Bitcoin Updates: S&P Rating Cut Highlights MicroStrategy's Liquidity Challenges Tied to Bitcoin

Shares of MicroStrategy (MSTR) dropped close to 5% to $263 on Thursday, deepening a 40% slide since July as the company gets ready to announce its quarterly results under increased attention for its Bitcoin-centric approach, according to a

. The decline comes after S&P Global Ratings downgraded the company’s bonds to junk status, as highlighted in a , which pointed to MicroStrategy’s significant Bitcoin holdings and ongoing liquidity concerns. Even with recent Bitcoin acquisitions and a shift in branding to "Strategy," the company’s financial stability remains closely linked to the unpredictable cryptocurrency, and experts are split on its long-term prospects, according to a .

According to GuruFocus, S&P Global Ratings cut MicroStrategy’s rating to a speculative B-, marking the first time a company with a "Bitcoin treasury" has received this grade. The agency noted the company’s $74 billion in Bitcoin assets—purchased using $15 billion in convertible bonds and preferred shares—while cautioning about currency mismatches and the risk of forced Bitcoin sales if prices drop. The firm’s balance sheet is heavily weighted toward Bitcoin, with debts in U.S. dollars, creating a fragile financial setup, as detailed in the TradingView article. S&P also pointed out that $5 billion in convertible bonds, currently out of the money, are due in 2028, adding to the pressure as MicroStrategy will owe $640 million per year in preferred dividends starting October 2025, GuruFocus added.

Despite these challenges, MicroStrategy has kept up its aggressive Bitcoin buying, acquiring 390 more coins for $43.4 million in the week ending October 26, as reported by a

. This purchase, financed through at-the-market sales of perpetual preferred shares, brings the company’s total Bitcoin holdings to 640,808 coins, worth about $73.7 billion, according to a . The average cost per Bitcoin stands at $74,032, which is well below the current market price of $115,100, indicating a profitable position, as noted in a . Nevertheless, analysts warn that this leveraged position increases the risk of losses if Bitcoin’s value declines, as discussed in an .

The company’s upcoming earnings release, scheduled after the market closes, will focus on its AI-powered business intelligence efforts and financial results, according to the AskTraders preview. Third-quarter revenue is expected to reach $116.93 million, a slight 0.7% increase year-over-year, but analysts predict a sharp swing in earnings per share (EPS), potentially jumping from -$1.72 to $9.67, as highlighted by AskTraders. MicroStrategy’s recent debut of "Mosaic," an AI-driven analytics tool, is intended to broaden its revenue base, though its impact on the company’s total value is still limited, the AskTraders preview notes.

Technical analysis shows

is hovering near a key support level at $260, and a drop below this point could trigger further declines toward $240, according to the Benzinga report. On the other hand, a move above $305–$320 may indicate a recovery. With the RSI around 43 and low trading volume, the market appears cautious ahead of a possible breakout, as also mentioned in the Benzinga update regarding recent Bitcoin acquisitions.

Expert opinions remain divided. TD Cowen has maintained a $620 price target (representing a 114% gain from current prices), citing the growing acceptance of Bitcoin and MicroStrategy’s status as the largest public holder, according to the TradingView article. However, some warn about the risks of heavy reliance on cryptocurrency, with Cantor Fitzgerald reducing its target to $680 in July and TD Cowen lowering theirs to $1,450 in September, as referenced in the AskTraders preview. The S&P downgrade and the company’s shrinking net asset value premium—which is now nearly gone—have heightened worries about its leveraged approach, as previously reported by Benzinga.