Wall Street downgrades MicroStrategy to sell, says debt play is ‘tapped out’

Looks like Wall Street is done playing along with MicroStrategy’s Bitcoin binge. On Tuesday, investment firm Monness Crespi Hardt downgraded the company’s stock from neutral to sell and slapped a $220 price target on it.

That number is about 23% below Monday’s closing price. The firm doesn’t think Strategy has any gas left in the tank to keep funding its bitcoin obsession with the same tricks.

In a note sent Tuesday, analyst Gus Galá from Monness Crespi Hardt said, “While we were negative on several respects upon initiation … we have gained incremental confidence that the convertible issuance strategy is likely tapped.”

Strategy has been issuing convertible debt since 2020 just to buy more Bitcoin.

Strategy’s fixed income play faces weak demand

The company, which recently changed its name from MicroStrategy to just Strategy, revealed in its Q4 2024 earnings report that with the convertible debt game pretty much done, the firm now plans to rely more on fixed income issuance.

This change comes after Strategy moved way ahead of schedule on its three-year plan to raise $42 billion—split evenly between $21 billion in equity and $21 billion in debt. Out of the equity half, $18.6 billion has already been raised through at-the-market activity. The whole idea behind the plan is to buy the same amount—$42 billion—in itcoin.

But Galá warned that investor interest in Strategy’s new plan appears weak. “We believe the whittling down of the premium will start to happen considering the focus on fixed income securities where there’s been … less than stellar uptake as measured by discounts to face value,” he said. If demand for these fixed income products keeps tanking, Galá said the company’s Bitcoin treasury strategy will face serious trouble.

Investors have historically priced Strategy above its actual Bitcoin holdings, treating it like a proxy for Bitcoin itself. That’s because the market believed the firm would always be increasing the amount of Bitcoin it holds per share. But if they can’t raise more capital, that assumption collapses. Galá said:

“If fixed income securities do not become a greater portion of issuance, the BTC treasury strategy will look [increasingly] challenged.”

Bitcoin’s own struggles weigh down investors

But Strategy’s MSTR stock isn’t the only thing struggling. Bitcoin has been stuck in a slump for three straight weeks. The first quarter of 2025 saw a loss of over 10%, per data from CoinGecko.

Crypto investors are now left guessing what’s next. Tracy Jin, chief operating officer at MEXC Exchange, said the market has gone quiet. “The market is now in a waiting phase,” she said. “Investors are not ready for active actions without clear signals.

If the White House’s trade rhetoric escalates, especially after Trump’s statements expected on Wednesday, there is a risk of a breakout of the $80,000 level downwards.” Jin added that there are no clear growth drivers right now, and that’s killing risk appetite.

We all pretty much know now that the Federal Reserve won’t cut interest rates until summer, which means liquidity stays tight, and anything risky—like crypto—gets hit first. She said fears of a global recession and growing geopolitical tensions are also pushing investors away from volatile assets like bitcoin. “Investors are looking for a safe haven, and bitcoin is not on this list,” Jin said.

Jin doesn’t think Bitcoin is headed to $100,000 anytime soon. She expects the coin to trade between $85,000 and $95,000 in April, with limited interest from big players. Historically, April has been rough for Bitcoin anyway. It’s ended in the red in three of the past four years, and this year looks like it’s following the same script. Jin said institutional demand just isn’t there right now.

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