S&P Downgrades MicroStrategy to B- “Junk Bond” Rating, Citing Bitcoin Overexposure and Low Liquidity

• S&P Global Ratings assigned MicroStrategy (MSTR) a B- credit rating, classifying it as a “junk bond” due to its heavy Bitcoin exposure and low U.S. dollar liquidity.
• The firm cited narrow business focus, weak capitalization, and high Bitcoin concentration as key vulnerabilities.
• Stable outlook assumes MicroStrategy can manage debt maturities and preferred stock dividends, potentially by issuing new debt.
• The rating is the first-ever S&P assessment of a Bitcoin-treasury-focused company, marking a major TradFi benchmark for crypto-related corporate risk.
• MicroStrategy’s rating matches Sky Protocol’s (formerly MakerDAO), which also holds a B- rating for similar concentration and governance concerns.
• Despite the rating, MSTR stock rose 2.27%, extending its 430% surge in 2024 before retracing 13% in 2025.
• S&P said an upgrade is unlikely in the next 12 months, unless liquidity improves and debt reliance decreases.
• A “severe Bitcoin stress” could force MicroStrategy to sell BTC at depressed prices, posing a downgrade risk.

S&P Global Ratings has assigned Michael Saylor’s MicroStrategy (MSTR) a B- credit rating, placing it firmly in non-investment-grade territory, often referred to as “junk bond” status.

The credit agency said the Bitcoin-treasury firm’s narrow business model and liquidity weaknesses are key risks, though it maintained a stable outlook for now.

“We view MicroStrategy’s high Bitcoin concentration, narrow business focus, weak risk-adjusted capitalization, and low U.S. dollar liquidity as weaknesses,”
— S&P Global Ratings, October 2025

Bitcoin-Heavy Strategy Sparks Concern

MicroStrategy currently holds 640,808 BTC, accumulated largely through equity and debt financing. While the company’s Bitcoin-first approach has made it a pioneer in corporate crypto exposure, it also creates what S&P called an “inherent currency mismatch.”

All of MicroStrategy’s debt is denominated in U.S. dollars, yet much of its liquid reserves are tied up in Bitcoin holdings and software operations that operate around breakeven in earnings and cash flow.

Source: Strategy

This imbalance means MicroStrategy could face serious liquidity pressure if Bitcoin prices plunge while debt obligations come due.

The B- credit rating marks the first-ever S&P assessment of a Bitcoin-treasury-focused corporation, establishing a reference point for traditional finance (TradFi) to evaluate the credit risk of crypto-centric businesses.

Interestingly, the rating puts MicroStrategy on par with Sky Protocol (formerly MakerDAO), which received the same B- rating in August. S&P cited centralized governance, high depositor concentration, and weak capitalization as reasons for Sky Protocol’s similar score.

To move out of “junk bond” status, MicroStrategy would need to climb six notches — from B- to BBB-, the lowest investment-grade rating.

Market Reaction: Steady Despite the Downgrade

Despite the “junk bond” label, MicroStrategy’s stock (MSTR) barely flinched. It rose 2.27% on Monday following the announcement, showing investor confidence remains intact.

In 2024, MicroStrategy was one of the Nasdaq’s top performers, surging 430%, though it has since retraced 13% in 2025, according to Google Finance data.

This resilience highlights that Wall Street still sees MSTR as a leveraged Bitcoin play, and its price often mirrors Bitcoin’s volatility rather than its corporate fundamentals.

While S&P maintained a stable outlook, it said an upgrade is unlikely in the next 12 months unless MicroStrategy:

• Improves its U.S. dollar liquidity,
• Reduces reliance on convertible debt, and
• Proves strong capital market access, even during Bitcoin downturns.

However, analysts warned that if Bitcoin enters a severe bear cycle, MicroStrategy could be forced to liquidate BTC at depressed prices to meet debt obligations — a scenario that could trigger further downgrades.

Why This Rating Matters

This assessment is more than just a rating — it’s a milestone for corporate Bitcoin adoption. It signals that traditional financial institutions are now quantifying crypto risk through conventional frameworks.

While MicroStrategy’s Bitcoin-maxi approach has paid off spectacularly during bull runs, the B- rating underscores the risks of overconcentration and debt exposure in volatile markets.

Still, with Michael Saylor’s conviction unwavering and Bitcoin’s long-term trajectory bullish, the rating may matter less to crypto investors — and more to TradFi observers trying to catch up.