Strategy says its current capital structure could withstand a prolonged, steady decline in Bitcoin while continuing to fund interest payments and preferred stock dividends.

According to company data, Strategy’s structure could support those obligations through 5.8 years of annual Bitcoin declines. The company also reported a $3.225 billion cash reserve that supports preferred dividends and interest payments on debt. The stress test is based on Strategy’s own BTC Rating metric, not an assessment from an independent credit rating agency.

The issue matters because Strategy uses Bitcoin as its primary treasury reserve asset while also carrying debt and preferred equity obligations. That makes its ability to cover cash payments, raise capital or sell Bitcoin central to how its balance sheet is assessed during weaker Bitcoin markets.

In a July 25 post on X, Strategy said Bitcoin could fall 11.4% per year for 5.8 consecutive years without pushing its company-defined BTC Rating below 1.0x.

At today’s capital structure, $BTC could fall 11.4% annually for 5.8 years, and Strategy could still fully fund interest and preferred dividends while maintaining a 1.0x BTC Rating. $MSTR pic.twitter.com/NqL5ZTV9Gg — Strategy (@Strategy) July 25, 2026

At today’s capital structure, $BTC could fall 11.4% annually for 5.8 years, and Strategy could still fully fund interest and preferred dividends while maintaining a 1.0x BTC Rating. $MSTR pic.twitter.com/NqL5ZTV9Gg

The statement came as Bitcoin traded near $64,463 and Strategy shares closed at $91.67 on July 24. Bitcoin was still below Strategy’s average purchase price, while MSTR had declined sharply from its earlier peak. The company’s exercise describes a steady multi-year decline, not a sudden crash, and it is not a guarantee that Strategy could meet every obligation under all market conditions.

What Strategy’s Bitcoin stress test measures

Strategy’s model relies on a metric 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. The calculation includes preferred dividend payments and interest payments. Strategy’s current credit metrics dashboard puts that floor at negative 11.4% over 5.8 years.

The company wrote that, “At today’s capital structure, BTC could fall 11.4% annually for 5.8 years” while Strategy continued to fund interest and preferred dividends. A 1.0x BTC Rating means the measured Bitcoin reserve still equals the claims included in Strategy’s formula. Strategy uses the calculation to describe balance-sheet coverage, rather than Bitcoin’s likely future price.

The metric also differs from a conventional credit rating. Strategy developed the measure internally and publishes it for illustrative purposes. The company does not present the stress test as evidence that Bitcoin will decline at a constant rate, or that its financing structure can withstand every possible form of market disruption.

Cash reserves and Bitcoin sales underpin the model

Strategy held 843,775 BTC as of July 19. The company acquired the coins for about $63.69 billion at an average price of $75,476. It also reported a $3.225 billion U.S. dollar reserve after raising $263.5 million through common-stock sales. As crypto.news reported, Strategy did not buy or sell Bitcoin during that week.

The reserve is intended to support preferred dividends and interest on outstanding debt. Strategy’s current figures put annual interest and dividend obligations at about $1.7 billion. That means the cash balance provides less than two years of direct coverage before the company would need new financing, Bitcoin sales or other capital actions.

Strategy established a broader Digital Credit Capital Framework in June. The plan authorizes up to $1.25 billion in Bitcoin sales to build or replenish the cash reserve. It also allows selected Bitcoin sales to fund dividends, interest payments and approved security repurchases. Strategy increased the STRC preferred dividend rate to 12% and approved separate $1 billion buyback programs for common and preferred securities.

Between June 29 and July 5, Strategy sold 3,588 BTC for about $216 million. The company used the proceeds for preferred distributions and reserve replenishment. Those sales reduced its holdings from 847,363 BTC to 843,775 BTC.

Strategy says its BTC Rating is not a credit rating

Strategy’s metric definitions state that BTC Rating is an internal, illustrative measure. It is not issued by an independent credit rating agency. The metric does not measure liquidity, solvency or reported financial performance. Strategy also says the calculation does not account for potential cross-defaults under its debt agreements.

The model uses the notional value of preferred stock, though some securities may have liquidation preferences above that amount. Its dividend coverage measure also assumes Strategy can refinance existing debt on broadly similar terms without repaying principal. Those assumptions may not apply during a severe funding shock or market shock.

Preferred dividends also require approval from Strategy’s board. The company can adjust STRC’s variable rate each month, and cash payments are not guaranteed. If its funding position weakens, Strategy may issue shares, sell Bitcoin, reduce distributions where permitted or restructure obligations. As a result, a 1.0x outcome in the model does not eliminate refinancing, dilution, execution or market risks.

Bitcoin and MSTR remain under pressure

Bitcoin traded around $64,463 on July 26, about 49% below its October 2025 peak near $126,000. MSTR closed at $91.67 on July 24. Investors continued to monitor Bitcoin’s price, Strategy’s cash needs, preferred dividend costs and the company’s market value relative to its Bitcoin holdings.

Strategy’s financing model has worked best when MSTR traded above the value of its Bitcoin reserve. That premium allowed the company to sell shares and increase Bitcoin per share. A lower market premium made new issuance less attractive and pushed Strategy to prioritize building cash instead of buying more Bitcoin.

The company has also moved from a primarily accumulation-focused approach toward more active capital management. Its current framework includes share sales, cash reserves, potential Bitcoin sales and repurchase programs. Crypto.news analysis noted that Strategy’s market premium, or mNAV, remains central because it determines whether common-stock issuance can increase Bitcoin per share.

The stress test reflects Strategy’s view of how long its current assets could support its financing structure under a steady decline in Bitcoin. It does not forecast Bitcoin’s direction and does not cover every type of market stress. Future results will depend on Bitcoin prices, access to capital, dividend decisions, debt terms and Strategy’s use of authorized Bitcoin sales.