Strategy Claims Bitcoin Can Fall 11.4% Yearly for Nearly Six Years

Strategy, an asset management company, claims that its current capital structure can withstand a prolonged decline in Bitcoin prices. According to the company's calculations, Bitcoin could fall by 11.4% each year for nearly six years without pushing Strategy's $BTC Rating below 1.0x.

The claim is based on Strategy's model, which uses a measure called $BTC Floor ARR. The company defines it as 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.

Strategy held 843,775 BTC as of July 19, with an average purchase price of $75,476. The company also reported a $3.225 billion U.S. dollar reserve after raising $263.5 million through common-stock sales.

The cash balance provides less than two years of direct coverage before Strategy needs new financing or capital actions. The company has authorized up to $1.25 billion in Bitcoin sales to build or refill the cash reserve and fund dividends, interest, and approved security repurchases.