MicroStrategy Faces Liquidity Crisis: Bitcoin Treasury Model Unstable Amid Weak Market

When Bitcoin faces downward pressure, crypto reserve management companies like MicroStrategy also find themselves in a difficult position. Currently, the company is under pressure from multiple sides: shrinking profit margins, declining fundraising ability, and the risk of being removed from major indices. Market confidence in this business model is being seriously challenged.

Warning Signals from Market Indicators

The crypto asset management sector is experiencing its darkest period. As Bitcoin’s price continues to adjust (currently at $90.68K), the market net asset value (mNAV) of these companies is rapidly decreasing.

Specifically, for MicroStrategy, the mNAV has fallen sharply. According to StrategyTracker data, as of November 21, this figure is only 1.2, after previously dropping below 1. That represents a loss of approximately 54.9% from the all-time high of 2.66. This premium weakening has serious consequences: fundraising ability is affected, forcing the company to issue new shares, diluting current shareholders’ ownership, which in turn drives the stock price down, creating a negative feedback loop.

Not all analysts agree that mNAV is a reasonable measure. Greg Cipolaro, Global Research Director at NYDIG, points out that this index has many limitations because it does not account for actual business operations or unrecognized liabilities. The calculation also relies on assumptions about the number of outstanding shares without including potential convertible bonds.

Risks from Negative Valuations and Index Exclusion

The stock performance of MSTR has caused market concern. MicroStrategy’s market capitalization is currently $50.9 billion, less than the total value of nearly 650,000 Bitcoin held by the company (with an average cost basis of $74,433, totaling $66.87 billion). This means MSTR shares are trading with a “negative premium,” a warning sign. Since the beginning of the year, the stock has plummeted 40.9%.

This situation raises fears that MicroStrategy could be removed from the Nasdaq 100 or other indices like MSCI USA. JPMorgan warns that if MSCI excludes the company from the index, capital outflows could reach $2.8 billion; if other indices follow suit, total withdrawals could amount to $11.6 billion.

Currently, MSCI is reviewing a proposal to exclude companies with Bitcoin or other crypto assets as their main business activity and that hold over 50% of their balance sheet. A final decision will be made before January 15, 2026. However, the risk of MicroStrategy being removed from the Nasdaq 100 remains relatively low because the company still ranks among the top 100 by market cap, and recent financial reports show the fundamentals remain stable.

Cash Crisis and the Search for New Funding Sources

MicroStrategy’s motivation to buy more Bitcoin has significantly slowed down. According to Q3 financial reports, cash and cash equivalents are only $54.3 million. Since early November, the company has only purchased an additional 9,062 Bitcoin, a sharp decline from 79,000 Bitcoin in the same period last year. The largest recent transaction was 8,178 BTC last week; other transactions are mostly a few hundred Bitcoin.

To address the cash shortage, MicroStrategy has sought new financial channels. The company issued perpetual preferred shares (STRE) with an 8-10% dividend rate, raising approximately $710 million through an initial issuance priced in euros. Additionally, the company has six outstanding convertible bonds, maturing from September 2027 to June 2032.

Leadership Moves and Stock Sell-offs

The market is also paying attention to leadership actions. In the financial report, MicroStrategy disclosed that Vice Chairman Shao Weiming will leave the company on December 31, 2025. Since September this year, he has sold MSTR shares worth $19.69 million through five transactions. However, all these transactions follow a pre-arranged 10b5-1 plan, a mechanism allowing executives to trade according to predetermined rules without violating securities laws.

Debt Risk Analysis: Is It a Major Concern?

Many institutional investors still hold positions in MSTR, including Arizona and Florida pension funds, Renaissance Technologies, and banks like Swedbank and Swiss National Bank. This presence somewhat reinforces market confidence.

Matrixport points out that although many worry that MicroStrategy might be forced to sell Bitcoin to repay debt, considering the asset structure and current debt repayment schedule, this scenario is very unlikely in the short term. It is not the primary risk to be concerned about.

Crypto analyst Willy Woo has provided a detailed analysis of MicroStrategy’s debt. Most of the company’s debt consists of convertible bonds that can be repaid with cash, stock, or a combination of both. With approximately $1.01 billion maturing on September 15, 2027, Woo estimates that the MSTR stock price needs to be above $183.19 (corresponding to Bitcoin around $91,502) to avoid selling Bitcoin. Ki Young Ju, CEO of CryptoQuant, believes the probability of MicroStrategy going bankrupt is “extremely low,” emphasizing that Michael Saylor has strong incentives to hold Bitcoin and no reason to sell.

Outlook and Future Challenges

Michael Saylor, founder of MicroStrategy, repeatedly emphasizes the “HODL” philosophy and expresses optimism about long-term prospects, asserting the company will not sell Bitcoin unless the price drops below $10,000. The stock price has already adjusted from a peak of $474 down to $207, making the valuation appear more attractive. There is still hope to be included in the S&P 500 index in December.

Investors who bought at high premiums are under the greatest pressure, but the risk of bankruptcy seems exaggerated. With flexible financial strategies, refinancing, or even using Bitcoin as collateral, MicroStrategy has many ways to handle upcoming debt maturities without selling its Bitcoin reserves.