According to analysts at BitMEX Research, it is “unlikely” that commercial IT firm MicroStrategy, known for its huge Bitcoin holdings, will be forced to sell its Bitcoin despite the fluctuations in BTC.

The firm, led by Chairman Michael Saylor, currently owns approximately 252,220 BTC worth over $17 billion, against a total acquisition cost of approximately $9.9 billion.

Shares of MicroStrategy rose more than 10% on Thursday to hit a 25-year high of $235.89, analysts said. The gain pushed the firm’s market value to $43.6 billion, putting it trading at a “large premium” to the net asset value (NAV) of its bitcoin holdings. The stock price gain compares to previous cycles when the Grayscale Bitcoin Trust was also trading at a premium before it was converted into a spot bitcoin ETF.

Analysts noted that MicroStrategy’s premium stock valuation allows the company to leverage stock offerings to further increase its Bitcoin exposure. The firm has raised $4.25 billion through five stock offerings since it launched its Bitcoin strategy in 2020, boosting its book value per share and enabling what some have called an “infinite money glitch.”

Saylor maintains that MicroStrategy has no intention of selling Bitcoin. However, the company’s significant debt load and Bitcoin’s inherent volatility have raised questions about whether the firm could be forced to liquidate its assets under certain circumstances.

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BitMEX Research’s report examined MicroStrategy’s debt structure, explaining that the bonds include complex conversion options. These options give bondholders flexibility, allowing them to convert the bonds into MSTR shares or seek cash repayment depending on the stock’s performance and the bond’s maturity. Analysts noted that most of these bonds allow MicroStrategy to redeem them with cash if the shares continue to trade at a premium, while bondholders are likely to convert to stock if Bitcoin prices remain strong. This structure makes forced Bitcoin sales less likely.

MicroStrategy faces interest payments on its debt, but analysts argue that cash flow from its software business should cover those obligations even in a bear market scenario. The bonds also have staggered maturity dates from 2027 to 2031, easing immediate financial pressure and reducing the likelihood of forced liquidation.

But analysts warned that if MicroStrategy’s stock premium shifts to a discount and bond repayments come due, it could become strategically advantageous for shareholders to advocate for Bitcoin sales. With the stock trading at a premium, there’s little incentive to sell Bitcoin, they said. Still, if the company takes on more debt, risks could increase, potentially leading to forced sales in the event of a pullback in Bitcoin prices.

Analysts expressed confidence in MicroStrategy’s current position despite the unpredictable nature of the cryptocurrency market, saying, “For now, leverage is low and liquidation risk is low.”

*This is not investment advice.

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