Benchmark Defends Strategy’s Bitcoin Treasury Amid Stock Slump

Benchmark’s defense of Strategy, formerly known as MicroStrategy, centers on a specific and dramatic price point for Bitcoin. In a note to clients, equity Research Analyst Mark Palmer directly addressed concerns that the company’s steep stock decline could force a liquidation of its crypto holdings. He argued that Strategy would only face an inability to cover its approximately $8.2 billion in outstanding convertible debt if Bitcoin’s price were to fall below $12,700 and remain there. ‘That would require a decline of ~86% from current levels,’ Palmer wrote, characterizing the loudest critics as ‘manifestly unfamiliar’ with the company’s operations.

While acknowledging Bitcoin’s volatile 17-year history has seen drawdowns exceeding 80%, Palmer framed the current scenario differently. He suggested that driving Bitcoin to such lows from its current price of around $85,779 would likely require ‘multiple macro shocks’ to happen simultaneously, a confluence of events he views as improbable at this juncture. This analysis provides a quantitative rebuttal to market fears, establishing a clear—and distant—risk parameter for investors concerned about Strategy’s leveraged position.

Undeterred by the recent market downturn, Benchmark maintained its ‘buy’ rating on Strategy’s stock with a $705 price target. This ambitious valuation is explicitly tied to a long-term bullish outlook for Bitcoin itself, assuming the cryptocurrency will reach $225,000 by the end of 2026. Palmer positioned Strategy not merely as a company holding Bitcoin, but as a specialized financial vehicle. ‘We believe Strategy’s stock remains one of the most powerful asymmetric vehicles in global markets,’ he wrote, citing its ‘balance-sheet architecture, capital-raising engine, and Bitcoin-linked reflexivity’ as sources of ‘upside torque that no other equity can match.’

This thesis underscores the core investment narrative for Strategy: it offers traditional equity market investors a leveraged, corporate-structured exposure to Bitcoin’s price movements. The company, which began its Bitcoin acquisition strategy in 2020 to protect shareholder returns, has since spent $48.3 billion to amass 650,000 BTC. At current prices, this hoard is worth $55.2 billion, cementing Strategy’s status as the world’s largest corporate holder of the digital asset. The stock’s 43% year-to-date decline, however, highlights the double-edged nature of this leveraged exposure, falling even as Bitcoin itself is down only about 9% over the same period.

In a move signaling a strategic adaptation to crypto market cycles, Strategy announced on Monday the formation of a $1.44 billion U.S. dollar reserve. The company stated this fund is designed as a vehicle to provide ‘very smooth continuous dividends’ during periods when Bitcoin’s price is down. This development is significant, as it demonstrates a proactive approach to managing shareholder returns independent of immediate crypto price fluctuations. Notably, the company ‘did not rule out selling the cryptocurrency,’ introducing potential flexibility into its previously staunch ‘hold’ strategy.

The broader market context remains mixed. Bitcoin, recently trading just over $85,779, sits more than 30% below its October record of $126,080, according to data from CoinGecko. Despite U.S. President Donald Trump’s crypto-friendly policies, the asset has erased its early 2025 gains. Yet, sentiment is not uniformly bearish. In a prediction market run by Myriad, a unit of Decrypt’s parent company Dastan, 54% of respondents expect Bitcoin’s next major move to be a rise to $100,000, while the remainder forecast a drop to $69,000. This divergence in outlook mirrors the fundamental debate playing out over Strategy’s own future, caught between Benchmark’s high-conviction bullishness and the market’s present skepticism.