Whether MicroStrategy (MSTR) sells its bitcoin (BTC) tokens to pay down debt is closely tied to how the cryptocurrency performs. The position is not large enough to distort prices but it does present a sentiment risk in a down cycle, Bernstein said in a research report Wednesday.

The business analytics software company is the largest corporate holder of bitcoin as a balance sheet treasury asset, owning around 140,000 BTC at an average cost of $29,800. The stash is worth about $4 billion at current prices, the report said.

The company has about $2.2 billion in debt, with repayments due in 2025 and beyond. It has pledged 15,000 of its bitcoins, Bernstein said.

“High BTC prices mean a stronger balance sheet, higher stock prices and easier debt repayment without selling its BTC holdings,” analysts Gautam Chhugani and Manas Agrawal wrote.

MicroStrategy holds around 0.7% of total bitcoin in circulation, representing about 20% of daily average traded volume in spot markets, the note said.

At those levels, MicroStrategy does not “necessarily pose a concentration risk” even if trading volumes fell during a bear market, though it may affect market sentiment.

“The potential liquidation of MicroStrategy’s BTC during bear markets creates an overhang for BTC in a down cycle,” it said.

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Will Canny

Will Canny is an experienced market reporter with a demonstrated history of working in the financial services industry. He's now covering the crypto beat as a finance reporter at CoinDesk. He owns more than $1,000 of SOL.