Strategy Inc., the company led by Michael Saylor that rebranded from MicroStrategy, was hit with a junk credit grade on Monday as S&P Global Ratings flagged its heavy concentration in Bitcoin and weak dollar liquidity.

According to S&P, the firm’s balance sheet is tied closely to the price of Bitcoin and carries risks that traditional ratings models find hard to treat as stable collateral.

Bitcoin Holdings Drive The Score

Based on reports, Strategy’s Bitcoin stack is enormous — about 640,808 BTC on its books — worth roughly $73 billion to $74 billion at recent prices.

S&P said that while the company owns a large digital-asset hoard, the volatility of that asset and the company’s limited cash flow make it risky under S&P’s credit rules.

S&P assigned a B- issuer credit rating and kept the outlook stable. That B- places the company squarely in non-investment-grade territory, signaling a higher chance of stress if markets turn against it.

S&P Global Ratings has assigned Strategy Inc a ‘B-‘ Issuer Credit Rating (Outlook Stable) — the first-ever rating of a Bitcoin Treasury Company by a major credit rating agency. https://t.co/WLMkFqkkCb

— Michael Saylor (@saylor) October 27, 2025

Currency Mismatch And Debt Pressure

Reports have disclosed that S&P was particularly concerned about a mismatch: most obligations are owed in US dollars, but most of the company’s value sits in Bitcoin. This gap can force the sale of Bitcoin to meet dollar payments if prices slide.

Analysts and commentators pointed to sizable convertible securities and preferred-stock commitments that add cash demands on the company. According to filings and market write-ups, the firm faces billions of dollars in convertible and preferred obligations spread over coming years.

Saylor and Strategy have made repeat purchases of Bitcoin as part of their stated plan. Those buys have created big unrealized gains on paper, but S&P’s methodology largely treats the token differently from traditional equity when measuring risk-adjusted capital.

Liquidity, Access To Markets

S&P noted that, for now, Strategy still has access to capital markets, which is why its outlook is stable rather than immediately negative.

But the rating agency warned that a sharp drop in Bitcoin’s price or any sudden tightening of funding channels could trigger a further downgrade.

Market participants will watch funding costs, preferred dividend payments and convertible notes for signs of stress.

Investors reacted with mixed signals in early trading. Some buyers treated the downgrade as a formal recognition of a known risk, while others judged the move as a calibration that won’t stop Saylor’s accumulation strategy if markets stay calm.

Trading volume and price swings in both Strategy shares and Bitcoin may rise as traders reassess odds.

Featured image from Gemini, chart from TradingView

This article was first published on The Bit Journal: Why did the MSTR stock price double despite being given a dismal S&P credit rating, and what does that say about the status of Bitcoin as a financial asset?

The world’s leading Bitcoin treasury firm, Strategy, saw its MSTR stock price double despite receiving a dismal S&P credit rating of B-. The firm maintained that Strategy’s weak liquidity and narrow focus could easily lead to its future collapse.

According to a post by Strategy on the social media platform X, S&P Global Ratings placed the Bitcoin treasury firm in speculative, non-investment-grade territory — aka “junk-bond” status — despite the outlook remaining stable.  However, Strategy CEO Michael Saylor noted that his company was the first digital asset treasury to receive an S&P credit rating, which, he said, was a clear indication of the company’s ongoing success.

Confidence in Strategy’s Long-Term Strategy

Despite the low rating, which indicates a lack of confidence, Strategy’s MSTR stock price turned positive, rising 2.27%, implying about 114% upside from Friday’s close and suggesting that investors had confidence in the firm’s long-term Bitcoin strategy. The special attention from investors at a time when the S&P credit rating took a dim view could serve as a milestone for the cryptocurrency industry.

The firm defended its decision to give a poor S&P credit rating, citing Strategy’s balance sheet as overwhelmingly tied to Bitcoin and stating that its low dollar liquidity and negative risk-adjusted capital outweighed strong access to prudent debt management and capital markets. S&P opines that the company’s structure creates an inherent currency mismatch: most assets are held in bitcoin, while debt and dividend obligations are denominated in U.S. dollars. Commenting on their report, the firm stated in their press release:

“We view Strategy’s high bitcoin concentration, narrow business focus, weak risk-adjusted capitalization, and low U.S. dollar liquidity as weaknesses.”

Facts the S&P Credit Rating Overlooked

In reaction to the rating, Matthew Sigel, head of digital assets research at VanEck, posted on X saying:

“The company can service debt for now, but is vulnerable to shocks.”

However, crypto economics are known to live and die on community hype, and Strategy’s branding could be an “X factor” that the S&P credit rating may not have incorporated into its system. Even now, new digital asset treasury firms are still referred to as “MicroStrategies,” a nod to the original company’s outsized reputation. Also, the S&P credit rating may have overlooked that TradFi is increasingly integrated with the broader crypto industry.

Conclusion

Despite the firm’s dismal S&P credit rating, Strategy assigned it a stable outlook, citing its past success in maintaining access to capital markets and managing debt maturities. With the next major maturity date set for 2028, the Bitcoin treasury firm has room to improve, as long as Bitcoin’s price doesn’t collapse.

Glossary of Key Terms

Strategy: A company that has a dual business model: it sells AI-powered enterprise analytics software, but its primary Strategy is to hold a large amount of Bitcoin on its balance sheet.

MSTR: MSTR is the stock ticker for Strategy Inc. (formerly MicroStrategy).

Bitcoin treasury firm: A publicly traded corporation that holds a significant amount of its corporate assets in Bitcoin as part of its treasury strategy.

Frequently Asked Questions about Strategy and Bitcoin Treasury Companies

What is Strategy (MicroStrategy) famous for?

Initially, the company focused on developing software for data mining and business intelligence. Currently, the firm’s Strategy involves leveraging its balance sheet to acquire BTC as a primary treasury reserve asset.

How do Bitcoin treasury companies work?

At their core, Bitcoin treasury companies are firms dedicated to accumulating a digital asset, regardless of whether that was the business’s original intent.

What is MicroStrategy’s Bitcoin Strategy?

MicroStrategy raises capital through convertible notes to buy Bitcoin, which helps Bitcoin’s price rise as they buy a lot of it. The MSTR stock price rises as the value of their bitcoin assets increases, and with a higher stock price, Strategy can raise even more money and buy more bitcoin.

 

Read More: S&P Calls It Junk, Market Calls It Gold: Why MSTR Soars 114% With Bitcoin">S&P Calls It Junk, Market Calls It Gold: Why MSTR Soars 114% With Bitcoin

Bitcoin edged higher on Sunday as signs of easing US-China trade tensions lifted risk assets, while Strategy’s founder hinted the company kept adding to its Bitcoin holdings.

Strategy Keeps Buying

Michael Saylor posted a chart on October 26 that uses orange dots to mark recent purchases. The visual cue has become his shorthand for new buys.

Based on reports, Strategy added 387 BTC between October 13 and October 20, bringing its total to 640,418 BTC. That number is striking on its own. It shows a steady, deliberate approach to buying even when prices are volatile.

Strategy’s disclosed average cost for its Bitcoin stands at $74,010. The company’s moves lately have been small compared with September, when it took in more than 7,000 BTC across several large transactions. The size of any fresh purchases this week has not been publicly revealed.

At the same time, Bitcoin’s market moves were influenced by broader news. The price of Bitcoin rose about 1.6% on Sunday, while Ethereum gained roughly 2.8%. Short-term swings appear driven more by headlines than by a single company’s actions.

It’s Orange Dot Day. pic.twitter.com/5FSGmxwoNS

— Michael Saylor (@saylor) October 26, 2025

Holdings, Valuation And Track Record

Based on reports, at prices a little over $115,000 per BTC, Strategy’s Bitcoin stash is valued at around $72 billion. That valuation implies a paper gain of more than $25 billion over a total cost basis of about $47.4 billion since the program began in 2020.

Reports have logged 83 separate purchase events in that time, a pattern that has left investors with a clear view of the firm’s playbook: buy repeatedly and report afterward.

Some of the buying was concentrated in September, when the firm added thousands of coins in a few large moves. Recently, however, allocations have looked smaller and more frequent. That shift suggests a preference for steady accumulation rather than single big bets.

Buying Behavior And Market Response

Strategy shares have been trading above the company’s net asset value. That fact suggests investors are comfortable owning MSTR as a way to gain Bitcoin exposure without buying the token directly. The company’s method — announce purchases after the fact and let the market reflect the holdings — has been consistent and predictable.

Geopolitical Headlines Drive Volatility

Meanwhile, officials from the US and China signaled progress in trade talks, and that helped calm some investors. According to reports, Scott Bessent told CBS News he expected the threat of 100% tariffs and an immediate export control regime to have receded.

Earlier in October, China announced tighter limits on rare earth exports used in chip manufacturing. On October 11, US President Donald Trump said he would impose an additional 100% tariff on Chinese goods and planned export controls on certain software to take effect on November 1.

Those days of sharp rhetoric caused heavy losses across markets and triggered one of the largest liquidation events in crypto this year.

Featured image from Gemini, chart from TradingView

Bitcoin Magazine

Strategy (MSTR) Earns S&P ‘B-’ Rating, Marking a Major Milestone for Bitcoin-Backed Credit

For the first time in financial history, a major credit rating agency has formally evaluated a company built on a bitcoin-backed credit model. In news covered by Bitcoin Magazine, the S&P Global Ratings has assigned Strategy Inc (MSTR) a ‘B-’ Issuer Credit Rating with a Stable outlook, recognizing not just the company, but the emergence of Bitcoin as collateral inside the credit system. This marks a watershed moment for corporate finance. Bitcoin-backed credit is no longer theoretical. It is now a rated financial reality.

Why This Moment Matters

Until now, Bitcoin had been accepted by equity markets, ETFs, and corporate treasury conversations — but credit markets remained untouched. Credit markets are where legitimacy is ultimately decided because they determine who can borrow, at what cost, and against which assets.

By rating Strategy Inc, S&P has implicitly acknowledged:

• Bitcoin can underpin structured debt and preferred equity.
• A bitcoin-backed credit strategy can be modeled, rated, and priced using traditional frameworks.
• Bitcoin is shifting from speculative asset to recognized collateral within corporate capital structures.

This is not a marketing milestone — it is a structural one. Bitcoin has entered the language of risk-adjusted return, yield, and covenants.

How S&P Interpreted Strategy’s Bitcoin-Backed Capital Model

The rating is speculative grade, but the Stable outlook is critical. It signals S&P’s belief that Strategy can continue to service obligations and access capital markets without selling its Bitcoin reserves — a foundational principle of bitcoin-backed credit.

S&P’s analysis mentions several possible weaknesses:

• High concentration of assets in Bitcoin
• Low U.S. dollar liquidity and negative risk-adjusted capital under S&P’s methodology
• Currency mismatch: long Bitcoin, short U.S. dollar debt obligations
• Limited operating cash flow outside software revenue

However, they also credited Strategy with unique structural strengths:

• No near-term debt maturities before 2027–2028
• Proven access to capital markets — both equity and debt
• A capital stack purpose-built to accumulate Bitcoin without diluting shareholders
• Active liability management via convertible debt and preferred stock instruments

In short, S&P is signaling that bitcoin-backed credit can function — if managed with discipline.

Implications for the S&P 500 and Institutional Legitimacy

Strategy Inc met the S&P 500 inclusion criteria in profitability and market capitalization but was passed over in 2024, widely believed to be due to its Bitcoin-heavy balance sheet. That decision now appears less defensible.

With a formal credit rating, the company shifts from “unrated anomaly” to “rated issuer.” For institutional capital, that distinction matters.

• Index committees can now reference a risk rating — not just a narrative.
• Treasury teams and insurers can benchmark exposure to bitcoin-backed credit against traditional corporate debt.
• This increases (not guarantees) the probability of future index inclusion and passive capital flows.

Bitcoin entering equity indices begins with Bitcoin entering the credit models behind them.

Bitcoin-Backed Credit: The Ideal State of Treasury Strategy

This rating does more than validate Strategy — it validates the architecture of bitcoin-backed credit as the superior evolution of corporate treasury management.

Phase 1 was equity-funded Bitcoin accumulation — high growth but shareholder dilution.
Phase 2 introduced convertible debt and preferred equity — allowing companies to acquire Bitcoin through capital markets rather than operating earnings.
Phase 3, now underway, is full institutional recognition of bitcoin-backed credit — rated, benchmarked, and capable of scaling.

This is the endgame:

• Use capital markets to borrow in fiat
• Use proceeds to acquire Bitcoin
• Service liabilities without selling reserves
• Increase Bitcoin-per-share over time, without issuing new common stock

With S&P formally rating Strategy’s issuer credit, this model moves from innovation to infrastructure.

Why Corporate Finance Leaders Need to Pay Attention

This rating does not compel companies to adopt Bitcoin. But it removes the claim that Bitcoin cannot be integrated into traditional credit systems.

From now on:

• Bitcoin can be factored into risk-weighted capital models and treasury policy.
• Credit and liquidity committees must understand how bitcoin-backed credit affects financing costs, refinancing risk, and balance sheet leverage.
• Investors can now compare Bitcoin-based capital structures against other high-yield or hybrid debt strategies.
• Boards can no longer dismiss Bitcoin as “unratable” or “unclassified.”

A New Chapter for Corporate Finance and Capital Markets

What makes this moment different isn’t that another institution “acknowledged” Bitcoin. That’s happened before with ETFs, GAAP accounting changes, and treasury allocations.

What’s different is where the recognition has now occurred: Not in equity markets. Not in payment networks. But in credit — the foundation of corporate finance and monetary systems.

When a credit rating agency like S&P evaluates a company built on Bitcoin, it does three things that have never happened before:

• It forces Bitcoin into risk models normally reserved for banks, sovereigns, and investment-grade corporations.
• It legitimizes bitcoin-backed credit as a structure that can be analyzed, refinanced, and scaled — not dismissed as speculative.
• It signals to other corporates and lenders that they must now understand Bitcoin not as an investment, but as collateral.

This rating does not mean the model is risk-free. It means the model is real enough to underwrite, stress test, and lend against.

That is the real inflection point — not that S&P approved of Bitcoin, but that they were forced to measure it.

Disclaimer: This content was written on behalf of Bitcoin For Corporations. This article is intended solely for informational purposes and should not be interpreted as an invitation or solicitation to acquire, purchase or subscribe for securities.

This post Strategy (MSTR) Earns S&P ‘B-’ Rating, Marking a Major Milestone for Bitcoin-Backed Credit first appeared on Bitcoin Magazine and is written by Nick Ward.

Bitcoin Magazine

S&P Assigns ‘B-’ Rating to Strategy (MSTR), Citing Bitcoin Exposure and Liquidity Risk

S&P Global Ratings assigned a ‘B-’ issuer credit rating to bitcoin-juggernaut Strategy, reflecting the company’s heavy concentration in bitcoin and limited dollar liquidity. The outlook is stable.

S&P said the rating reflects Strategy’s “high bitcoin concentration, narrow business focus, weak risk-adjusted capitalization, and low U.S. dollar liquidity.” The company reported $8.1 billion in pre-tax earnings in the first half of 2025, almost entirely from appreciation in the value of its bitcoin holdings.

The firm said in their release that while Strategy’s balance sheet is dominated by bitcoin, its management has prudently staggered debt maturities and maintained flexibility by financing primarily with equity.

In other words, this rating means Strategy can meet debt obligations for now but faces significant default risk if market conditions worsen.

Strategy — now effectively a bitcoin treasury company — raises capital through equity and debt issuances to purchase and hold bitcoin. Its securities give investors varying exposure to bitcoin across its capital structure. 

Just today, founder and former CEO Michael Saylor announced a purchase of 390 BTC between October 20 and October 26, spending approximately $43.4 million at an average price of $111,053 per Bitcoin. The firm still operates a small AI-powered analytics business, though it remains roughly breakeven.

JUST IN: S&P Global Ratings has rated a #Bitcoin treasury company for the first time — Michael Saylor’s Strategy pic.twitter.com/oP4j5UIJlj

— Bitcoin Magazine (@BitcoinMagazine) October 27, 2025

A Strategy first

This S&P rating is the first-ever rating of a Bitcoin Treasury Company by a major credit rating agency.

According to S&P, Strategy’s risk-adjusted capital ratio was significantly negative as of June 30, 2025, because the agency deducts bitcoin assets from equity in its calculation. 

Strategy reported $8.1 billion in pre-tax earnings in the first half of 2025. Operating cash flow during the period was negative $37 million.

The agency cited several key risks, including a currency mismatch between Strategy’s bitcoin-denominated assets and dollar-denominated obligations such as interest, debt principal, and preferred dividends. 

S&P also pointed to cybersecurity risks given the company’s reliance on custodians to safeguard its bitcoin.

Strategy holds bitcoin valued at roughly $70 billion, against $8 billion in convertible debt, much of which matures beginning in 2028. Annual preferred dividends total about $640 million, which the company plans to fund through additional stock and preferred equity issuance.

While Strategy’s access to capital markets remains a core strength, S&P warned that a sharp decline in bitcoin prices or loss of investor confidence could impede its ability to refinance debt or pay dividends, potentially leading to bitcoin sales “at severely depressed prices.”

S&P said the rating could be downgraded if access to markets weakens or debt management risks rise. An upgrade is unlikely unless the company improves its U.S. dollar liquidity or reduces reliance on convertible debt.

Strategy’s trillion-dollar endgame

Earlier this year, Michael Saylor laid out an ambitious plan to reshape global finance through Bitcoin.

In an interview with Bitcoin Magazine, Saylor described an “endgame” in which Strategy accumulates a trillion-dollar bitcoin balance sheet, growing 20–30% annually, and uses it as the foundation for a new global credit system.

At the core of his vision is scale: with enough BTC on corporate balance sheets, the long-term appreciation of Bitcoin — historically around 21% annually — would supercharge the capital base.

On top of that, Saylor sees an opportunity to issue bitcoin-backed credit at yields significantly higher than traditional fiat-based debt, potentially two to four percentage points above corporate or sovereign rates.

He argued that over-collateralization could make this system safer than even AAA-rated debt, while simultaneously fueling broader financial growth.

Saylor’s vision extends beyond credit markets. As Bitcoin becomes embedded in corporations, banks, insurers, and sovereign wealth funds, public equity indexes could gradually become indirect bitcoin vehicles.

This, he says, would benefit equity markets and corporate balance sheets while introducing higher yields and greater transparency into financial products.

The implications are broad: savings accounts could yield 8–10% instead of near-zero, money market funds could be denominated in bitcoin, and insurance products could be reimagined around bitcoin collateral.

This post S&P Assigns ‘B-’ Rating to Strategy (MSTR), Citing Bitcoin Exposure and Liquidity Risk first appeared on Bitcoin Magazine and is written by Micah Zimmerman.

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