Strategy May Sell Bitcoin Holdings Amid $8 Billion Debt

Strategy, a prominent corporate Bitcoin holder, is facing significant financial challenges that may necessitate the sale of a portion of its Bitcoin holdings. The company, which holds 528,128 BTC purchased at an average price of $67,548 per coin, is under financial strain due to mounting debt and unrealized losses. According to a regulatory filing on April 7, Strategy may be forced to sell some of its Bitcoin holdings if it fails to secure additional financing. This development comes at a time when the Bitcoin price has dipped below $80,000, trading around $74,000, leading to substantial paper losses for the company.

Strategy's financial woes are compounded by an $8 billion debt, which includes $35 million in annual interest payments and $150 million in annual dividends. The company's core business in the software niche has also struggled to generate sufficient revenue to alleviate these financial pressures. For the first quarter of 2025, the expected unrealized loss for Strategy is estimated to be $5.9 billion, despite a $1.69 billion tax advantage.

In response to these liquidity issues, Strategy has announced plans to raise $2.1 billion through the sale of perpetual preferred stock, offering an 8% dividend. This move aims to reduce the company's reliance on traditional forms of debt. However, the company's future remains heavily dependent on the performance of Bitcoin prices.

While past warnings about potential Bitcoin selloffs have not materialized, Strategy's current financial situation may necessitate a selloff at prices significantly lower than their recent acquisition costs. Analysts have expressed confidence in a Bitcoin price comeback, but the company's financial struggles could force a selloff, potentially impacting the market.

Bitcoin's price performance has been volatile, with the cryptocurrency initially advancing to test resistance at $80,800 before failing to break through. The Relative Strength Index (RSI) reached overbought conditions, leading to a death cross and a subsequent drop to a new support level at $78,880. Bitcoin then stabilized and climbed to find resistance at $80,160, but faced strong selling pressure, falling to a 24-hour low of $74,680. Despite some correction, Bitcoin formed a confident uptrend, closing in on the $77,700 resistance.

Given the recent price performance, it may be challenging for Bitcoin to find bullish pressure soon. The cryptocurrency is currently advancing on the $77,700 resistance, but the RSI is foraying into the overbought zone, suggesting a potential reversal. However, if buying pressure persists, there could be a spike above the resistance soon.