Benchmark report: No need to worry about Strategy's solvency

PANews reported on December 1st that, according to CoinDesk, Wall Street brokerage Benchmark stated that the recent Bitcoin price pullback has once again raised concerns about the viability of Strategy, a major Bitcoin holder. However, the firm believes these concerns are simply noise that inevitably occurs during Bitcoin's decline. In a report released Monday, analyst Mark Palmer pointed out that critics are conflating short-term volatility with genuine solvency risks, ignoring the logic behind Strategy's balance sheet, which is designed to maximize Bitcoin leverage. Strategy holds approximately 649,870 Bitcoins (worth $55.8 billion) and is backed by $8.2 billion in ultra-low-cost convertible bonds and $7.6 billion in perpetual preferred stock. Its debt is manageable, and its corporate structure is far more robust than critics claim. The perpetual preferred stock is Strategy's core competitive advantage that distinguishes it from other digital asset holding companies.

Regarding the recurring market concern about the crisis threshold, Benchmark points out that Bitcoin would need to fall to around $12,700 and remain at that low level for a substantial risk to materialize, a drop of 86%, which the firm considers highly unlikely in the current institutionally driven market. Palmer reiterated its "buy" rating on the stock and its $705 price target (based on the assumption of Bitcoin reaching $225,000 by 2026), stating that the recent pullback has not changed its view.