MicroStrategy Bankruptcy Claims Debunked: Financial Analysis Reveals Strong Position

The narrative of a forced Bitcoin sale was debunked by the mechanics of MicroStrategy's $1.05 billion convertible note redemption. On January 24, 2025, the company announced it would redeem all outstanding notes on February 24, 2025, at a cash price equal to 100% of the principal amount. This was a scheduled debt maturity, not a distress event.

Holders had a conversion option prior to the redemption. They could convert their notes into shares at a fixed price of $142.38 per share by February 20, 2025. Those who chose not to convert were simply repaid in cash, a standard outcome for convertible debt when the stock price fails to meet the conversion threshold.

CryptoQuant founder Ki Young Ju labeled the forced liquidation fear a "Twitter myth." He argued that failing to convert is not a bankruptcy trigger; it is simply normal debt maturity. The company's capital structure and shareholder incentives are misaligned with a liquidation scenario, making the narrative unsupported by the actual financial mechanics.

Capital Structure: USD Reserves Cover Dividends, Not the Redemption

The company's capital structure is designed to handle its obligations without touching its Bitcoin. A key pillar is the $2.25 billion USD Reserve established in the fourth quarter of 2025. This reserve is explicitly built to cover dividend and interest payments, providing more than two and a half years of coverage.

The primary driver of these payments is the $3.4 billion aggregate stated amount of perpetual preferred stock, STRC. With a current dividend rate of 11.25%, the annual obligation on this instrument is approximately $887 million. The reserve is sized to meet this recurring cost, which is separate from the $1.05 billion cash outflow for the convertible note redemption.

This means the $1.05 billion redemption payment is a manageable liquidity event, not a strain on the company's financial fortress. The cash for this debt maturity comes from the company's broader capital raise of $25.3 billion in 2025, while the STRC dividend payments are funded from the dedicated reserve. The two flows operate independently, with the reserve ensuring dividend continuity regardless of the Bitcoin price or the note redemption.

Bitcoin Holdings as a Strategic Asset, Not a Liability

The company's core strength is its massive Bitcoin treasury. As of February 1, 2026, MicroStrategy holds 713,502 bitcoins, valued at approximately $54.26 billion. This asset base is not a liability but the foundation of its capital structure, providing substantial collateral for its preferred stock and funding its operations.

The recent stock price action reflects market pressure, not a capital deficiency. Over the last 20 days, the share price has declined 19.19%. This volatility is a direct function of the broader Bitcoin market environment and the company's fair value accounting for its digital assets, which amplifies unrealized gains and losses on the income statement. The drop is a price move, not a signal of insolvency.

The company's capital raises and preferred stock structure demonstrate a deliberate design to support, not liquidate, this treasury. The $25.3 billion raised in 2025 and the $3.4 billion STRC instrument are tools to generate amplification and provide a stable funding base. This setup is intended to absorb Bitcoin price swings for STRC investors while protecting the common stock, making the Bitcoin holdings a strategic asset that fortifies the balance sheet.