MicroStrategy’s Possible Collapse: A 2026 Crypto Black Swan Event
MicroStrategy, one of the largest corporate holders of Bitcoin, owns approximately 671,268 BTC. This represents over 3.2% of all Bitcoin in circulation, presenting significant risks to the cryptocurrency market. The company’s reliance on Bitcoin has drawn concerns that its potential collapse could be more damaging than the 2022 FTX incident.
MicroStrategy’s Financial Position
MicroStrategy has invested over $50 billion in Bitcoin, mainly through debt and stock sales. While its software division generates around $460 million annually, this is minimal compared to its Bitcoin investments. As of December 2025, the company’s market cap sits at about $45 billion, but its Bitcoin holdings are valued at approximately $59 to $60 billion.
Risks of Collapse
Nearly 95% of MicroStrategy’s valuation is tied to Bitcoin’s price. Recently, the average cost of acquiring Bitcoin for MicroStrategy stood at about $74,972. The company faced significant losses when Bitcoin saw a 20% drop since October 10, 2025, with MicroStrategy stock losing double that amount during the same timeline.
Debt and Financial Obligations
As of late 2025, MicroStrategy’s debt exceeds $8.2 billion in convertible debt and over $7.5 billion in preferred stock. The company incurs annual cash outflows of $779 million for interest and dividends. A sharp decline in Bitcoin prices below $13,000 could signal insolvency for MicroStrategy. While such a drop isn’t imminent, Bitcoin’s past performance shows 70-80% drawdowns are not unusual.
Market Impact of a Potential Collapse
Unlike FTX, which was an exchange, MicroStrategy’s failure would have deeper implications for the crypto market. It holds more Bitcoin than all but a few ETFs and governmental entities. If market panic occurs over MicroStrategy’s financial difficulties, Bitcoin’s price could plummet, creating a feedback loop that impacts all cryptocurrencies.
- Current Bitcoin holdings: 671,268 BTC
- Market value of BTC: Approximately $59-$60 billion
- MicroStrategy’s debts: Over $15.7 billion
- Annual cash outflows: $779 million
Future Outlook and Risks
As of late 2025, MicroStrategy holds $2.2 billion in reserve, allowing it to cover payouts for two years at current levels. However, if Bitcoin drops significantly and capital markets become restrictive, this reserve may dwindle quickly. The probability of a collapse in 2026 is estimated at 10-20%, given the current turmoil surrounding its financial position and market dynamics.
Should a massive sell-off occur, the impact on Bitcoin could be severe. MicroStrategy’s eventual liquidation could undermine market confidence, potentially triggering widespread declines across the cryptocurrency sector.
