MicroStrategy Junk B- Rating: Bitcoin Liquidity Risks
On October 28, S&P Global Ratings downgraded MicroStrategy’s credit rating to junk B-, citing extreme Bitcoin concentration, narrow focus, weak capitalization and limited dollar liquidity. The credit rating reflects risks from 640,808 BTC holdings (worth about $74 billion), financed by $15 billion in convertible bonds and preferred stock, including $5 billion of out-of-the-money convertibles maturing between 2028 and 2031 and annual preferred dividends of $640 million from October 2025. Negative $37 million operating cash flow in H1 2025 and minimal legacy software revenue underscore MicroStrategy’s reliance on unrealized Bitcoin gains for its $8 billion pre-tax earnings. The downgrade warns forced Bitcoin sales if debt maturities coincide with price declines. Despite this, MicroStrategy maintains strong market access and added $43.4 million in BTC recently. Traders will watch Q3 earnings on October 30 for updates on liquidity and balance-sheet health.
Bearish
The junk-grade downgrade emphasizes MicroStrategy’s concentrated Bitcoin exposure and looming debt obligations, raising the risk of forced BTC sales if maturities align with price dips. Negative cash flow and reliance on unrealized gains further heighten short-term selling pressure, while long-term concerns over corporate crypto treasury models may dampen market sentiment, marking a bearish outlook for Bitcoin.