Bitcoin Obsession Costs Saylor — S&P Tags Strategy As ‘Junk’

Strategy Inc., formerly MicroStrategy, received a junk credit rating of B- from S&P Global Ratings due to its heavy reliance on Bitcoin. S&P sees the company's balance sheet as closely tied to Bitcoin's price, making it risky under traditional credit rules because of its volatility. Strategy's large Bitcoin holdings, worth approximately $73 billion, are viewed differently than traditional equity. A key concern is the mismatch between dollar-denominated obligations and Bitcoin-dominated assets, potentially forcing Bitcoin sales. The company faces billions in convertible and preferred obligations in the coming years, adding to the cash demands. S&P acknowledged Strategy Inc.'s current access to capital markets, resulting in a stable outlook. However, a significant Bitcoin price drop or funding channel tightening could lead to a further downgrade. Investors reacted with mixed signals, some seeing it as a known risk recognition, while others saw a sign of impending correction. This rating may lead to increased trading volume and price volatility in both Strategy shares and Bitcoin.