Strategy CEO says Bitcoin must crash to $8,000 before debt risk

Strategy Inc. CEO Phong Le said Bitcoin would need to fall to $8,000 before the company's debt obligations become a genuine risk.

Strategy Inc. Chief Executive Officer Phong Le said Bitcoin would need to crash to $8,000-$10,000 before the company's $22.2 billion in debt faces real pressure.

"When Bitcoin gets down closer to $8,000 to $10,000, that's when we have to consider some of the risks associated with our debt," Le said in a Bloomberg interview. "Until that point in time, we feel very secure about the balance sheet."

The company recently boosted its dollar reserves to $3 billion through a stock sale. Strategy holds more than 840,000 Bitcoin worth over $54 billion, or about 4 percent of the total supply, alongside $6.7 billion in convertible notes and $15.5 billion in preferred stock outstanding as of late May.

Critics including Peter Schiff have warned that Strategy's preferred stock structure, carrying an approximately 11.5 percent yield, could enter a death spiral if Bitcoin fails to appreciate enough to support payouts. Le dismissed the comparison, saying dividends are funded by issuing common equity at a premium to net asset value — a structure he said bears no resemblance to a Ponzi scheme.

Le said the company is focused on restoring its STRC preferred security to its $100 par value before issuing more shares. Once that target is reached, Strategy plans to raise additional capital and buy more Bitcoin.

"We're not going anywhere," Le said. "My objective would be to be the largest buyer of Bitcoin for the foreseeable future."

The CEO also pushed back on concerns about Strategy's market influence, noting Bitcoin records $30 billion to $40 billion in daily trading volume. He pointed to the company's recent $200 million Bitcoin sale, which he said "did not move the market."

The scrutiny echoes an earlier chapter in the company's history. In March 2000, MicroStrategy's stock collapsed from $260 to $33 after restating financial results due to accounting errors, later settling with the SEC for $10 million.

David Trainer, chief executive of New Constructs, said the software business has become "a rounding error next to the balance sheet," with the company's valuation tied almost entirely to its Bitcoin holdings and the premium investors pay for leveraged exposure.

"If that premium disappears, one of the company's key advantages disappears with it," Trainer said.

This article is for informational purposes only and does not constitute investment advice.