Bitcoin News Today: Bitcoin Overreliance and Liquidity Woes Send Strategy to Junk Status, S&P Warns

S&P Global Ratings has assigned a B- credit rating to Michael Saylor's Strategy Inc., formerly MicroStrategy, placing the bitcoin-treasury company in junk bond territory with a stable outlook. The rating reflects concerns over the firm's heavy concentration in bitcoin, limited U.S. dollar liquidity, and structural risks tied to its capital structure, despite its $73.7 billion in bitcoin holdings.

The agency emphasized that Strategy's business model—acquiring bitcoin as a reserve asset while funding operations through equity and debt—creates a "currency mismatch." Its U.S. dollar-denominated debt and dividend obligations are backed by volatile bitcoin assets, exposing the company to liquidity strain if prices decline. S&P noted that while Strategy's bitcoin holdings exceed its debt obligations, the lack of cash flow generation from its primary asset and reliance on convertible debt amplify risks.

The rating highlights a "significantly negative" risk-adjusted capital (RAC) ratio, calculated by deducting bitcoin's market risk from equity value. Strategy reported negative cash flow of $37 million in the first half of 2025, with most earnings derived from unrealized gains on its bitcoin treasury. The firm faces $8 billion in convertible debt, including $5 billion of out-of-the-money notes maturing starting in 2028, and $640 million in annual preferred dividends, which it plans to fund via at-the-market equity sales.

S&P warned that a sharp drop in bitcoin prices could force Strategy to sell assets at depressed values or restructure debt, despite its history of prudent capital management. The stable outlook hinges on maintaining access to capital markets and avoiding prolonged price stress. A downgrade could follow if bitcoin's value declines sharply or liquidity tightens, while an upgrade would require reduced reliance on convertible debt and stronger dollar liquidity.

The rating aligns Strategy with high-risk crypto-linked issuers like stablecoin provider Sky Protocol, both categorized as B-. Despite the speculative grade, analysts at TD Cowen remain bullish, projecting the firm could hold nearly 900,000 BTC by 2027 as bitcoin's integration into traditional finance expands, and, according to The Block, some analysts see MSTR shares doubling. Strategy's shares, trading near $298, have surged amid ongoing bitcoin accumulation, with the company recently purchasing 390 BTC for $43.4 million.

A separate piece outlines what investors need to know about the downgrade risk and potential implications for holders.