The strategy says its current capital structure can withstand a prolonged decline in bitcoin while continuing to fund interest payments and dividends on preferred stock.
summary
- The strategy says its current structure can fund liabilities through 5.8 years of Bitcoin’s continued decline.
- Company data shows a cash reserve of $3.225 billion supports preferred dividends and debt interest payments.
- The stress test uses Strategy’s own internal BTC rating rather than an independent credit agency’s assessment.
On July 24th mail On
This claim arrived as Bitcoin was trading near $64,463 and shares of the strategy closed at $91.67 on July 24. Bitcoin remained below the strategy’s average buy price, while the MSTR price fell sharply from its previous peak. The exercise describes a steady decline for several years, not a sudden collapse or a guarantee that the strategy can meet all obligations in all market conditions.
What measures does the Bitcoin stress test measure?
The strategy model uses a metric called BTC Floor ARR. The company defines it as the lowest constant annual return for Bitcoin that would maintain a 1.0x coverage of net debt and preferred equity over the weighted duration of its credit structure. The account includes interest and preferred dividend payments. Its current Credit metrics dashboard This puts the lower bound at negative 11.4% over 5.8 years.
“In today’s capital structure, BTC could decline 11.4% per year for 5.8 years,” the strategy wrote while the company continued to fund preferred interest and dividends. A BTC rating of 1.0x means that the measured Bitcoin reserve still matches the claims listed in the strategy formula. The company uses the calculation to describe balance sheet coverage, not the potential future price of Bitcoin.
The account is also different from a traditional credit rating. The strategy developed and published the measure itself for illustrative purposes. The company does not present this as evidence that Bitcoin will decline at a steady rate or that its financing structure can withstand all kinds of market disruptions.
Cash reserves and Bitcoin sales support this model
The strategy held 843,775 BTC as of July 19. It acquired approximately $63.69 billion worth of coins at an average price of $75,476. The company also announced a reserve of $3.225 billion after raising $263.5 million through common stock sales. Such as crypto.news I mentionedThe strategy did not buy or sell Bitcoin during that week.
The reserve supports preferred dividends and interest on outstanding debt. The strategy’s current numbers put annual interest and dividend obligations near $1.7 billion. The cash balance thus provides less than two years of immediate coverage before the company needs new financing, Bitcoin sales, or other capital actions.
Created a broader strategy Digital credit capital framework In June. The plan allows up to $1.25 billion in bitcoin sales to build or replenish cash reserves. It also allows specific bitcoin sales to fund dividends, interest, and repurchases of approved securities. The strategy raised STRC’s preferred dividend rate to 12% and approved separate $1 billion repurchase programs for common and preferred securities.
strategy It sold 3,588 bitcoins for about $216 million between June 29 and July 5. The proceeds were used for preferred distributions and replenishment of reserves. The sales reduced their holdings from 847,363 BTC to 843,775 BTC.
The strategy warns that its BTC rating is not a credit rating
Strategy Metric definitions It is noteworthy that the classification of BTC is an internal clarification procedure. They are not issued by any independent credit rating agency. It does not measure liquidity, solvency, or reported financial performance. The company also says the calculation does not take into account potential defaults under its debt agreements.
The model uses the par value of the preferred stock, although some securities may carry liquidation preferences higher than this amount. The dividend coverage measure also assumes that the strategy can refinance existing debt on substantially similar terms without paying down the principal. These assumptions may not hold during severe financing or market shock.
The strategy’s board must also approve the preferred dividend. The Company may adjust STRC’s variable rate each month, and does not guarantee cash payments. The strategy may issue shares, sell bitcoin, reduce dividends where permitted, or restructure liabilities if its funding position weakens. Therefore a 1.0x result does not eliminate refinancing, dilution, implementation or market risk.
Bitcoin and MSTR remain under market pressure
Bitcoin was trading at about $64,463 on July 26, roughly 49% below its October 2025 peak near $126,000. MSTR closed at $91.67 on July 24. Investors continued to track the price of Bitcoin along with the strategy’s cash requirements, preferred dividend costs, and market value relative to its Bitcoin holdings.
The company’s financing model worked best when its MSTR traded higher than the value of its Bitcoin reserve. This premium allowed Strategy to sell shares and raise Bitcoin per share. Lower market premiums made new issues less attractive and prompted the company to build cash rather than buy more bitcoin.
The company also shifted from a model focused primarily on accumulation to active capital management. Its current framework includes stock sales, cash reserves, and potential Bitcoin sales and buyback programs. Crypto.news analysis male This strategy’s market premium, or mNAV, remains central because it determines whether issuing common stock can raise bitcoin per share.
A stress test presents a strategy’s view of how long its current assets can support its financing structure under a steady decline. It does not predict the direction of Bitcoin and does not cover all forms of market pressures. Future results will depend on Bitcoin prices, access to capital, dividend decisions, debt terms and the Company’s use of authorized Bitcoin sales.
