Bitcoin’s Biggest Believer on the Brink: Will Strategy Sink or Swim? 🚀💔

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Is the specter of forced liquidation creeping up on Bitcoin’s most fervent corporate devotee? Strategy, once riding high on the waves of Bitcoin’s (BTC) relentless ascent, now finds itself in a tempest of crumbling stock and mounting debt. Could this aggressive strategy be the very noose tightening around its neck? 🤔

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Forced liquidation fears explode

For months, Strategy (formerly MicroStrategy) basked in the glow of Bitcoin’s relentless rally, buoyed by a renewed optimism in the crypto markets, thanks to pro-crypto Donald Trump’s return to the White House. Ah, the good old days! 🌞

Its stock soared to a dizzying height of $543 in November 2024, mirroring Bitcoin’s own meteoric rise. But, as is often the case in this wild west of finance, the euphoria was short-lived. On February 26, MSTR took a nosedive to $263 — a staggering 52% drop from its peak. Ouch! 😱

This week has seen a particularly steep sell-off, with MSTR shedding 19% as Bitcoin struggles to hold onto its key support levels. As of February 27, BTC is hovering around $86,000, about 21% below its all-time high of $109,000, reached on January 20. Talk about a rollercoaster! 🎢

Despite BTC’s downturn, Strategy remains steadfast in its Bitcoin-first approach. Just last week, the firm doubled down, snapping up another 20,356 BTC for nearly $2 billion at an average price of $97,514 per coin. Bold move, Cotton! 😏

This latest purchase was funded through its at-the-market equity program and a heavily subscribed $2 billion convertible note offering. With this addition, the company now holds a staggering 499,096 BTC — nearly 2.4% of Bitcoin’s total fixed supply. Talk about a Bitcoin hoarder! 🤑

Yet, while Strategy is all-in on Bitcoin, the market seems less convinced. Some corners of the internet are buzzing with warnings of an impending “forced liquidation” event, suggesting that if Bitcoin falls further, Strategy could be in serious trouble. Yikes! 😬

MSTR forced liquidations will start around $66k BTC. Hold on to your seats…

— Jeremy wolfsteller (@CryptoScout78) February 26, 2025

One user floated the idea that liquidations could begin at around $66,000 BTC, while another bluntly predicted the company could be bankrupt within a year. The drama unfolds! 🎭

Hate to say it, but wouldn’t be surprised if MSTR is bankrupt in a year, the scam is up. Just buy BTC.

— CryptoSwell (@Zack642Steiner) February 25, 2025

But how much truth is there to these concerns? Could Strategy really face a liquidation crisis, or is this just another case of crypto Twitter running ahead of itself? Let’s break it down.

The reality behind Strategy’s liquidation fears

Looking at the numbers and the structural setup of Strategy’s Bitcoin holdings, the theory of forced liquidation isn’t entirely off the table — but it would require a worst-case “mayday” scenario. Buckle up! 🚀

From a technical viewpoint, forced liquidation of $MSTR is not necessarily impossible.

But, it is highly unlikely.

This is particularly due to the way the convertible notes are structured and multiple price variables at play.

It would need a “mayday” situation to occur.

— The Kobeissi Letter (@KobeissiLetter) February 25, 2025

For starters, forced liquidation is a function of leverage, collateral, and lender obligations. If Strategy had taken out traditional loans to buy Bitcoin and BTC’s price fell below a critical threshold, creditors could demand repayment by liquidating

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2025-02-27 17:33