Is Bitcoin Safe Even if It Plunges to $8,000? The Basis of Saylor’s Confidence

▲ Michael Saylor, Bitcoin (BTC), Strategy / ChatGPT-generated image     ©

If the price of Bitcoin (BTC) plunges below $10,000, would Strategy, the world’s largest corporate holder, face bankruptcy? As market anxiety has recently intensified, Chairman Michael Saylor has drawn attention by expressing confidence that the company would remain unfazed even in a worst-case scenario where Bitcoin falls to $8,000.

According to cryptocurrency-focused outlet Bitcoinist on February 18 (local time), Saylor shared a company statement dismissing market concerns, saying Strategy would be able to fully repay its debt even if Bitcoin’s price dropped to $8,000. Strategy currently holds 714,644 BTC, valued at approximately $49 billion based on the current price of $69,000. In contrast, the company’s net debt stands at about $6 billion, giving it a strong asset coverage ratio of 8.3 times.

Notably, Strategy outlined a significant downside scenario. The company modeled a situation in which Bitcoin crashes 88% from current levels to $8,000. In that case, the value of its Bitcoin holdings would fall to around $6 billion—still roughly equal to or slightly exceeding its net debt. In other words, even in the event of an 88% collapse, the company could theoretically maintain a 1.0x coverage ratio and meet its debt obligations.

Strategy’s debt structure also shields it from the risk of immediate liquidation. Its borrowings are not margin loans that trigger automatic liquidation based on Bitcoin price fluctuations. Instead, they consist of low-interest convertible bonds with maturities spread between 2027 and 2032. Therefore, even if Bitcoin’s price were to plummet, the company would not face margin calls forcing it to liquidate its holdings.

Over the next three to six years, Strategy plans to reduce its debt by converting existing convertible bonds into equity. Rather than issuing new senior secured debt, the company aims to maintain financial health by converting liabilities into company shares. Despite Bitcoin recently falling below $70,000, Saylor has continued his regular purchasing strategy, acquiring an additional 1,142 BTC for about $90 million in early February.

Of course, a drop to $10,000 would represent a catastrophic decline of 85% to 90% from recent highs. While Strategy’s model suggests debt repayment would still be possible at $8,000, the company’s equity value would shrink from $48.5 billion to less than $6 billion. Nevertheless, by preparing even for such extreme circumstances, Saylor has once again demonstrated his unwavering conviction in Bitcoin.

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