Bitcoin News Today: Bitcoin's Plunge Pits Strategy Against $1B 2027 Debt Deadline

Strategy's Bitcoin-Backed Convertible Debt Could Require $1 Billion Payout in 2027 as Market Volatility Intensifies

The largest corporate holder of Bitcoin, Strategy, faces a critical juncture as its stock price has fallen below the conversion threshold for a $1 billion tranche of convertible debt due in September 2027. The development underlines growing risks for the company, which has leveraged its Bitcoin holdings to fund aggressive expansion but now faces mounting pressure from a bearish crypto market and institutional sell-offs.

Bitcoin's 35% decline in November 2025 has eroded Strategy's market capitalization to $49 billion, trailing the $56 billion value of its 649,870 Bitcoin holdings. This inversion has triggered concerns about the company's ability to service its $8.2 billion in convertible debt, with $7.4 billion of that currently "out of the money" and unlikely to convert into equity. The stock's recent drop below $170 - a 60% decline from its 2024 peak - has also raised the stakes for the September 2027 debt maturity, where holders can demand cash repayment.

Michael Saylor, Strategy's executive chairman, has pivoted to a credit-driven strategy to mitigate these risks. The company has issued $7.7 billion in perpetual preferred securities - Strike, Strife, Stride, and Stretch - offering high fixed dividends (8–10.5%) classified as "return of capital" to reduce investors' tax burdens. However, the recent Bitcoin slump has caused these preferreds to trade below par, with yields rising to 11–12.5% as investors demand higher compensation for perceived risks.

Institutional skepticism is deepening. JPMorgan analysts warned of a potential $2.8 billion outflow if MSCI removes Strategy from its indices in January 2026, a decision that could force passive funds to divest and further depress the stock. Amundi, Europe's largest asset manager, recently sold $135 million in Strategy stock, mirroring JPMorgan's $134 million divestment and signaling broader portfolio rebalancing.

Strategy's financial flexibility is constrained by its high leverage. CFO Andrew Kang highlighted contingency measures, including at-the-market equity sales and new preferred stock offerings, but analysts caution that prolonged Bitcoin weakness could trigger margin pressures. Saylor, however, remains bullish, advocating for a "credit amplification" model to grow Bitcoin holdings while reducing debt-to-Bitcoin ratios from 11% to zero by 2029.

The company's average Bitcoin purchase price of $74,433 leaves it with a 16.5% unrealized gain at current prices but exposes it to a potential 16% loss if the asset falls below $70,000. S&P Global's B- credit rating reflects concerns over Bitcoin's concentration and liquidity risks.

As the January 2026 MSCI decision looms, Strategy's survival hinges on Bitcoin's recovery and its ability to attract income-focused investors to its preferred securities. Saylor's vision of transforming Bitcoin into a yield-generating asset faces an uncertain path, with the market watching closely for signals of stability-or collapse.