Ripple CTO warns Saylor’s Strategy faces trouble if Bitcoin crashes

Strategy holds over 629,000 BTC today, making it one of the largest corporate Bitcoin treasuries in the world. Ripple CTO David Schwartz describes this as a “leveraged long type position,” warning that it could unravel quickly if Bitcoin’s price dips below key levels.

How Strategy became the biggest corporate Bitcoin holder

Michael Saylor’s first buy landed in August 2020: $250 million for 21,454 BTC. Since then, the firm has steadily accumulated more, including a recent 430 Bitcoin purchase for $51.4 million in August 2025.

Those purchases raised the stash to 629,376 BTC, about 3% of total supply, and pushed the carrying cost near $33 billion. Strategy funded the spree with stock sales and high-yield convertible notes; a February 2025 deal priced implied share volatility near 48%, well above market averages.

Leverage sits at $8.2 billion. Analysts at CoinDesk note that Bitcoin must fall below roughly $16,500 before the loan collateral comes under stress. Still, shares drop when Bitcoin drops. Strategy fell 50% from its peak during the February pullback, mirroring BTC.

The stock also lags in softer markets. Prices sank 30% between late January and mid-March, right after Saylor’s Forbes cover story – an awkward timing, to be fair. Saylor, unfazed by swings, has a history of weathering massive losses, including $6 billion in a day during the 2000 tech crash.

However, debt costs rise as rates rise. If bond markets tighten again, Strategy might pay more to roll notes or sell extra shares – moves that dilute holders and signal financial stress.

What happens if Bitcoin slides hard?

Schwartz’s comment is simple: Strategy thrives above its average coin cost but faces pain below it. The company’s break-even sat near $26,080 in mid-2021 and has since climbed toward $30k. If BTC dives under that level for long, the firm books impairment charges that can spook equity investors.

Debt adds torque. Convertibles convert only if shares stay lofty; falling prices lock the debt in place, squeezing cash flow. Reuters likened the setup to a copycat “hoarder game” where more firms may issue similar notes, amplifying systemic risk. The U.S. Securities and Exchange Commission (SEC) already studies corporate coin disclosures; a forced sale by Strategy might accelerate rule-making around crypto-backed debt. 

There’s a flip side. Strategy’s last pause in buying came when unrealized gains hit $14 billion in Q2 2025, leaving room to ride out swings. Saylor also pitches perpetual preferred stock – his “$100 billion dream” – to pad liquidity without dumping coins. That plan may or may not fly.

Ripple’s CTO, for context, has no stake in Strategy. His comment echoes earlier warnings from market strategists who see BTC correlation as a double-edged sword. Still, the remark sparked fresh debate on X about whether corporates should treat Bitcoin as cash, investment, or something in-between. There’s no firm answer yet.

Volatility rounds out the story. Bitcoin’s 30-day realized volatility sits near 40%, low by crypto standards but high for most treasuries. A swift 25% drop, while rare, isn’t unheard of and could push Strategy’s equity sharply lower before debt covenants react.

Schwartz’s warning lands in one sentence: leverage cuts both ways. Strategy’s massive stack looks brilliant when Bitcoin rises; it looks brittle if the market cracks. Corporate finance rarely mixes with 24/7, hyper-volatile assets. Saylor made it normal – but that doesn’t make it safe.