Bitcoin Drops 21% as Strategy Debt Buyback Sparks Market Concerns

Bitcoin has fallen roughly 21% in just 10 days, slipping to the $61,000 level for the first time in four months. The decline came after Strategy, one of the largest corporate holders of Bitcoin, announced plans to repurchase part of its convertible debt, leading to a temporary pause in its aggressive Bitcoin accumulation strategy.

Since March, Strategy had acquired 126,016 BTC worth approximately $9.31 billion, helping support market sentiment. However, the company recently used $1.38 billion raised through equity offerings to buy back debt, reducing its cash reserves and raising questions about future Bitcoin purchases.

Investors Question Risk of Bitcoin Liquidation

Concerns have emerged over whether Strategy could eventually be forced to sell part of its Bitcoin holdings. Despite growing speculation, the company’s financial position remains relatively strong. Strategy’s net leverage stands at around 11%, a level many analysts consider conservative given the size of its Bitcoin reserves.

Importantly, the company has no debt agreements that require automatic Bitcoin sales if prices fall. Analysts note that Strategy could raise capital through additional stock offerings rather than liquidating digital assets.

STRC Performance and ETF Outflows Remain Key Factors

Market participants are also watching Strategy’s preferred stock, STRC, which has traded below its $100 benchmark level. The stock plays an important role in the company’s fundraising strategy and has helped generate billions of dollars this year.

Bitcoin Recovery Faces Challenges

Some analysts warn that fears surrounding a potential future Bitcoin sale could create a negative feedback loop, discouraging new buyers from entering the market. At the same time, continued selling pressure from spot Bitcoin ETFs has weakened overall demand.

For now, many traders believe a sustained Bitcoin rally above $70,000 may remain difficult unless investor confidence improves, STRC recovers toward $100 and ETF flows return to positive territory.