Wall Street brokerage firm Benchmark stated that concerns about Strategy’s financial structure, which have resurfaced following the recent drop in the Bitcoin (BTC) price, are unrealistic.
According to the institution, the concerns circulating in the market are merely the “noise” that occurs every cycle when Bitcoin declines, and the company’s financial fundamentals remain solid.
In a report released Monday, analyst Mark Palmer warned against critics portraying short-term volatility as a genuine risk of bankruptcy for the company. He said these comments ignore Strategy’s balance sheet model, which is designed to maximize Bitcoin’s leverage.
The company holds approximately 649,870 BTC, worth $55.8 billion at the time of writing. This position is supported by $8.2 billion in ultra-low-cost convertible notes and $7.6 billion in perpetual preferred stock.
Benchmark argued that this structure keeps Strategy’s total debt manageable and that the company has a much stronger corporate foundation than critics claim. The report noted that Strategy’s perpetual preferred stock structure, in particular, is a key competitive advantage that distinguishes it from other digital asset holding companies.
Benchmark also addressed the frequently discussed “crisis threshold” in the market, stating that for a real financial risk to emerge, the Bitcoin price would need to fall to around $12,700 and remain at that level for an extended period. It stated that this scenario is extremely unlikely, as it would imply an 86% collapse given the current institutional investor-dominated market structure.
*This is not investment advice.