S&P Assigns Strategy Inc B- Credit Rating Due to Bitcoin Risks

Strategy Inc., led by Michael Saylor, received a 'B-' junk credit rating from S&P Global Ratings due to its heavy reliance on Bitcoin and weak dollar liquidity. The company's balance sheet closely ties to Bitcoin's price, posing risks under traditional credit models.

Bitcoin Holdings Impact

Strategy holds approximately 640,808 BTC, valued at $73-$74 billion.
S&P’s credit rules deem the asset's volatility and limited cash flow risky.
The B- rating places Strategy in non-investment-grade territory, indicating potential stress if market conditions worsen.

Currency Mismatch and Debt Concerns

S&P highlighted the mismatch between obligations in US dollars and the value in Bitcoin, which may necessitate selling Bitcoin to meet payments.
The company faces billions in convertible securities and preferred-stock commitments adding cash demands.
Saylor’s repeated Bitcoin acquisitions have unrealized gains but are treated differently in risk assessments.

Despite these concerns, S&P noted Strategy retains access to capital markets, maintaining a stable outlook. However, a sharp Bitcoin price drop or funding channel tightening could prompt a downgrade. Investors showed mixed reactions, with some viewing the downgrade as expected, while others see it as a calibration of known risks. Trading volume and price volatility in Strategy shares and Bitcoin may increase as traders reassess the situation.