Strategy: Bitcoin Could Fall 11.4% Annually for Nearly Six Years

Strategy, a company focused on Bitcoin investment, has run a stress test to determine how long its current assets could support its financing structure under a steady decline in Bitcoin's value. According to the test, Strategy's capital structure can withstand a prolonged Bitcoin decline of 11.4% per year for nearly six years.

The stress test used Strategy's internal BTC Rating metric, which measures the lowest constant annual Bitcoin return that would preserve 1.0x coverage of net debt and preferred stock over the weighted duration of its credit structure. The company defines this floor at negative 11.4% over 5.8 years.

Strategy currently holds $3.225 billion in cash reserves, which support preferred dividends and interest on outstanding debt. However, the cash balance provides less than two years of direct coverage before the company needs new financing or Bitcoin sales to refill the reserve.