When Strategy stock plunged more than 11% on Tuesday morning, fears of a potential forced liquidation from the self-described “Bitcoin Treasury” company spread across markets.
While those fears are not unfounded—as the company is the largest corporate entity holding Bitcoin—concerns may be overblown.
That’s because structural safeguards make a forced liquidation scenario for Strategy “highly unlikely,” according to analysts at The Kobeissi Letter
The way “convertible notes are structured” with Strategy lends credence to this assertion, The Kobeissi Letter wrote on X on Tuesday.
A convertible note is a short-term debt instrument that converts into equity, typically used to delay discussions about a company’s valuation.
