S&P Cuts MicroStrategy to Junk on BTC Debt; TD Cowen Bullish
S&P Global Ratings has downgraded MicroStrategy to a B- credit rating, citing its heavy reliance on Bitcoin (BTC) financed through debt and insufficient US dollar liquidity. Last week, MicroStrategy added 390 BTC, bringing its total to 640,808 BTC with a $26.6 billion unrealized gain on $47.4 billion invested. S&P flagged a currency mismatch—assets in BTC versus USD liabilities—and noted that an upgrade is unlikely within 12 months unless MicroStrategy boosts USD liquidity, cuts convertible debt, and secures capital access. While shares climbed 2.3% on the announcement, the firm remains at risk of forced BTC sales if debt maturities coincide with a market downturn. VanEck’s Matthew Sigel warns that MicroStrategy can service its debt now but is highly sensitive to shocks. Conversely, TD Cowen maintains a buy rating with a $620 target, forecasting BTC reserves could near 900,000 by 2027, driven by slowing issuance and potential Fed support. Traders should weigh the bearish credit risks against bullish long-term accumulation forecasts.
Neutral
The junk‐rating by S&P highlights immediate downside risk for Bitcoin due to MicroStrategy’s potential forced sales under debt pressure and currency mismatch—bearish factors in the short term. However, TD Cowen’s bullish forecast for rising BTC reserves and a $620 target supports long-term accumulation, suggesting underlying confidence in Bitcoin’s outlook. Balancing elevated credit risk with optimistic supply trends and potential Fed easing leads to a neutral stance on Bitcoin’s price impact overall.