640,000 bitcoins on the line: MicroStrategy's life-or-death gamble
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640,000 bitcoins on the line: MicroStrategy's life-or-death gamble
On November 21, 2025, the cryptocurrency market experienced its most intense volatility of the year: Bitcoin's price plummeted from $88,000 to $81,000 within 24 hours, dropping over 8% in a single day and hitting a three-month low. This sharp decline was no accident, as market attention turned squarely to MicroStrategy (Micro Strategy), the world's largest corporate holder of Bitcoin.
Navigating Web3 tides with focused insightsOriginal author: 3 Point Blockchain JayZhou
At this moment, rumors about the company being removed from the MSCI index are intensifying. Institutions like BlackRock adjusting their portfolios have further fueled the fire, spreading market sentiment that "Bitcoin is just one step away from $70,000."
On November 1, 2025, I published an article on my official account titled When Will the Once-Every-Four-Years Bitcoin Bull Market End?, concluding with a strong statement: "This is now the end of the crypto market's狂欢, and altcoins only have a few final days left." I also wrote another piece titled Bear Market as a Cash Machine: 6 Strategies to Earn 10x Against the Trend.
To understand the essence of this crisis, one must first look beyond appearances and clearly see the true nature of MicroStrategy—a company not naturally a "believer in Bitcoin," but rather a traditional tech firm with over three decades of experience that has made an aggressive pivot into crypto assets. Its fate being deeply tied to Bitcoin represents both a high-stakes gamble and a microcosm of global capital’s anxiety toward the traditional financial system.
MicroStrategy: From BI Giant to Aggressive Transformation into a “Bitcoin Public Company”
Prior to becoming known as the “first Bitcoin stock,” MicroStrategy was already a benchmark player in the business intelligence (BI) sector. Founded in November 1989 by 24-year-old Michael Saylor in Delaware, with headquarters in Tysons Corner, Virginia, the company rapidly grew into the world’s largest independent BI service provider thanks to its forward-looking investments in data analytics technology.
1. Glory and Bottlenecks in Traditional BI
MicroStrategy’s core business involves providing enterprises with data analysis, mobile services, and security software solutions. Its three flagship products—MicroStrategy 10, MicroStrategy Analytics, and MicroStrategy Mobile—form a complete enterprise-level data service ecosystem. Notably, MicroStrategy 10 pioneered the integration of business intelligence with data discovery, while its compatibility with Red Hat Linux expanded its market reach, consistently placing it among the top five BI tools in Gartner’s Magic Quadrant.
Leveraging technological advantages, MicroStrategy serves most Fortune 500 companies, government agencies, and educational institutions. With over 2,000 employees globally and operations spanning more than 20 countries and regions, annual revenue remains stable above $500 million. The company went public on Nasdaq in 1998 (stock code: MSTR), and during the peak of the dot-com bubble in 2000, its share price surged 16 times from its IPO level, briefly approaching a market cap of nearly $18 billion, making it a star tech stock at the time.
However, beneath the glory lay hidden growth constraints. In the second decade of the 21st century, competition in the BI industry intensified, with giants like SAP and Oracle entering the fray, gradually squeezing MicroStrategy’s market share. More critically, its reliance on software subscription fees proved insufficient for sustained growth. Prior to 2020, revenues stagnated within the $500–600 million range for years, with volatile net profits. After the 2002 dot-com crash, its market value plummeted 98% to just $40 million, exposing the weak cyclical resilience typical of traditional tech firms.
2. Saylor’s Faith Revolution: From Software Vendor to Bitcoin Evangelist
The turning point in MicroStrategy’s destiny lies entirely in founder Michael Saylor’s personal conviction. A MIT graduate and tech elite, Saylor has long held deep insights into macroeconomics and monetary systems. Following the outbreak of the COVID-19 pandemic in 2020, the Federal Reserve launched massive quantitative easing, expanding its balance sheet by trillions of dollars within months. This triggered intense concern in Saylor about fiat currency depreciation.
After extensive research into various asset classes, Saylor turned his focus to Bitcoin. He firmly believes that fiat currencies are inherently prone to devaluation due to governments’ unlimited money printing, whereas Bitcoin—with its capped supply of 21 million coins and decentralized algorithmic design—possesses natural anti-inflation properties akin to “digital gold,” positioning it as the “ultimate store of value.” This belief is no mere rhetoric; Saylor elevates Bitcoin to the status of the “Holy Grail of digital civilization,” publicly declaring that “the longer you hold Bitcoin, the greater the compounding effect,” and even plans to destroy the private keys to his personal holdings of 17,000 BTC after death, permanently removing them from circulation.
In August 2020, Saylor led MicroStrategy in making a pivotal decision that would alter the company’s trajectory: announcing the purchase of 21,454 bitcoins using $250 million of corporate funds at an average price of approximately $11,700. This marked the beginning of its “corporate Bitcoinization” journey. The move caused a stir across the tech industry, with critics labeling it “diversionary speculation.” However, Saylor responded with continuous buying, gradually attracting companies like Tesla and Block to follow suit, ushering Bitcoin into a new era of institutional adoption.
3. Leverage Frenzy: Betting $27.6 Billion on 640,000 Bitcoins
If the initial purchase was exploratory, subsequent actions fully revealed Saylor’s aggressive approach. To scale up Bitcoin holdings, MicroStrategy abandoned conservative strategies such as reinvesting internal cash flow. Instead, it raised massive capital through convertible bond issuances and share dilutions, creating a “leverage-on-leverage” accumulation model. By June 2025, the company had raised over $27.6 billion through various financing channels, all funneled into Bitcoin purchases.
The scale of this “hoarding race” is staggering. According to the latest disclosed figures, as of November 18, 2025, MicroStrategy acquired an additional 51,780 BTC for $4.6 billion (average price $88,627), bringing its total holdings to exceed 649,870 BTC—over 3% of all mined Bitcoin—and solidifying its position as the top corporate holder worldwide. In cost terms, the total investment stands at approximately $27.9 billion, with an average acquisition price of $62,428. At the market price of $81,000 on November 21, 2025, the unrealized profit reaches $11.7 billion, which fuels its continued accumulation strategy.
Yet behind these impressive numbers lie enormous risk exposures. Debt constitutes a significant portion of MicroStrategy’s funding structure. It raised $3 billion via high-interest convertible bonds, resulting in a leverage ratio exceeding 16x, with annual interest expenses alone reaching $185 million. Even more concerning is the “tight coupling” between the company’s market value and Bitcoin’s price—when Bitcoin rose in February 2024, MicroStrategy’s stock surged 40% in three days; conversely, during Bitcoin’s downturn in November 2025, its shares fell 22%. This correlation implies that if Bitcoin drops below key support levels, it could trigger a deadly spiral of “stock decline → loss of financing ability → forced Bitcoin sales → further price drop.”
Today’s MicroStrategy is no longer a pure BI company. Financial reports show that Bitcoin accounts for 77% of its balance sheet, far surpassing the scale of traditional operations. The U.S. SEC has begun scrutinizing whether its “de facto ETF” business model violates securities regulations, while ESG investors strongly criticize the energy-intensive nature of its Bitcoin mining-related activities (annual power consumption equivalent to Norway’s national usage). This former tech giant has effectively become a testing ground for Saylor’s Bitcoin faith.
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Crisis Erupts: Index Removal Countdown and Institutional Selling in Sync
The sharp Bitcoin drop on November 21, 2025, appears to be a concentrated release of market sentiment, but in reality, it is an inevitable outcome driven jointly by MicroStrategy’s underlying crisis and institutional portfolio adjustments. Among these, the MSCI index removal event became the “final straw” breaking market confidence.
1. Rule-Based Blow: MSCI’s “50% Threshold” and $9 Billion in Selling Pressure
MSCI (Morgan Stanley Capital International), as the world’s most influential index provider, directly influences the flow of trillions of dollars in passive funds through changes in index constituents. Its rules explicitly state: when a company’s cryptocurrency assets exceed 50% of its total assets, it will no longer be classified as a “public company,” but instead treated as an “investment fund,” leading to exclusion from major indices such as the MSCI Global Index and S&P 500-linked indices.
This rule is nothing short of “fatal” for MicroStrategy. As previously noted, Bitcoin assets already constitute 77% of its balance sheet, far exceeding the 50% threshold. MSCI’s October 2025 announcement confirmed its formal removal from relevant indices effective January 15, 2026. This means global pension funds, index ETFs, and other passive funds tracking these indices must liquidate their MicroStrategy shares before the deadline.
According to Goldman Sachs estimates, the volume of passive funds affected by this delisting totals around $9 billion. Although these funds are selling MicroStrategy stock—not directly dumping Bitcoin—the market’s anxiety has already spread. Investors widely fear that if MicroStrategy faces cash flow strain due to a plunging stock price, its 640,000 BTC holdings may be tapped as “liquidation assets.” More critically, selling 640,000 BTC would represent roughly 15% of Bitcoin’s daily trading volume—an overwhelming shock if released en masse.
This “anticipatory panic” peaked on November 21. That day, rumors circulated that a large institution had begun early divestment from MicroStrategy stock, triggering retail sell-offs. The company’s share price plunged 15% intraday, while Bitcoin markets saw a flood of stop-loss orders, driving prices down sharply from $86,000 to below $81,000—the largest single-day drop since the 2024 halving.
2. Institutional Exit: BlackRock Rebalancing and Collapse of Market Confidence
MicroStrategy’s crisis served only as the spark; moves by institutions like BlackRock amplified the panic. As the world’s largest asset manager, BlackRock’s Bitcoin ETF, approved in 2024, once managed over $80 billion in assets, making its actions a key barometer of institutional sentiment toward crypto.
In mid-November 2025, disclosed holdings showed BlackRock’s Bitcoin ETF reduced its BTC position by 12,000 coins, sparking rumors of “giant retreat.” Although BlackRock later clarified this was merely “routine rebalancing”—representing only 1.5% of total holdings—and simultaneously increased exposure to Ethereum and other cryptos, the news was magnified amid prevailing fear.
More importantly, institutional risk aversion is rising. U.S. Treasury data shows federal debt breached $40 trillion by November 2025, with the Fed potentially initiating an interest rate hike cycle in 2026 to combat inflation. Under these conditions, hedge funds including Bridgewater and Soros Fund Management are reducing allocations to risky assets, with highly volatile Bitcoin a natural candidate for reduction. CoinShares reported outflows from crypto investment products reached $1.8 billion in the third week of November—the highest weekly outflow since the 2022 bear market.
MicroStrategy’s crisis and institutional sell-offs created a “resonance effect”: retail investors worried about potential forced BTC sales, while institutions reduced positions due to macroeconomic concerns. Together, they triggered a brutal “crowded long unwind” in Bitcoin markets. On November 21 alone, derivative market liquidations hit $3.2 billion, with Bitcoin-related positions accounting for over 70%, as massive leveraged longs were forcibly closed, accelerating price declines.
Reevaluating Holding Logic: Saylor’s “Peak Theory” Misconception and the Long-Term Bet
Facing severe market volatility, a central question emerges: Is MicroStrategy still accumulating Bitcoin at prices between $80,000 and $100,000 because it truly believes we’re near a price top? The answer is exactly the opposite—Saylor’s holding logic is not short-term speculation, but a long-term, faith-driven gamble.
1. Not Peak Theory, But “Endgame Theory”
Saylor does not believe current prices mark a peak. On the contrary, in a June 2025 public speech, he predicted Bitcoin would surpass $1 million within the next five years. His core arguments are threefold: First, ongoing institutional demand growth—BlackRock and others’ Bitcoin ETF holdings already exceed 150% of annual miner output, creating a supply-demand gap that drives prices upward. Second, fragility in the fiat monetary system—with U.S. debt surpassing $40 trillion, fiat devaluation will push capital toward inflation-resistant assets like Bitcoin. Third, Bitcoin’s scarcity—after the 2024 halving, block rewards dropped from 6.25 to 3.125 BTC, slowing supply growth and reinforcing its scarcity premium.
This “endgame” mindset gives MicroStrategy’s accumulation strategy a distinct “counter-cyclical” character. During the 2022 bear market, when Bitcoin fell to $16,000 and most institutions stood idle, MicroStrategy invested $1.9 billion to buy 120,000 BTC. In November 2025, as prices dipped to the $80,000 range, it added another 50,000 BTC. These “buy-the-dips” moves reflect less a pursuit of short-term gains than a commitment to a long-term “accumulate and wait” strategy.
From a cost perspective, MicroStrategy’s average holding cost is $62,428. At the current $81,000 price, it still enjoys a 30% paper gain, meaning there is no immediate “margin call” pressure. On November 22, Saylor posted on social media: “Our Bitcoin holdings are a long-term hedge against fiat inflation and will not change due to short-term price fluctuations,” aiming to stabilize market confidence.
2. Hidden Risk: The “Achilles Heel” of Leverage Strategy
Despite Saylor’s firm stance, MicroStrategy’s leveraged strategy carries non-negligible risks. As noted earlier, the company owes $185 million annually in debt interest. Its traditional BI business generates about $500 million in annual revenue, yielding roughly $120 million after operating costs—leaving a $65 million shortfall in interest coverage. This means prolonged sideways or declining Bitcoin prices could lead to cash flow stress.
Even more dangerous is the “collateral chain reaction.” Some of MicroStrategy’s financing uses stock or Bitcoin as collateral. If Bitcoin falls below $70,000, the collateral value may no longer cover outstanding debts, prompting lenders to demand margin calls. Failure to meet these could result in forced liquidation. Goldman Sachs estimates MicroStrategy’s “safe margin” corresponds to a Bitcoin price of $68,000—breaching this level could trigger initial forced sales of up to 50,000 BTC.
Market concerns over this risk are already reflected in derivatives data. Bitcoin options markets show a surge in put option open interest at the $70,000 strike for December expiry, reaching 23,000 contracts—a 80% increase from a week prior—indicating many investors are hedging against a break below $70,000.
Bitcoin Price Outlook: Defense of the $70K Level and Long-Term Value Anchors
Given MicroStrategy’s crisis and institutional withdrawals, will Bitcoin fall below $70,000 in the short term? What about its long-term trajectory? Combining technical, funding, and fundamental analysis, we can examine this from three dimensions: support levels, downside potential, and long-term drivers.
1. Short-Term Support: $75,000–$78,000 as the “First Line of Defense”
Technically, the $75,000–$78,000 range is a critical support zone for Bitcoin. This interval was a dense trading area in the first half of 2025, representing accumulated cost bases for both institutional and retail investors. It also marks the launch point post-2024 halving, giving it strong psychological significance.
Funding data indicates early signs of bottom-fishing capital entering. When Bitcoin dipped to $81,000 on November 21, the Grayscale Bitcoin Trust (GBTC) premium recovered from -2% to +0.5%, suggesting institutions began accumulating via trust vehicles. Middle Eastern sovereign wealth funds and family offices also increased positions during this period. Abu Dhabi’s sovereign fund disclosed raising its Bitcoin holdings from 12,000 to 15,000 BTC at an average price of ~$80,000.
Additionally, MicroStrategy’s near-term actions will influence support stability. If the company raises additional capital through stock issuance in December or negotiates debt rollovers with creditors, fears of “forced liquidation” could ease, supporting Bitcoin’s price. Market expectations suggest Saylor may announce a new financing plan in early December to restore investor confidence.
2. Extreme Scenario: Battle for $70K and Downside Limits
If market panic continues escalating, Bitcoin could test the $70,000 level—a price marking both MicroStrategy’s “safety margin” and the liquidation line for much leveraged capital. A breach below $70,000 could trigger dual shocks: first, forced liquidation of part of MicroStrategy’s collateral, releasing 50,000 BTC of selling pressure; second, retail follow-the-leader sell-offs, amplifying the decline.
However, even if $70,000 breaks, the downside space remains limited. Historically, within 12 months following a halving, Bitcoin’s lowest price typically stays above the pre-halving peak (the 2024 pre-halving high was $65,000). The $68,000–$70,000 range is likely to form a “value floor,” attracting large-scale inflows from long-term investors.
In extreme cases, Bitcoin might briefly touch $65,000—but this would only occur under scenarios like a “systemic global financial crisis” (e.g., a >20% plunge in U.S. equities) or “massive default by MicroStrategy.” While the global economy faces inflationary pressures today, no systemic crisis signals have emerged yet, making such extreme outcomes less than 5% probable.
3. Long-Term Drivers: Dual Support from Scarcity and Institutional Adoption
Beyond short-term noise, Bitcoin’s long-term bullish thesis remains intact, anchored by two pillars: “strengthened scarcity” and “deepening institutional allocation.”
On scarcity, after the 2024 halving, Bitcoin’s annual inflation rate dropped from 1.7% to 0.85%, now lower than gold’s 1.6% annual mining rate, further highlighting its “digital gold” credentials. As the next halving approaches in 2028, expectations of tighter supply will increasingly factor into pricing—this is one of Saylor’s core rationales for long-term holding.
On institutional adoption, despite short-term rebalancing by firms like BlackRock, the long-term influx of capital remains unchanged. Data shows institutional allocation to crypto still stands below 1%, far less than traditional assets like stocks and bonds. Fidelity Investments forecasts that global pension funds will allocate around $50 billion to Bitcoin by end-2026—enough to push prices back above $100,000.
More importantly, MicroStrategy’s crisis may accelerate the crypto market’s “deleveraging” and “regulatory maturation.” Regulators may introduce clearer rules targeting “corporate large-scale crypto holdings” to prevent recurrence of similar leverage risks. Meanwhile, institutional investors may increasingly favor compliant ETF products over high-risk vehicles like MicroStrategy. Such structural shifts will mature the Bitcoin market and lay the foundation for sustained long-term growth.
Conclusion: A Financial Experiment on Faith Versus Rules
MicroStrategy’s Bitcoin gamble and Bitcoin’s short-term volatility represent, at their core, a collision between traditional financial rules and emerging assets. Saylor is staking an entire public company on his Bitcoin faith, while the market swings repeatedly between fear and reason.
For investors, the immediate priority is monitoring the battle for the $70,000 level, closely watching MicroStrategy’s financing progress and the aftermath of MSCI index adjustments. In the long run, however, Bitcoin’s scarcity and institutional demand remain unchanged—short-term fluctuations are merely “normal price corrections around intrinsic value.”
The January 15, 2026 deadline for MSCI delisting draws ever closer, marking a pivotal moment for both MicroStrategy and Bitcoin. The final outcome of this experiment will not only determine one company’s survival but may also reshape global capital’s perception of crypto assets and rewrite wealth dynamics for the next decade. Regardless of the ending, MicroStrategy’s radical transformation has already etched a bold chapter in financial history—paying a steep “tuition fee” for the institutionalization of cryptocurrency through its own risk-taking.
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