Strategy says Bitcoin can fall 11.4% yearly for nearly six years

Strategy says its current capital structure could withstand a prolonged Bitcoin decline while continuing to fund interest payments and preferred stock dividends. 

In a July 24 post on X, the company said Bitcoin could fall 11.4% each year for 5.8 consecutive years without pushing its company-defined BTC Rating below 1.0x.

The claim arrived as Bitcoin traded near $64,463 and Strategy shares closed at $91.67 on July 24. Bitcoin remained below Strategy’s average purchase price, while MSTR had fallen sharply from its previous peak. The exercise describes a steady multi-year decline, not a sudden crash or a guarantee that Strategy could meet every obligation under all market conditions.

What Strategy’s Bitcoin stress test measures

Strategy’s model uses a measure called BTC Floor ARR. The company defines it as the lowest constant annual Bitcoin return that would preserve 1.0x coverage of net debt and preferred stock over the weighted duration of its credit structure. The calculation includes interest and preferred dividend payments. Its current credit metrics dashboard places that floor at negative 11.4% over 5.8 years.

Strategy wrote: “At today’s capital structure, BTC could fall 11.4% annually for 5.8 years” while the company continued funding interest and preferred dividends. A 1.0x BTC Rating means the measured Bitcoin reserve still matches the claims included in Strategy’s formula. The company uses the calculation to describe balance-sheet coverage, not Bitcoin’s likely future price.

The calculation also differs from a traditional credit rating. Strategy developed the metric itself and publishes it for illustrative purposes. The company does not present it as proof that Bitcoin will decline at a steady rate or that its financing structure can withstand every type of market disruption.

Cash reserve and Bitcoin sales support the model

Strategy held 843,775 BTC as of July 19. It acquired the coins for about $63.69 billion at an average price of $75,476. The company also reported a $3.225 billion U.S. dollar reserve after raising $263.5 million through common-stock sales. As crypto.news reported, Strategy did not buy or sell Bitcoin during that week.

The reserve supports preferred dividends and interest on outstanding debt. Strategy’s current figures place annual interest and dividend obligations near $1.7 billion. The cash balance therefore provides less than two years of direct coverage before the company needs new financing, Bitcoin sales or other capital actions.

Strategy created a broader Digital Credit Capital Framework in June. The plan authorises up to $1.25 billion in Bitcoin sales to build or refill the cash reserve. It also permits selected Bitcoin sales to fund dividends, interest and approved security repurchases. Strategy raised the STRC preferred dividend rate to 12% and approved separate $1 billion buyback programmes for common and preferred securities.

Strategy sold 3,588 BTC for about $216 million between June 29 and July 5. It used the proceeds for preferred distributions and reserve replenishment. The sales reduced its holdings from 847,363 BTC to 843,775 BTC.

Strategy warns its BTC Rating is not a credit rating

Strategy’s metric definitions state that BTC Rating is an internal, illustrative measure. No independent credit rating agency issues it. It does not measure liquidity, solvency or reported financial performance. The company also says the calculation does not account for possible cross-defaults under its debt agreements.

The model uses the notional value of preferred stock, although some securities may carry liquidation preferences above that amount. Its dividend coverage measure also assumes Strategy can refinance existing debt on broadly similar terms without repaying principal. Those assumptions may not hold during a severe funding or market shock.

Strategy’s board must also approve preferred dividends. The company can adjust STRC’s variable rate each month, and it does not guarantee cash payments. Strategy may issue shares, sell Bitcoin, lower distributions where permitted or restructure obligations if its funding position weakens. A 1.0x result therefore does not remove refinancing, dilution, execution or market risks.

Bitcoin and MSTR remain under market pressure

Bitcoin traded around $64,463 on July 26, roughly 49% below its October 2025 peak near $126,000. MSTR closed at $91.67 on July 24. Investors continued to track Bitcoin’s price alongside Strategy’s cash requirements, preferred dividend costs and market value relative to its Bitcoin holdings.

The company’s financing model worked best when MSTR traded above the value of its Bitcoin reserve. That premium allowed Strategy to sell shares and increase Bitcoin per share. A lower market premium made new issuance less attractive and pushed the company to build cash rather than buy more Bitcoin.

The company has also shifted from a mainly accumulation-focused model towards active capital management. Its current framework includes share sales, cash reserves, possible Bitcoin sales and repurchase programmes. Crypto.news analysis noted that Strategy’s market premium, or mNAV, remains central because it determines whether common-stock issuance can increase Bitcoin per share.

The stress test presents Strategy’s view of how long its current assets could support its financing structure under a steady decline. It does not predict Bitcoin’s direction or cover every form of market stress. Future results will depend on Bitcoin prices, access to capital, dividend decisions, debt terms and the company’s use of authorised Bitcoin sales.