Arkham Reveals When Strategy Could Sell Bitcoin Amid Over $6B Paper Loss

Arkham Intelligence has assessed whether Michael Saylor could be forced to sell Bitcoin after Strategy’s BTC holdings fell more than 10% below their average purchase price.

Bitcoin’s recent downturn has deepened losses for both retail and corporate investors. In particular, Strategy, the pioneer of the Bitcoin treasury model, has seen the value of its holdings drop sharply, fueling debate over its next move.

Key Points 

• Bitcoin’s recent price slump has triggered heavy unrealized losses across both retail and institutional portfolios. 
• Strategy’s BTC stash is now down over $6 billion, representing an 11.92% unrealized loss. 
• Since Strategy primarily funds its Bitcoin purchases via equity issuance and convertible debt, it has significant flexibility in managing its financial obligations. 
• Strategy stresses that it can still cover its debts even if Bitcoin’s price crashes to $8,000. 

Strategy Faces Over $6B Paper Loss on Its Bitcoin Holdings 

Company data shows that Strategy acquired 717,131 BTC for an average cost of $54.52 billion. However, with Bitcoin trading at $66,961, those holdings are now worth $48.02 billion. As a result, the firm faces an unrealized loss of $6.5 billion, representing an 11.92% decline. 

Since Strategy financed these purchases through the issuance of its preferred stock and convertible notes, speculation has intensified that Strategy may need to liquidate part of its Bitcoin reserves to offset its short-term debt. 

Strategy’s Bitcoin Funding 

Examining Strategy’s financing structure, Arkham Intelligence indicated that selling Bitcoin remains a last resort, not an immediate necessity. The blockchain analytics platform explained that Strategy relies heavily on equity issuance and convertible debt, giving it flexibility in managing liabilities. 

Its preferred shares, such as STRK, STRF, STRD, STRC, and STRE, offer dividend rates of roughly 8-10%. However, these dividends are legally optional, and redemptions remain at the company’s discretion, according to Arkham. Notably, only STRK converts into common stock. Therefore, Strategy is not required to sell Bitcoin to meet preferred dividend payments.

In contrast, convertible notes pose a firmer obligation. The company carries about $8 billion in convertible debt against roughly $2.5 billion in cash. These notes are legally binding and must be repaid or converted at maturity. Unlike preferred dividends, they cannot be skipped. 

Selling Bitcoin Remains Strategy’s Last Resort

Since convertible notes can typically be converted or refinanced, Arkham Intelligence emphasized that Strategy can remain underwater on Bitcoin for extended periods. However, the firm noted that Strategy would likely sell some BTC only if both conversion and refinancing options fail. 

Meanwhile, Strategy recently dismissed concerns about its ability to service debt amid Bitcoin’s downturn. The company asserted that it could meet its obligations even if BTC fell to $8,000, signaling confidence despite market weakness.

Soon after, Strategy reinforced that stance by purchasing an additional 2,486 BTC. Analysts now expect the company to announce further Bitcoin acquisitions in the coming weeks.