I conducted extreme stress tests on Strategy for three years. The result is...

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Author: Adam Livingston, Crypto Analyst; Translation: @金色财经xz

I conducted an extremely brutal three-year stress test on Strategy.

Not a mild version. It's the kind where "Bitcoin crashes 55% from here, mNAV collapses below 0.5x, capital markets shut tight, cash is continuously drained, BTC is forced to be sold to pay senior claims, and everyone on X (formerly Twitter) is celebrating victory in front of their makeup mirrors".

Starting assumptions:

Bitcoin price: $59,135

MSTR stock price: $87.64

Total BTC holdings: 847,363

Cash reserves: $1.4 billion

CEBE (Common Equity Bitcoin Exposure, BTC per common share): 138,161 sats/share

Debt ratio: 41.5%

Then in month 6, the model brutally crashed BTC price to $26,611.

When collateral collapses, fixed-dollar debt layers reveal their inherent nature — their BTC-denominated scale expands sharply.

BTC allocated to senior debt surged from 351,567 to 819,073.

Debt ratio skyrocketed from 41.5% to 96.7%.

BTC holdings attributable to common equity collapsed from 495,796 to 28,290.

CEBE was devastated:

From 138,161 sats/share to 7,884 sats/share.

The model shows Strategy's stock price falling from $87.64 to $1.01.

This is the real horror movie. Would the stock really drop that low in this extreme scenario? I doubt it. During the 2022 bear market, common equity sats exposure saw extremes below -14,000, but the stock never fell below $10.

But the unsettling bearish scenario lies here.

The model assumes:

Zero new BTC purchases, zero common stock issuance.

Monthly expenditure obligation: $167.7 million.

Cash reserves exhausted in month 9.

After cash depletion, BTC sales begin.

Over three years, Strategy must sell 115,727 BTC to maintain solvency of the entire capital structure. That's the real damage.

But even so, it still ends with 731,636 BTC.

Final state:

Bitcoin price: $48,498

MSTR stock price: $51.86

mNAV: 1.40x

BTC held by common equity: 274,093

CEBE: 76,380 sats/share

Debt ratio: 62.5%

Strategy survived. Common equity went through 18 months of purgatory, but it survived.

The real risk is not the "instant bankruptcy" that FUD (Fear, Uncertainty, and Doubt) spreaders claim.

The real risk is: when fixed-dollar senior debt temporarily devours almost the entire Bitcoin stack (in BTC equivalent), CEBE (common equity BTC exposure) gets extremely compressed.

"Surviving" does not mean "comfortable".

So, does it mean Strategy will "death spiral"? The model says no.

BTC-0.82%
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