higher than MSTR’s, highlighting that while Strategy’s leverage can boost performance in some windows, pure Bitcoin’s decade-plus run remains powerful.

What Happens to MSTR if Bitcoin Drops Below $75,000?

To answer “bankruptcy,” you need to understand how companies actually fail. It’s rarely “assets down = instant bankruptcy.” It’s almost always a multi-step problem.

So here’s the full framework.

The Three Layers That Decide Bankruptcy Risk

Layer 1: Solvency (Do Assets Exceed Liabilities?)

Solvency is the balance-sheet question:

Are the company’s assets worth more than what it owes?

At $75,000 BTC, Strategy’s 672,497 BTC would be worth roughly $50.4B (before considering taxes/accounting and price swings).

That alone does not scream “insolvent overnight,” because Strategy’s BTC position is huge.

But solvency isn’t the whole story – because assets can be illiquid or politically “unsellable” (selling BTC could crush confidence).

So you move to Layer 2.

Layer 2: Liquidity (Can They Pay Bills Without Forced Selling?)

This is where most real-world corporate blowups happen.

Strategy has ongoing cash needs such as:

• dividends on preferred stock
• interest on debt
• operating expenses

In early December 2025, Strategy announced it established a $1.44B USD Reserve, specifically to support preferred dividends and interest on outstanding indebtedness, funded from stock sales via its ATM program.

Barron’s described this reserve as a direct response to investor concerns about the company’s ability to meet annual preferred dividend obligations exceeding $700M, and that the reserve was intended to cover at least 12 months (with a goal to extend to 24+ months).

So even if Strategy is “rich in Bitcoin,” it still needs cash to pay obligations on schedule. The reserve is meant to reduce the risk of “we have to sell BTC at the worst time.”

Layer 3: Capital Markets (Can They Refinance And Fund The Strategy?)

This is the layer most people miss.

Strategy’s model depends on access to capital markets:

• issuing shares (ATM)
• issuing convertibles or other instruments
• maintaining investor confidence

When MSTR trades at a premium, issuing shares can feel “accretive” to BTC-per-share.

When MSTR trades at a discount, issuing shares can feel like selling $1 for $0.80 and shareholders revolt.

That’s when the strategy becomes harder to run.

This is why MSTR can fall faster than BTC:

• BTC down → MSTR down more → premium collapses → issuance becomes painful → narrative weakens → MSTR down more.

That feedback loop is what investors mean when they talk about “reflexivity.”

Does BTC < $75K Automatically Trigger Strategy’s Bankruptcy?

No. There is no single public “BTC liquidation line” that forces Strategy into bankruptcy the moment Bitcoin hits $74,999.

Also, one older fear, Bitcoin-collateralized margin-call risk, was tied to Strategy’s past Silvergate loan (which the company previously repaid). That removes the cleanest “BTC drop → collateral call → forced sell” pathway many critics cite.

The real risk is slower and uglier:

• prolonged BTC weakness
• sustained MSTR discount
• capital markets tightening
• high cash obligations
• confidence shock (index exclusion, funding freeze, etc.)

What Strategy’s Real “Bankruptcy Path” Would Look Like

Here’s the realistic chain that would have to develop (not just “BTC hits $75K”):

1. Bitcoin drops and stays low for a long time: A short dip doesn’t kill companies. Long duration is what stresses structures.
2. MSTR stays at a deep discount to its Bitcoin value: If the stock trades below what the market thinks the BTC is worth (after debts), financing becomes politically toxic.
3. Equity issuance becomes punitive: If Strategy keeps issuing shares into weakness, dilution increases and can spiral sentiment.
4. Debt markets tighten (refinancing risk increases): Strategy has historically used convertibles; when markets are risk-off, these can become expensive or difficult.
5. Liquidity pressure forces bad choices: At that point, the company may have to choose between: cutting back purchases dramatically, raising money on harsh terms or selling BTC (which could damage the entire thesis). The $1.44B reserve was meant to reduce the chance of reaching this stage quickly.

What to Watch Next

If your goal is to judge whether “bankruptcy risk” is rising, watch these in order:

• Does MSTR stay at a discount? A persistent discount signals the market is rejecting the “Bitcoin per share” funding loop.
• How aggressive is dilution? December 2025’s share-sale pace is why people are nervous.
• USD reserve coverage and updates: A strategy was created to explicitly establish a $1.44B reserve for dividend and interest stability. If that shrinks fast, stress rises.
• MSCI outcome in January 2026: The expected Jan 15, 2026 decision is a potential catalyst either way.
• Bitcoin trend duration: The longer BTC is weak, the more pressure builds on the financing structure.

So Can Strategy Survive BTC Below $75K?

Yes, it can – BTC below $75K is not an automatic bankruptcy trigger.

But Strategy is not a “normal stock.” It’s a financing-driven Bitcoin vehicle, and that means risk grows when several things hit at once:

• Bitcoin down for a long time
• MSTR at a discount
• heavy dilution
• capital markets tightening
• index outflow pressure

The reason the conversation is loud in early 2026 is that multiple elements of that chain (dilution, premium collapse, index overhang) are already in play.

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About the Author

Onkar Singh

Onkar Singh has three years of experience as a digital finance content creator. Throughout his career, he has collaborated with various DeFi projects and crypto media outlets. In his leisure time, he enjoys fitness activities at the gym and watching movies across different genres. Balancing his professional and personal interests, Onkar continues to contribute to the digital finance landscape while pursuing his hobbies.

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