Tom Lee: The Real Risk for Bitcoin Will Emerge in 18 Months

The fluctuations in the crypto market have led investors to focus heavily on Bitcoin (BTC) and Ethereum (ETH). Recently, institutional investors using the platform called Strategy as a hedge have created significant pressure in the markets.

The CEO of Bitmine Immersion, Tom Lee, stated that because Strategy holds approximately 650,000 Bitcoin, the company is the most closely followed stock in the market. Investors are opting to short MSTR (MicroStrategy) shares directly for hedging purposes. However, Lee notes that Bitcoin and Ethereum derivatives do not provide sufficient space for large positions; therefore, institutional investors prefer the liquid options chain of MSTR.

Amidst this intense market pressure, MSTR's balance sheet is also being closely monitored by investors. Although the pullback in Bitcoin prices may lead Strategy's Bitcoin portfolio to approach a breaking point, experts believe the company will not face any forced sales or financial stress in the short term.

However, the main pressure point will emerge in 18 months when the first redemption option for the company's 0.625 ratio convertible bonds becomes available. The initial call right for these bonds in September 2027 could force MSTR shares to generate cash if they remain at current levels. The company could buy time by issuing shares through Automated Teller Machine (ATM) if necessary, selling small amounts of Bitcoin, or paying dividends in shares.

Nevertheless, many of these options could narrow the capacity for raising new capital and pose a risk of undermining investor confidence. Tom Lee mentioned that market makers have not fully recovered since the October crash, which is why a significant portion of the hedge need has shifted toward MSTR. In this environment of weak liquidity, the company's price movements and balance sheet continue to be at the center of broad risk management for crypto investors.