Odaily reported that debate has intensified around whether Strategy (MSTR) could face a so-called “death spiral” of selling. The concern emerged after Bitcoin briefly fell back to around $60,000, prompting renewed discussion about the stability of Strategy’s leveraged treasury model. Wall Street firms including Benchmark and TD Cowen have pushed back against that bearish narrative in their reports, while maintaining a “buy” rating on Strategy.
Benchmark Points to Cash and Bitcoin Reserves
Benchmark analyst Mark Palmer said the “death spiral” thesis overlooks several layers of protection within Strategy’s balance sheet and capital structure. According to Palmer, before any large-scale Bitcoin sale would take place, the company would first have to use roughly $1 billion in cash reserves for dividend payments. In addition, Strategy’s current Bitcoin holdings, valued at about $55 billion, provide another major buffer against forced asset sales.
STRC Described as a Core Funding Engine
The reports also identified STRC as an important part of Strategy’s defensive structure. STRC is a type of perpetual preferred stock designed to maintain a price of around $100 while offering a floating annualized yield of about 11.5%. The analysis describes the structure as operating through a cycle of yield demand, financing and additional BTC accumulation, positioning it as a core funding engine for Strategy’s long-term treasury model.
TD Cowen also offered a supportive assessment of the structure. The firm said STRC has shown relatively low volatility even during sharp Bitcoin pullbacks, helping stabilize Strategy’s capital structure. TD Cowen described STRC as an instrument for yield and capital protection rather than a purely high-risk speculative product, aligning with Benchmark’s emphasis on cash reserves, Bitcoin holdings and financing design.
Criticism remains in the market, however. Some market voices argue that the structure could create a risk mechanism similar to a negative feedback loop, with asset-sale pressure emerging under extreme conditions. As a result, the debate around Strategy continues to center on whether its cash buffer, STRC mechanism and Bitcoin reserves are sufficient to withstand severe market stress.