Strategy CEO: Bitcoin needs to drop to $8,000 and stay there for five years to trigger a debt crisis

During the fourth quarter earnings call held on Thursday, Strategy CEO Phong Le stated that the company's balance sheet remains robust at this stage.

Phong Le pointed out that only if the price of Bitcoin drops to $8,000 and maintains that price level for five to six years will it pose a substantial threat to the company's ability to repay convertible debt.

This statement is intended to show investors that despite the current market downturn, the company's balance sheet has a significant safety margin before triggering a liquidity crisis.

When elaborating on the conditions that would trigger a crisis, Phong Le said that only under extreme conditions, namely a 90% drop in Bitcoin to $8,000, would the company be unable to use Bitcoin reserves to repay convertible bonds, at which point it would consider restructuring, issuing new shares, or taking on debt.

According to the company's financial report, Strategy posted a net loss of $12.4 billion in the fourth quarter, primarily due to the price of Bitcoin falling below its average cost basis, resulting in unrealized losses in the company's digital asset reserves.

Despite the impact of the end-of-quarter Bitcoin decline, the company's performance and market valuation experienced unrealized losses. However, Chief Financial Officer Andrew Kang emphasized that the company's operations will remain focused on long-term strategy and will not alter established policies due to short-term market fluctuations.

The company's executive chairman, Michael Saylor, expressed agreement with this strategy, stating that while quarterly fluctuations are severe and concerning, the company's strategy is focused on the long term and aims to withstand short-term price volatility, including current extreme conditions.

Additionally, Saylor criticized recent market fears about Bitcoin facing quantum attacks as 'terrible FUD.' He noted that quantum computing technology is still in its early stages and is not expected to pose a real threat for at least the next decade.

Saylor also emphasized that the entire financial system faces the same quantum threat challenges, and the Bitcoin network has the capability to upgrade to quantum-resistant protocols through global consensus in the future.

In summary, the core message from the Strategy management this time is to stabilize investors' confidence in the company's strategy and financial health amidst market panic by clearly defining the debt safety net, reaffirming the long-term holding strategy, and debunking fears of technological threats.

#Strategy #Quantum Threat