S&P Gives Strategy B- Rating Amid Bitcoin Risks

This rating places it in junk bond territory but with a stable outlook. The rating was also the first-ever S&P evaluation of a Bitcoin treasury firm. The agency specifically pointed to Strategy’s high Bitcoin exposure, limited US liquidity, and debt reliance as key risks, though investors seemed unfazed as the stock rose 2.27% on Monday. Meanwhile, corporate crypto buyers largely paused their Bitcoin and Ethereum accumulation since the early October market slump. Coinbase’s David Duong said digital asset treasuries have cut buying to yearly lows, with BitMine Immersion Technologies being the only major firm still purchasing aggressively.

Strategy Earns Junk Rating

S&P Global Ratings assigned Michael Saylor’s Bitcoin-focused company, Strategy, a “B-” credit rating. This classification places it in the speculative, non-investment-grade category, which is referred to as “junk bond” status. Despite the label, S&P described the firm’s outlook as stable, which means that it has at least some confidence in its ability to manage its obligations and maintain financial stability.

The agency pointed to several key weaknesses behind its assessment, including Strategy’s heavy concentration in Bitcoin, its narrow business model, limited US dollar liquidity, and weak risk-adjusted capitalization. With 640,808 BTC on its balance sheet that was acquired largely through debt and equity financing, the company’s success remains closely tied to Bitcoin’s performance. 

S&P explained that Strategy faces a fundamental “currency mismatch,” since its debt is denominated in US dollars while its liquidity reserves are largely tied to Bitcoin and its breakeven software operations.

The rating is a historic first: it’s the first time S&P Global formally evaluated a company whose core business revolves around a Bitcoin treasury. This sets a precedent for how traditional financial institutions may assess the creditworthiness of crypto-centered firms moving forward. Interestingly, Strategy’s B-minus rating places it on par with decentralized stablecoin issuer Sky Protocol (formerly MakerDAO), which received the same score in August due to concerns over depositor concentration, centralized governance, and capitalization risks.

While an upgrade is unlikely in the next year, S&P indicated that Strategy could improve its standing by strengthening its US dollar liquidity, reducing dependence on debt, and showing continued access to capital markets, even during downturns in Bitcoin’s price. However, the agency also warned that if Bitcoin experiences a severe correction, Strategy might be forced to sell its holdings at depressed prices to meet debt obligations, which could actually trigger a downgrade.

Strategy’s stock price over the past 24 hours (Source: Google Finance)

Despite the speculative rating, Strategy’s stock stayed resilient. The company’s shares rose 2.27% on Monday, suggesting that investors are largely unfazed by the assessment. Though down 19% over the past 6 months, Strategy is still one of Nasdaq’s standout performers.

Corporate Crypto Buyers Hit Pause

Meanwhile, publicly listed companies that hold Bitcoin and Ethereum on their balance sheets have largely halted their accumulation since the sharp market downturn earlier in October. This could suggest that there is a growing sense of caution among major crypto treasuries. 

According to Coinbase Institutional’s head of investment research, David Duong, digital asset treasury (DAT) firms — which typically include some of the market’s biggest Bitcoin buyers — have “largely ghosted” the market since the Oct. 10 drawdown and have not returned to major buying even during brief price recoveries.

Duong pointed out that over the past two weeks, Bitcoin purchases by these companies dropped to near year-to-date lows and have yet to show meaningful signs of recovery. The pullback reflects the reduced confidence in the market after the steep selloff that saw Bitcoin fall 9% between Oct. 10 and 11, dropping from around $121,500 to lows below $110,500. Since then, BTC was able to rebound slightly to trade at $113,933 at press time.

BTC’s price action over the past month (Source: CoinMarketCap)

The cooling sentiment also weighed on the market valuations of many crypto treasury firms, whose stock prices started to align more closely with the value of their underlying assets after strong rallies earlier this year. Duong described the buying slowdown as a sign that even the “heavy hitters with deep pockets” are proceeding carefully after a leveraged market washout, despite Bitcoin hovering around technical support levels.

One exception to this trend is BitMine Immersion Technologies, an Ethereum-focused treasury firm that continued buying aggressively. Duong said BitMine spent over $1.9 billion since Oct. 10 to buy close to 483,000 ETH, making it the only consistent buyer over the past few weeks. Ethereum followed Bitcoin’s downturn earlier this month by plunging over 15% to $3,686 before recovering slightly to around $4,100.

Duong warned that if BitMine slows or pauses its purchases, the market could lose one of its few remaining sources of corporate demand.