MicroStrategy’s BTC Holding Doesn’t Necessarily Present Crypto Market Concentration Risk: Bernstein

Whether MicroStrategy (MSTR) sells its Bitcoin (BTC) tokens to pay down debt is closely tied to the cryptocurrency’s performance. The position isn’t large enough to distort prices, but it poses sentiment risk in a down cycle, Bernstein said in a research note on Wednesday.

The business analytics software company is the largest corporate holder of Bitcoin on balance sheet assets, owning around 140,000 BTC at an average price of $29,800. The stash is worth about $4 billion at current prices, the report said.

The company has approximately $2.2 billion in debt that is due to be repaid in 2025 and beyond. It has pledged 15,000 of its bitcoins, Bernstein said.

“High BTC prices mean a stronger balance sheet, higher share prices and easier debt repayment without selling BTC holdings,” wrote analysts Gautam Chhugani and Manas Agrawal.

MicroStrategy holds about 0.7% of total Bitcoin circulation, which is about 20% of the daily average trading volume on spot markets, the release said.

At these levels, MicroStrategy “doesn’t necessarily pose a concentration risk,” even if trading volumes declined during a bear market, although that could hurt market sentiment.

“MicroStrategy’s BTC potential liquidation during bear markets creates an overhang for BTC in a down cycle,” it said.

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