Strategy’s aggressive Bitcoin (BTC) strategy is again under scrutiny. The company is reportedly enduring complex financial maneuvers to sustain its holdings.

While its initial 2025 convertible bond has already been redeemed, concerns remain over the company’s long-term financial stability. Particularly, its ongoing reliance on debt and stock dilution to maintain its Bitcoin purchases spurred controversy.

Stock Dilution & Debt Loom Large Over Strategy

Recently, Strategy (formerly MicroStrategy) announced the launch of a new perpetual preferred stock offering named STRF or “Strife.”

“Strategy today announced the launch of $STRF (“Strife”), a new perpetual preferred stock offering, available to institutional investors and select non-institutional investors,” the firm’s executive chair, Michael Saylor, said.

Some analysts see the move as a desperate attempt to raise cash. Cinneamhain Ventures partner Adam Cochran pointed out that the company faces a precarious financial position. He highlighted that despite its $53 million operating cash flow, it has a negative $1.06 billion in levered free cash flow.

This means that even with Bitcoin’s price appreciation, the company’s financial obligations are mounting.

“These bond issues continue to worsen each year, diluting the equity they’ve been issuing against,” Cochran stated.

MicroStrategy’s 2025 convertible bond had already been redeemed. However, the company still faces a $1 billion debt due in 2027. Further, its new stock offering suggests a growing urgency to address liquidity concerns.

“…So then this desperate yield-bearing perpetual offering 10% compounding, on a company that is 6x its asset value and negatively losing money, also has no near-term use case. You have to work towards the $1 billion 2027 debt, while paying this off,” he added.

Despite these financial pressures, Strategy continues its aggressive Bitcoin purchasing strategy. Earlier this week, the firm bought $10.7 million worth of Bitcoin, its smallest purchase of 2025. This raises questions about whether the company’s cash reserves are beginning to strain under its debt load.

Bitcoin Strategy Faces Increasing Financial Strain

Recently, reports surfaced suggesting that Strategy might be forced to sell some of its $43 billion Bitcoin holdings if financial conditions worsen.

Such a sale could cause downward pressure on Bitcoin’s price. However, experts warn that the biggest risk is to MicroStrategy shareholders, who would suffer a significant decline in stock value.

“Maintaining investor confidence will be crucial for MSTR in the wake of downswings,” the Kobeissi Letter noted.

Another major issue facing MicroStrategy is its ongoing tax dilemma. Analysts have pointed out that the company faces significant tax liabilities. The obligations come as its Bitcoin holdings could further strain its financial position.

“All the debt that MSTR has taken to buy Bitcoin is unsecured against the Bitcoin. There cannot be a margin call against the Bitcoin,” investor British HODL noted.

With a tax burden that could reach billions, questions remain about how the company intends to balance its obligations while continuing to buy Bitcoin.

MicroStrategy’s struggles highlight broader market concerns about highly leveraged Bitcoin strategies. While Saylor has been a staunch advocate of Bitcoin, his approach to financing these purchases has drawn criticism for being excessively risky.

As competition in the corporate Bitcoin investment space grows and investors become more cautious, MicroStrategy’s financial maneuvers will continue to be closely scrutinized.

BeInCrypto data shows Bitcoin was trading for $83,563 as of this writing. This represents a modest gain of 0.89% in the last 24 hours.

Bitcoin’s (BTC) price has historically experienced multiple bear traps. Depending on market conditions, these traps have appeared in short-term phases or larger timeframes.

Some analysts believe that Bitcoin is currently in such a bear trap and that a bull run will begin after the current phase ends.

What Does Bitcoin Bear Trap Cycle Mean?

A bear trap occurs when an asset’s price (such as stocks, cryptocurrencies, or indices) shows a sharp decline. This drop convinces investors that a bearish trend is starting. However, the price soon reverses and rises again, “trapping” those who sold short or exited their positions, expecting further declines.

According to pseudonymous crypto analyst Finish, Bitcoin’s bull run cycles typically last around nine months. A bear trap often appears in the sixth month of the cycle. During this phase, Bitcoin’s price drops sharply, causing panic and sell-offs. But after that, the price recovers and reaches new highs.

Historical data from previous cycles—including 2011, 2013, 2017, 2021, and the current cycle (2024–2025)—show that this pattern repeats consistently.

“2025 cycle is the same. Six-month bear trap, then a new ATH,” Finish predicted.

In his analysis, Finish also explains the driving forces behind bear traps in each cycle. For example, the 2013 bear trap was triggered by the shutdown of Silk Road, an online black market, and China’s ban on Bitcoin, which caused market panic.

In 2017, the ICO boom fueled Bitcoin’s bull run, pushing its price to $20,000. However, a bear trap emerged in the sixth month due to the launch of Bitcoin futures on the CME exchange. This was combined with media hype and concerns over Tether (USDT), which faced transparency issues.

Similarly, in 2021, Bitcoin soared to $69,000. But the six-month bear trap was triggered by an overheated market sentiment and Elon Musk’s sudden shift in stance on Bitcoin payments.

For the 2024–2025 cycle, Finish believes Bitcoin is currently in its bear trap phase. Macroeconomic factors, especially policies from US President Donald Trump, play a crucial role.

Trump’s policies—such as interest rate cuts, tariff war, and his pledge to make the US the “crypto capital” of the world—have created optimism but also caused short-term price volatility. This aligns with the six-month bear trap model described by Finish.

Additionally, analyst Danny agrees with this outlook. He predicts that Bitcoin’s biggest bull run will officially begin in April 2025 once the current bear trap phase ends. Danny suggests that Bitcoin could reach $300,000 by 2026.

“We’re in the Markup phase, just past a classic bear trap. Historically, the biggest gains follow as Bitcoin dominance dips and capital shifts to mid- and low-cap tokens,” Danny predicted.

However, some analysts have lowered their expectations for Bitcoin’s growth. Ecoinometrics observes that Bitcoin’s growth rate in this cycle is significantly lower than in previous cycles. Ki Young Ju, founder of CryptoQuant, has analyzed Bitcoin’s PnL cycle signals and predicts that Bitcoin’s bull run has already ended.

Trusted Editorial content, reviewed by leading industry experts and seasoned editors. Ad Disclosure

A well-known American economist suggested a relationship between gold, NASDAQ and Bitcoin, saying that a decline in NASDAQ usually leads to a decrease in Bitcoin. 

Peter Schiff explained in a post the correlation between the state of Bitcoin and the market situation of NASDAQ, adding that there is a negative relationship between gold and NASDAQ.

NASDAQ-Bitcoin Connection

Schiff, a renowned Bitcoin skeptic, told his followers on X that the bearish condition of the financial market might influence the price movement of the flagship crypto, saying that if NASDAQ goes down, Bitcoin follows.

The economist said that currently, NASDAQ is down 12%, and could affect Bitcoin. “If this correction turns out to be a bear market, and the correlation where a 12% decline in the NASDAQ equates to a 24% decline in Bitcoin holds, when the NASDAQ is down 20%, Bitcoin will be about $65K,” he added.

The NASDAQ is down 12%. If this correction turns out to be a bear market, and the correlation where a 12% decline in the NASDAQ equates to a 24% decline in Bitcoin holds, when the NASDAQ is down 20%, Bitcoin will be about $65K.

But if the NASDAQ goes into a bear market, history…

— Peter Schiff (@PeterSchiff) March 16, 2025

However, Schiff argued that once NASDAQ entered a bear market, the decline would be much larger, citing what happened in the past.

He explained that after the bursting of the Dot-com bubble, NASDAQ plummeted by nearly 80% while during the 2008 global financial crisis, it dropped by 55%, and, recently, during the pandemic crash in 2020, NASDAQ went down by around 30%.

“The average of those three bear markets is a 55% decline. If this bear market bottoms with just a 40% decline, that would put Bitcoin at about $20K. However, my bet would be that a drop of that magnitude would accelerate Bitcoin’s collapse to much lower levels,” he added.

Yellow Metal Continues To Shine

Schiff might have a bearish outlook on Bitcoin but offered a more optimistic view on gold, saying there is a negative relationship between NASDAQ and gold. 

He said that since the NASDAQ peaked on December 16, 2023, gold has increased by 13%, which is an almost perfect 1-to-1 correlation.

“If that correlation holds too, a 40% drop in the NASDAQ would put gold over $3,800. However, my guess is that if a bear market in stocks coincides with a significant decline in the dollar on foreign exchange markets, gold will rise much higher,” he explained in a post.

Gold-Bitcoin Comparison

Schiff said that even if gold were at $3,800 gold and Bitcoin was at $20,000, in terms of gold, the firstborn crypto would decrease by 85%, adding that it would more likely end the comparison that Bitcoin is a store of value similar to gold.

“There will clearly be no justification for the US government or any state government to keep any Bitcoin in a Strategic Reserve. There will also be no reason for ETF investors to keep holding their positions either. With all that selling, it will be impossible for $MSTR to sell enough Bitcoin to avoid bankruptcy,” he said.

As of writing, Bitcoin is traded at $82,433 with a market cap of over $1.6 trillion.

Featured image from Pexels, chart from TradingView

Editorial Process for bitcoinist is centered on delivering thoroughly researched, accurate, and unbiased content. We uphold strict sourcing standards, and each page undergoes diligent review by our team of top technology experts and seasoned editors. This process ensures the integrity, relevance, and value of our content for our readers.