For the first time in the company’s history, Strategy’s market value has fallen below the net asset value of its Bitcoin holdings.

This reversal means that the total value of the Bitcoin it owns is now less than the total debt the company took on to acquire it. Analysts worry that if bearish conditions continue, Strategy could enter into a death spiral.

Debt Load Turns Into Liability

Bitcoin’s sharp decline today is being closely tied to mounting pressure on Strategy (formerly MicroStrategy), the largest corporate holder of the asset. 

Market sentiment shifted abruptly after Bitcoin broke below the $100,000 threshold, trading near $95,562 at the time of writing. The downturn intensified concerns about Strategy’s leveraged position, adding pressure to an already fragile market environment.

The shakeup also renewed questions about the long-term viability of its allocation model, which relies heavily on aggressive leverage. Chairman Michael Saylor uses billions in borrowed capital to expand the company’s Bitcoin holdings, magnifying both gains and risks.

When Bitcoin rises, that leverage amplifies gains. But when it falls, the company’s debt load becomes a point of vulnerability.

This playbook has raised fresh concerns among traders that Strategy could slip into what some call a “death spiral.” Falling BTC prices are steadily eroding the value of the company’s collateral.

In that scenario, the company could be forced to sell part of its holdings to meet its obligations. Even if such a scenario never materializes, the possibility alone is enough for market participants to reposition.

Saylor Addresses Selling Speculation

Beyond Strategy’s structural leverage risk, market participants also worry about the impact the market would suffer if Saylor were to unload some of his holdings.

Strategy currently owns 641,692 BTC, or roughly 3% of the total circulating supply. If the company were forced to liquidate a substantial portion of that stash, the resulting increase in supply could significantly impact the market.

The growing concern pushed Saylor to address speculation about a possible Bitcoin sell-off. In an interview with CNBC, the Strategy founder reiterated his long-term conviction in Bitcoin and dismissed the rumors of a sell-off. 

“My view is [that] Bitcoin is going to outperform gold, it’s going to outperform the S&P, it is digital capital, and so if you’re a long-term investor, this is the place to be,” Saylor said. 

Despite his confidence, today’s developments inevitably raise concerns about structural vulnerabilities in Strategy’s accumulation strategy.