More dangerous than FTX? MicroStrategy could trigger the biggest Bitcoin sell-off in history

MicroStrategy, once a software company, has transformed into a major Bitcoin holder with 582,000 BTC ($61B), but its strategy relies on debt, leverage, and shareholder dilution, raising concerns about financial stability.
The company's revolving financing model involves issuing shares/bonds to buy BTC, boosting stock prices, and repeating the cycle—a process critics call financial engineering rather than sound investment.
With an average BTC cost of $70,000, a sharp price drop could trigger massive unrealized losses (currently $5.9B), forcing asset write-downs and potential liquidation.
New accounting rules (ASC 350-60) expose volatility risks, and a class-action lawsuit alleges MicroStrategy concealed these risks while aggressively diluting shares.
If BTC falls below $87,000, analysts warn of forced selling, which could destabilize the crypto market due to MicroStrategy's 2.77% global BTC holdings.
Unlike compliant Bitcoin ETFs, MicroStrategy operates as a speculative, sentiment-driven entity, losing ground to transparent alternatives like BlackRock’s IBIT.
A collapse could spark a chain reaction, eroding confidence in corporate BTC adoption and disproportionately impacting retail investors misled by celebratory "buy more" narratives.
The takeaway: MicroStrategy represents a systemic risk—investors should scrutinize financials, not hype, as true crypto participation requires risk awareness, not blind faith.

1️⃣ From software company to “Bitcoin vault”

Back in 2020, MicroStrategy has transformed from a boring software company into a “Bitcoin corporate treasury.”

As of now, they hold 582,000 BTC, worth more than $61 billion
It sounds like faith, but behind it is:
➔ Debt + Leverage + Shareholder Dilution

This isn’t “Bitcoin maximalism”, this is a combination of financial engineering + market bubbles.

2️⃣ Their rules of the game: revolving financing

Issue more shares or bonds ➔ Buy BTC ➔ Announce news ➔ Stock price rises ➔ Continue financing ➔ Repeat

This is not investment logic, this is a financial cycle.

Moreover, they have just approved another $1 billion in additional issuance quota through the **"ATM Program"**, preparing to continue diluting the market.

Retail investors think it is "good news", but in fact your shares are being quietly diluted.

3️⃣ The trigger of the crisis: average holding cost

MSTR’s average BTC cost: about $70,000
Once BTC falls sharply below this cost line, their book assets will shrink rapidly.
The current unrealized losses on the books have reached $5.9 billion

No matter how loud the slogans are, auditors and creditors will not buy them.

4️⃣ Will it really collapse? Risks are accumulating

New accounting standard ASC 350-60 requires them to disclose asset fluctuations at fair value.
Losses can no longer be hidden. Every time BTC falls, it directly hits the profit table.

In May, some shareholders filed a class-action lawsuit against MSTR, accusing it of concealing volatility risks while continuing to issue additional shares for financing at a high intensity.

5️⃣ What are they?

❌ Not a traditional software company

❌ Not a Compliant Bitcoin ETF

✔ It is a BTC speculative listed company driven by market sentiment and tweets

ETF funds are flowing to more compliant and transparent products such as BlackRock IBIT, and MSTR's role is being marginalized.

6️⃣ What will happen if there is a real crash?

MicroStrategy holds approximately 2.77% of the world's BTC
Once forced to sell, it will become the largest single selling event in history

Without hedging and contingency plans, the entire BTC market will pay for it.

Even worse:

They have "educated" a generation of retail investors, who cheer "We bought it again!" as their slogan of faith.

But the truth is: you are not waiting in the front row for institutions to enter, you happen to be their exit channel.

7️⃣ Standard & Poor's, Standard Chartered Bank and other institutions have issued warnings:

As long as BTC falls below $87,000, it may trigger a wave of forced liquidation
MicroStrategy bankruptcy → Chain reaction → Crypto market confidence crisis

By then, not only MSTR, but any company considering including BTC on its corporate balance sheet will be scared off.

✅ Summary: The bubble has not burst, but the powder keg has been ignited

MicroStrategy is neither a hero nor a villain.

It is one of the biggest risk factors in the crypto market.

If you hold BTC, you must know:
Your fate is tied to theirs.

Don’t just look at tweets about “how much BTC did you buy”, read the financial reports, understand the data, and be alert to risks.

True faith is rational participation after understanding the risks, not blind worship.