Strategy Inc. just showed its math on what happens if Bitcoin craters, and the answer is: not much. The company’s BTC Floor metric confirms that every single one of its debt and preferred stock instruments holds a coverage rating above 1.0x even if Bitcoin plummets to $21,000, a level roughly 80% below current prices.
The numbers behind the floor
Strategy’s BTC Floor Annualized Return, a metric the company uses to gauge the minimum performance its Bitcoin reserves need to deliver, currently sits at -11.34%. That figure represents the worst annualized return Bitcoin could deliver before the company’s obligations start looking shaky.
Put differently: Bitcoin would need to decline at roughly 11% per year, compounded over the weighted credit duration of about 5.79 years, before Strategy’s coverage ratios dip below the critical 1.0x threshold.
The company’s internal modeling goes further than the $21K scenario. Financial projections suggest the over-collateralization framework could withstand Bitcoin prices as low as $7,000 to $8,000 per coin before the math truly breaks.
