Strategy Inc. has built the most ambitious corporate Bitcoin treasury in history. Now it’s discovering what happens when the asset backing that treasury starts sliding.
The company holds 843,738 BTC as of May 25, 2026, an extraordinary stockpile supported by $6.7 billion in convertible notes and $15.5 billion in preferred stock. That’s roughly $22.2 billion in total obligations riding on a single, notoriously volatile asset.
The numbers behind the pressure
Strategy’s capital stack reads like a case study in concentrated risk. The company’s average acquisition cost sits around $75,000 to $76,000 per Bitcoin, which means any sustained price weakness below that threshold starts eating into the paper value of the entire treasury.
S&P Global Ratings assigned the company a B- junk credit rating back in October 2025. That’s deep into speculative territory, the kind of rating that makes refinancing more expensive and investors more nervous. The rating agency flagged two specific issues: Strategy’s narrow asset focus and the staggered maturities on its convertible debt.
The preferred stock layer adds its own complications. Dividend rates on instruments like STRC run around 11%, which is a hefty annual obligation that doesn’t pause because Bitcoin had a bad quarter. Unlike common stock dividends, preferred stock payments are contractual. Miss them, and the consequences cascade through the capital structure.
To put the scale in perspective: $15.5 billion in preferred stock at roughly 11% implies annual dividend obligations north of $1.5 billion. That money has to come from somewhere, and Strategy’s core software business generates only a fraction of what’s needed to cover those payments alongside convertible note obligations.
A rare Bitcoin sale and debt maneuvers
In what amounted to a philosophical shift, Strategy sold 32 BTC in late May 2026. The sale generated $2.5 million, a rounding error compared to the company’s total holdings, but symbolically significant. Strategy had previously maintained a rigid no-sell stance on its Bitcoin position.
On the debt reduction front, Strategy repurchased $1.5 billion worth of its 0% convertible notes maturing in 2029, buying them back at an 8% discount. That move trimmed the company’s convertible debt from $8.2 billion and strengthened its BTC yield metric to 13.3% year-to-date. By retiring debt at a discount, the company improved the ratio of Bitcoin per diluted share, which is the core metric Strategy uses to justify its entire approach.
It’s a clever move, but it also consumed $1.38 billion in cash to execute.
Can the structure survive a real crash?
Strategy’s executives have made a bold claim: the company’s financial structure could withstand a 90% drop in Bitcoin prices and survive for several years. The basis for that confidence is a dedicated USD reserve currently sitting at $871 million as of May 25, 2026, earmarked specifically to cover dividend and interest obligations.
If Bitcoin fell 90% from, say, $80,000, the entire treasury would be worth roughly $6.7 billion, barely enough to cover the convertible notes alone and nowhere near sufficient to address $22.2 billion in total obligations. The equity cushion would effectively evaporate.
Bitcoin has dropped more than 80% from peak to trough in previous cycles. The question isn’t whether it could happen. It’s whether Strategy’s capital structure is resilient enough to absorb it without triggering a forced liquidation spiral.
What this means for investors
The B- credit rating from S&P isn’t just a label. It affects borrowing costs, counterparty willingness, and the terms available for future refinancing. As convertible notes approach their staggered maturity dates, Strategy will need to either repay them, convert them to equity, or refinance at potentially higher rates.
For crypto market participants more broadly, Strategy’s situation matters because of its sheer scale. A company holding nearly 844,000 BTC is, by definition, a systemic participant. Any forced selling would create significant downward pressure on spot markets.
Watch the USD reserve balance and the preferred dividend coverage ratio in coming quarters. Those two numbers will tell you more about Strategy’s staying power than any executive’s confidence about surviving a 90% drawdown.