TLDRStrategy (formerly MicroStrategy) stock is down 16% year-to-date amid Bitcoin’s correctionThe company holds 499,096 Bitcoins purchased at an average cost of $66,350 per coinStrategy has spent over $33 billion on Bitcoin, generating an unrealized profit of more than $10 billionThe company financed purchases with stock issuance and approximately $9.5 billion in convertible debtMost of Strategy’s debt doesn’t mature until 2027 or later, reducing short-term liquidation risksStrategy, the company formerly known as MicroStrategy, has seen its stock value drop approximately 16% since the beginning of the year as Bitcoin experiences an ongoing correction. On February 25, the company’s shares fell by more than 10% to around $245, marking a nearly 50% decline from its all-time high of $473 reached in November.The stock’s recent performance comes amid Bitcoin’s price movement below the $90,000 mark for the first time since November 2024. On February 25, Bitcoin dropped around 4% to approximately $88,000, prompting concerns about how this might affect companies with Bitcoin-heavy balance sheets.Strategy currently holds 499,096 Bitcoins, which it acquired through investments totaling $43.7 billion at an average cost of approximately $66,350 per coin. Since 2020, the company has spent upward of $33 billion buying Bitcoin, resulting in an unrealized profit of more than $10 billion based on current prices.The company’s approach to Bitcoin acquisition has involved a mix of financing methods. Strategy has issued new stock and taken on around $9.5 billion in convertible debt to fund its purchases. This debt strategy is structured in such a way that virtually none of the company’s debt matures until 2027 or later.The extended debt maturity timeline gives the company some breathing room against short-term Bitcoin price fluctuations. According to analysis from The Kobeissi Letter, a market research firm, Bitcoin would need to fall well over 50% from current levels and remain depressed until 2027 and beyond to force Strategy to liquidate its holdings.First, $MSTR's strategy is largely contingent on the ability to raise additional capital.In a situation where their liabilities rise significantly higher than their assets, this ability could deteriorate.However, this doesn't necessarily mean "forced liquidation." pic.twitter.com/jWxQT8m5kD— The Kobeissi Letter (@KobeissiLetter) February 25, 2025Despite the recent stock price decline, many analysts remain optimistic about Strategy’s future prospects. On February 6, research firm Benchmark raised Strategy’s price target to $650, expressing confidence that the company “will continue to aggressively raise capital to fuel its bitcoin acquisition strategy during the balance of the year.”Benchmark analysts have introduced the concept of “Bitcoin yield” as a key metric for evaluating Strategy’s performance. This measure looks at the ratio of Bitcoin holdings to outstanding shares, effectively using Bitcoin-per-share as a guideline for the company’s financial health. According to Benchmark, Strategy is targeting a Bitcoin yield of 15% for 2025.Market Volatility Tests Strategy’s Bitcoin VisionThe company’s long-term vision for Bitcoin acquisition remains ambitious. In November, shortly before reaching its all-time high stock price, Strategy announced its goal of purchasing $42 billion worth of Bitcoin by 2027.Strategy is not alone in experiencing market volatility related to its Bitcoin investments. Other companies following similar Bitcoin treasury strategies have seen comparable retraces in their stock prices. For example, Semler Scientific, which began purchasing Bitcoin in 2024, has seen its stock drop more than 20% year-to-date.The $8.2 billion debt against Strategy’s $43.4 billion Bitcoin investment provides the company with protection from short-term financial challenges. This is mainly because most of its convertible notes don’t become due until 2027, giving the company time to weather market fluctuations.Since August 2020, Strategy has continued its Bitcoin acquisition plan without selling any assets during periods of market decline. This buy-and-hold approach has been a defining feature of the company’s Bitcoin strategy.Some market observers have raised questions about the sustainability of Strategy’s Bitcoin buying spree. The Kobeissi Letter noted that the company’s “strategy is largely contingent on the ability to raise additional capital” backed by its growing Bitcoin treasury. They cautioned that “in a situation where their liabilities rise much higher than their assets, this ability could deteriorate.”For Strategy to be forced to sell its Bitcoin holdings, Bitcoin prices would need to stay below $66,000 for an extended period. Given the current price of Bitcoin, despite the recent correction, the company still maintains a substantial buffer.The recent price drops occurred during ongoing sell-offs in US spot Bitcoin exchange-traded funds (ETFs). This market movement has affected not just Strategy but the broader cryptocurrency investment landscape.Experts in the field have suggested that Bitcoin may experience more favorable conditions in the future, citing continued institutional interest. They point out that the current market differs from previous cryptocurrency downturns because governments and institutions are now building Bitcoin reserve programs, potentially establishing stronger long-term demand for the digital asset.The post Strategy Stock Falls 16% YTD as Bitcoin Drops Below $90,000 appeared first on Blockonomi.