MicroStrategy Gets B- Credit Rating From S&P: High Bitcoin Exposure, Low USD Liquidity

Introduction

S&P Global Ratings assigned Michael Saylor’s MicroStrategy a B- credit rating, placing it firmly in speculative “junk bond” territory while maintaining a stable outlook. The agency cited the company’s narrow business focus on Bitcoin, high BTC concentration, weak risk-adjusted capitalization, and low U.S. dollar liquidity as key weaknesses. MicroStrategy holds 640,808 BTC, largely financed through equity and debt, creating what S&P called an “inherent currency mismatch,” since its debt is denominated in USD while much of its dollar reserves support a breakeven software business.

The rating is notable as a first for a Bitcoin-treasury-centric company, establishing a TradFi benchmark for assessing crypto-focused corporate credit risk. MicroStrategy’s B- rating aligns with decentralized stablecoin issuer Sky Protocol (formerly MakerDAO), which also drew scrutiny for depositor concentration, centralized governance, and weak capitalization. To exit junk status, MicroStrategy would need to rise six notches to BBB-. Despite the downgrade optics, MSTR was one of Nasdaq’s best performers in 2024 (up ~430%) and rose 2.27% on Monday, suggesting limited immediate market impact.

S&P indicated an upgrade within 12 months is unlikely but could be considered if MicroStrategy boosts USD liquidity, reduces reliance on convertible debt, and proves resilient access to capital even during Bitcoin drawdowns. Conversely, the rating could fall if capital-market access weakens or if convertible debt comes due during a severe Bitcoin stress event, potentially forcing BTC sales at depressed prices. 

Background

S&P Global Ratings has placed Michael Saylor’s MicroStrategy in speculative-grade territory, assigning the software-and-Bitcoin firm a B- long-term issuer credit rating with a stable outlook. The assessment—often dubbed a “junk bond” rating—highlights MicroStrategy’s high concentration in Bitcoin (BTC), limited U.S.-dollar liquidity, narrow operating focus, and heavy use of convertible debt. While the news does not impede the company’s day-to-day operations, it offers investors a TradFi benchmark for judging the credit risk of businesses that tie their balance sheets so closely to cryptocurrency.

Key takeaways at a glance

• MicroStrategy now holds 640,808 BTC—worth roughly $20 billion at a BTC price near $31,000 (data: BitcoinTreasuries.net and CoinMarketCap).

• S&P Global defines a B- issuer as one that is “more vulnerable to adverse business, financial, or economic conditions but currently has the capacity to meet financial commitments” (S&P criteria).

• MicroStrategy’s convertible debt totals about $4.2 billion, with maturities ranging from 2025 to 2032 (company filings, U.S. SEC).

• The rating could rise if the firm boosts U.S.-dollar liquidity, trims leverage, and maintains access to capital even during Bitcoin downturns.

Why S&P Called MicroStrategy “Speculative Grade”

S&P’s analysts list four core weaknesses:

1. High Bitcoin concentration Over 99 % of MicroStrategy’s liquid assets sit in BTC, exposing the firm to crypto-market volatility.

2. Narrow business focus The traditional software division generates only marginal cash flow, so Bitcoin strategy dominates the corporate profile.

3. Low dollar liquidity Cash on hand is small relative to outstanding convertible notes, creating what S&P calls an “inherent currency mismatch” because all debt is denominated in U.S. dollars.

4. Weak risk-adjusted capitalization Equity cushions are thin relative to the potential swings in BTC value.

In plain language, S&P believes MicroStrategy can service its obligations today but could face trouble if Bitcoin suffers an extended bear market just as debt matures.

Understanding “Junk Bond” in Context

“Junk bond” is Wall Street shorthand for any bond rated BB+ or lower by S&P (Ba1 or lower by Moody’s). These speculative-grade credits carry higher default risk and therefore must offer investors a higher yield. According to a 2024 report by the International Monetary Fund, junk bond spreads average 350-450 basis points above comparable Treasuries, though crypto-linked issuers often pay even more. MicroStrategy’s B- sits six notches below investment grade (BBB-) and three notches above the lowest tier (CCC).

How Big Is MicroStrategy’s Bitcoin Bet?

Since August 2020, MicroStrategy has become the poster child for a “Bitcoin-treasury” model—replacing traditional cash reserves with BTC and funding purchases through equity issuance and low-coupon convertibles. The strategy’s scale is unprecedented for a public company:

Metric	Value (approx.)	Source
Bitcoin holdings	640,808 BTC	MicroStrategy Q1 2025 10-Q
Average cost basis	$16,920 per BTC	Company press releases
BTC market value	~$20 billion	CoinMarketCap (Oct 2025)
Convertible debt outstanding	$4.2 billion	SEC filings
2024 share-price rally	+430 %	Google Finance

The upside is clear: Bitcoin appreciation has catapulted MicroStrategy’s market cap beyond $25 billion. The downside is leverage—if BTC draws down sharply, lenders might demand higher coupons or investors might balk at new equity raises.

Currency Mismatch and Convertible Debt Explained

A convertible note is a bond that gives investors the right to convert into equity at a preset price. MicroStrategy issued several low-interest convertibles—some with coupons as low as 0 %—when BTC enthusiasm was high. While cheap on paper, all principal is repayable in dollars. If a maturity date lands during a Bitcoin slump, the firm might need to sell BTC at unfavorable prices or refinance at steeper rates, precisely the risk S&P references.

Market Reaction So Far

Interestingly, the rating has not rattled equity markets: MicroStrategy shares rose 2.27 % the day the rating became public, suggesting investors had already priced in speculative credit risk. Jon Todaro, an analyst at Needham & Co. (quoted by Reuters), argues that Bitcoin ownership, not credit rating, is the main driver of MSTR’s trading multiple. However, within the bond market, any future issuance will now be marketed as high-yield, potentially raising MicroStrategy’s cost of capital.

MicroStrategy’s Path to a Higher Rating

S&P says an upgrade in the next 12 months is “unlikely,” yet outlines three levers that could move the needle:

1. Increase U.S.-dollar liquidity Keeping larger cash buffers or short-term Treasuries would reduce forced-liquidation risk.

2. Reduce reliance on convertible debt Paying down notes or refinancing into longer-dated, fixed-rate loans could ease maturity pressure.

3. Demonstrate capital-market access in down cycles If MicroStrategy can raise funds even when Bitcoin is falling, it proves resilience.

Conversely, the rating could drop if Bitcoin’s price plummets and MicroStrategy struggles to refinance or if regulators impose restrictive crypto policies.

How Does MicroStrategy Compare With Other Crypto-Linked Issuers?

S&P recently assigned the same B- to Sky Protocol (formerly MakerDAO), citing depositor concentration and governance risk in the decentralized stablecoin issuer. While the business models differ—stablecoin vs. corporate treasury—both ratings reflect a shared theme: crypto-centric balance sheets present unique challenges for traditional credit metrics like liquidity coverage, asset quality, and cash-flow stability.

Broader Implications for Corporate Bitcoin Adoption

MicroStrategy’s rating represents the first time a Bitcoin-treasury strategy has been vetted by a top-tier credit agency. According to Fitch Ratings (June 2025 outlook on digital-asset risk), more Fortune 500 firms are exploring limited BTC allocations, but most stop short of large-scale debt-funded purchases because of potential rating consequences. S&P’s decision provides a public datapoint: heavy BTC exposure can cap a firm’s rating in the B range, at least until the market matures and volatility subsides.

Bottom Line

MicroStrategy’s B- credit rating underscores both the promise and peril of turning a corporate treasury into a Bitcoin vault. On one hand, the company’s BTC stash has delivered outsized equity returns and global headlines; on the other, it constrains credit quality because debt obligations remain in dollars while revenue and liquidity hinge on a notoriously volatile asset. Investors weighing MicroStrategy—or any future corporate Bitcoin adopter—should track three factors closely: dollar liquidity, leverage, and the timing of debt maturities against the crypto market cycle.

For now, S&P’s stable outlook signals that MicroStrategy is expected to navigate near-term obligations, but the path to investment grade will require more than holding; it will require classic balance-sheet discipline, diversified cash flows, and proof that the Bitcoin treasury playbook can thrive through both bull and bear phases.