For nearly two decades, bitcoin’s most strident critics have likened it to the 17th-century “tulip bubble”—a symbol of wild speculation and a swift crash. But the tide seems to be turning. Eric Balchunas, a veteran Bloomberg ETF expert, recently declared that the comparison is outdated and far-fetched.
Balchunas argues that while the tulip market “took a single blow and collapsed” and disappeared after three years, bitcoin has taken six or seven fatal blows, collapsed, then revived, reached new highs and endured for 17 years. That resilience alone is the strongest answer to the skeptics about the value of this digital asset. Even if bitcoin does not generate cash flow like stocks, it still has a similar status to gold or rare works of art.
But as concerns about bitcoin's intrinsic value subside, the market faces a much more real and frightening concern: the safety of Strategy, the company that holds the world's largest bitcoin stash.
After 17 years, bitcoin has proven its mettle by shattering the comparison with tulips (Photo: CoinDesk).
When the "giant" begins to tremble
The story of Strategy (Stock Code: MSTR) is becoming the focus of the global financial world. From a software company, under the leadership of Michael Saylor, Strategy has transformed into a giant "bitcoin treasury", owning up to 650,000 BTC, equivalent to about 60 billion USD and accounting for 3.1% of the total circulating bitcoin supply worldwide.
Strategy's rise was once seen as a testament to institutional acceptance of cryptocurrencies. But with a big boat comes big waves, its outsized position is turning Strategy into a potential "time bomb."
MSTR stock has lost 30% of its value in the past month alone, and is down 65% from its all-time high in November 2024. This decline coincides with a correction in bitcoin, which has fallen from a record high of $126,000 to the $85,000 region.
Observers are asking: Is Strategy "too big to fail"?
The history of world finance has never lacked painful lessons about collapsed monuments. From Enron - the 7th largest company in the US but "disappeared" because of accounting fraud, to Lehman Brothers in the 2008 crisis, or most recently the shock from Silicon Valley and FTX in the crypto industry.
Eli Cohen, a corporate lawyer specializing in digital asset infrastructure, warns that the public company label or large capitalization is not a “get out of jail free card.” If Strategy goes bust, there will be no government bailout like the banks, and shareholders will be the ones to bear the brunt.
Michael Saylor's "First Time" and Liquidity Pressure
What worries the market most is not just the falling stock price, but the change in Strategy's policy. Michael Saylor, once known as a "bitcoin evangelist" for his "buy and hold forever" philosophy, has now had to admit a harsh reality: The company may be forced to sell bitcoin.
Despite repeatedly urging investors to “never sell,” Strategy recently set up a $1.44 billion reserve fund under financial pressure and debt obligations. The move is intended to ensure cash flow to pay dividends and prepare for the worst-case scenario: When the adjusted net asset value (mNAV) falls below 1. In simple terms, if the market values the company lower than the amount of bitcoin it holds, liquidity pressure will force it to sell assets to balance the balance sheet.
Notably, Strategy is saddled with a convertible bond of up to $8.2 billion. If the stock price does not recover enough to convert to equity, they will need a huge amount of cash to repay the debt. The prospect of having to "discharge" bitcoin to pay off debt is no longer just a theory but has been acknowledged by the company's leadership as an existing risk.
Strategy is currently one of the largest bitcoin holding companies in the world, owning about 650,000 BTC, equivalent to nearly 60 billion USD, accounting for about 3.1% of the total circulating bitcoin supply (Photo: Alarmy).
Imagine what would happen if Strategy started to sell off?
According to Katherine Dowling, General Counsel at Bitwise Asset Management, selling assets to restructure finances is a normal business activity. However, with Strategy, the story is not so simple. It is Michael Saylor's previous tough statements that have turned bitcoin holdings into a "religion", and any sale will be seen as a betrayal of trust, causing shockwaves in the entire market.
Trantor, a prominent figure in the decentralized finance world, said that any decision by Strategy to sell BTC would trigger a wave of selling by retail investors and create opportunities for short sellers. The cryptocurrency market, which is already fearful of the "next Terra Luna or FTX", will be extremely sensitive to this information.
More dangerous is the liquidity risk. Sal Ternullo, former head of crypto at KPMG, points out that if Strategy runs into a cash crunch while its stocks are undervalued, it will fall into a death spiral: forced to sell cheap assets to save the stock price, the more it sells, the lower the price, and the deeper the crisis.
While Strategy is still in a relatively strong position with an mNAV of 1.14 and a newly established cash reserve, the specter of risk still lingers. Strategy’s story is now not just a story of a business, but a test of the maturity of the bitcoin market: Can the king of digital currencies absorb the shock if the biggest “shark” runs aground?
There are no guarantees in the financial markets. As industry expert Mitchell Rudy puts it: "Strategy may have enough momentum to weather the storm, but the possibility of failure, however low, cannot be completely ruled out."
Source: https://dantri.com.vn/kinh-doanh/bitcoin-thoat-bong-ma-tulip-nhung-dang-nin-tho-truoc-ca-map-strategy-20251207190755596.htm
Comment (0)