Bitcoin fell 21% after Strategy’s debt buyback news— Is a Terra Luna-style doom loop next?
Bitcoin fell 21% in 10 days, briefly revisiting $61,000, as Strategy paused its aggressive BTC buying to use $1.38 billion of equity proceeds to repurchase convertible debt. That shift, plus the STRC preferred stock slipping below $100, raised fears that Strategy might someday need to sell Bitcoin. Strategy has accumulated 126,016 BTC since March and still has conservative leverage by most measures, with BTC collateral coverage remaining strong even at much lower prices. There is no debt covenant that would force a liquidation, and if needed the firm could raise cash by issuing more MSTR equity instead of selling BTC. The main risk is liquidity: cash has fallen to about $900 million, enough for roughly six months of dividends. If debt markets stay closed and ETFs keep selling, sentiment could worsen in a self-reinforcing “doom loop,” even without an imminent forced sale.
