Strategy Faces Dilution Risk More Than $10K BTC Scenario

Key Insights:

• Strategy is the top Bitcoin proxy, and investors now watch how it keeps buying without becoming a forced seller.
• The key risk is Sept. 15, 2027, when $1.01B in converts can demand cash if the stock stays below ~$183.
• Spot Bitcoin ETFs crushed Strategy’s premium, making share issuance—and dilution—more obvious.

Strategy (formerly MicroStrategy) is now walking a tight line with its plan to protect its Bitcoin stash, and yet it keeps leaning on new share sales to fund the strategy.

Over time, that trade-off has turned the company into Wall Street’s most liquid Bitcoin stand-in. Since its MicroStrategy days, Strategy has tapped common stock, convertible debt, and preferred shares to stack more BTC and reshape its balance sheet around the asset.

Still, the mood has shifted. With Bitcoin sitting around $68,000 and Strategy shares stuck below $130, investors now focus less on the headline BTC stack and more on the plumbing behind it.

They want to know how the company keeps adding Bitcoin without backing itself into a corner. In essence, the market watches the funding playbook closely because the wrong move could turn a steady buyer into a forced seller.

Strategy Can Handle a Bitcoin Price Crash Below $10,000

However, the story changes when prices stop cooperating. With Bitcoin price action near $68,000 and Strategy shares sitting below $130, investors now look past the bold Bitcoin headlines and study how the company funds the next buy.

As a result, the spotlight has moved to the fine print. Shareholders want to see whether Strategy can keep stacking BTC without crossing the line where financing pressure turns it from a steady buyer into a forced seller.

To be fair, some respected voices see far more pain ahead. Bloomberg Intelligence strategist Mike McGlone has warned that Bitcoin could still fall as low as $10,000.

But Strategy isn’t acting spooked. The Michael Saylor-led company has suggested it can handle the heat even if Bitcoin drops further, including a worst-case slide to around $8,000.

Strategy news: Could the company survive a Bitcoin price drop to $8,000?

Even then, the bigger worry isn’t Bitcoin’s price on its own. It’s one date and one stock level that could decide how stressful things get.

Strategy’s $1.01 billion convertible notes due in 2028 give investors a key option. They can demand a cash buyback on Sept. 15, 2027. That clause looks far more dangerous when the stock sits below the notes’ original conversion level of roughly $183.19 per share, because it makes taking cash more attractive than converting into equity.

Now that spot Bitcoin ETFs have taken root, that old advantage has faded. The stock no longer holds its premium as easily, so Strategy’s dependence on selling shares to fund new Bitcoin purchases stands out much more.

The company’s own dashboard shows how fast the equity base has grown. As of Feb. 16, Strategy listed 333.755 million basic shares outstanding and 366.114 million assumed diluted shares, alongside a Bitcoin stash of 717,131 BTC.

Strategy’s “Cheap” Debt Has a Catch

Convertible debt often gets labeled as cheap money because it carries a low interest rate.

Strategy’s 2028 convertibles fit that description on paper, with a 0.625% coupon. Still, investors focus on a different problem. They worry about what happens if the conversion feature never becomes attractive and noteholders choose not to swap the debt for shares.

The notes do not come due until Sept. 15, 2028. However, the key decision point hits a year earlier.

As Sept. 15, 2027 gets closer, everything hinges on the stock price. If Strategy trades well above $183.19, noteholders gain a clear reason to convert into shares. At the very least, they have less motivation to ask for cash, because the conversion option starts to look valuable.

On the other hand, the math flips if the stock stays below $183.19. In that case, taking cash looks like the better deal for noteholders.

That is where the pressure builds. Strategy would need a clear way to come up with roughly $1 billion, and it may have to do it in a market that no longer wants to bankroll Bitcoin-style leverage on friendly terms.

Strategy’s own dashboard makes it clear why investors keep circling that $183.19 level.

The company breaks down each convertible series and shows how many shares each one could add. That table includes the 2028 notes, which anchor their conversion math to the same $183.19 price.

This is not a routine accounting chart. It works more like a scoreboard of incentives. Besides, it turns one stock price level into a practical stress test for the whole strategy.

Strategy Downplays Insolvency Fears, Cites Asset Base

At the same time, the company has pushed back on worst-case fears. Strategy has said that even a sharp Bitcoin price drop does not automatically put it on the brink, because it still holds significant assets on its balance sheet.

Even so, traders do not obsess over bankruptcy spreadsheets right now. They worry about the funding choices Strategy makes to keep its Bitcoin position intact.

That concern grows when the stock is soft. In that environment, the company often has to issue more shares to raise the same amount of cash, which pushes the bill onto common shareholders through dilution.

The Latest Strategy Fundraising Highlights Growing Reliance on Share Sales

In its fourth-quarter 2025 update, the company reported roughly $5.6 billion in gross proceeds during the quarter. It then added another $3.9 billion between Jan. 1 and Feb. 1, 2026. Most of that money, the firm said, came from selling common stock through its at-the-market program.

Strategy said it sold 24,769,210 shares for about $4.4 billion in the fourth quarter. It then sold another 20,205,642 shares for roughly $3.4 billion in January. As of Feb. 1, the company also reported $8.1 billion still available under its common stock ATM program.

That pace matters for one simple reason: dilution is not a side effect anymore. It drives the model. When the share price drops, the company must issue more stock to raise the same cash. As a result, each new raise spreads the Bitcoin claim across a larger base, shrinking what each share represents.

Strategy’s own dashboard shows how quickly the share base is growing. Basic shares outstanding climbed to 333.755 million by Feb. 16, up from 312.062 million at the end of 2025.

That jump captures the real dilemma for common shareholders. Strategy says its goal is to increase Bitcoin per share over the long run. However, every new share sale also spreads the same Bitcoin pile across more owners in the meantime.

In the near term, that promise can look shaky. When conditions turn soft, the company often has to raise cash at a worse price, which means issuing more shares.

As a result, dilution can move faster than the benefit investors expect from additional Bitcoin. The problem gets even sharper when the stock’s premium to its implied Bitcoin value shrinks and stays low, because fundraising becomes more expensive in share terms.

The post Strategy Faces Dilution Risk More Than $10K BTC Scenario appeared first on The Coin Republic.