Strategy(MSTR.US)Founder Seth "clashes" with shorts: Will not sell even if Bitcoin drops 90%, will address debt pressure through refinancing

Amid the continued sharp decline in Bitcoin prices, Strategy (MSTR.US) founder and CEO Michael Saylor publicly denied on Tuesday that the company would liquidate its holdings due to Bitcoin’s drop, reaffirming confidence in the company’s financing ability and Bitcoin’s long-term value.

In an interview, Saylor stated that even if Bitcoin were to fall 90% over the next four years, Strategy would not be forced to sell its Bitcoin but would instead respond to debt pressures through refinancing. “If Bitcoin drops 90%, we will restructure our debt,” he said, emphasizing that banks are willing to continue lending to the company because they recognize the inherent value in Bitcoin’s volatility.

In recent years, Strategy has heavily bought Bitcoin through stock and debt issuance, currently holding 714,644 BTC with an average purchase cost of approximately $76,056 per Bitcoin. As Bitcoin’s price fell below $70,000 from a peak of about $126,000 last October, market opinions on Strategy’s financial model and risk exposure have diverged significantly.

As Bitcoin faces increasing downward pressure, the number of investors betting on further declines in Strategy’s stock price is rapidly growing. According to an analysis report released by S3 Partners on Tuesday, since September 2025, Strategy’s short positions have increased by approximately 40%. Currently, about 30.5 million shares are shorted, accounting for roughly 10% of the company’s float.

Meanwhile, Strategy’s stock has also faced selling pressure from both bulls and bears. Since reaching a 52-week high of $455.90 in July last year, the stock has declined by about 70%, with the latest price at $136.94.

S3 notes that early shorting activity mainly targeted hedging arbitrage of Strategy’s $8.2 billion convertible bonds, with shorts selling stock to hedge against downside risk of the bonds. Additionally, well-known short investor Jim Chanos’s Kynikos Associates has engaged in arbitrage by buying Bitcoin and shorting Strategy, as the company’s stock once traded significantly above its Bitcoin asset net value.

However, S3 states that this structure has changed. Since mid-September last year, short positions related to convertible bond arbitrage have decreased by about 2.5 to 5 million shares, while the total short interest in Strategy increased by approximately 9.2 million shares. This indicates that the new short positions are more directly betting against Strategy itself and Bitcoin prices.

S3’s report points out, “Short sellers are increasingly focusing on the pressures faced by Strategy’s financing model.”

Beyond price volatility, a recurring potential risk cited by shorts is the development of quantum computing technology. S3 states that ultra-powerful quantum computers could theoretically crack blockchain encryption protocols, undermining the security of crypto assets and investor confidence. Every breakthrough in quantum technology could serve as a catalyst for periodic shocks to confidence in crypto assets.

S3 notes, “If the development of quantum computing is viewed by the market as a negative factor for Bitcoin, then as the technology advances, investors will repeatedly face new uncertainties.”

Bitcoin has recently experienced continued intense volatility, and market sentiment remains fragile. On Tuesday, Bitcoin’s price stayed below $70,000.

Earlier, Bitcoin briefly rebounded on Monday and crossed above $70,000, but this rally was short-lived. Last week, amid a broad correction in major US tech stocks, Bitcoin fell to $60,000 on February 6, triggering forced liquidations of some crypto assets.

Compass Point analyst Ed Engel said that Bitcoin still faces the risk of retesting $60,000 and could even dip into the $55,000 to $60,000 range. However, he also pointed out that Bitcoin’s average purchase cost (around $56,000) and the 200-day moving average (about $58,000) are converging, making sustained dips below these levels less likely.

Engel believes that high volatility in the crypto market will persist in the near term, potentially limiting the formation of clear directional trends.