MicroStrategy could see cheaper debt if Fed cuts rates today

If the Federal Reserve announces an interest rate cut — even by 25 basis points — today, Michael Saylor's Bitcoin proxy firm Strategy (Nasdaq: MSTR), formerly MicroStrategy, stands to benefit.

Yes, you read that right.

Strategy, the world's largest Bitcoin treasury firm, will be able to drive forward its Bitcoin acquisition agenda even more aggressively if the Fed announces a rate cut after the conclusion of the Federal Open Market Committee (FOMC) meeting on Sep. 17.

The reason is pretty simple and it's to do with the kind of financial instruments the firm depends on for its Bitcoin purchases.

Related: What is Crypto? Cryptocurrency explained

Strategy's debt financing model

Debt is one of the primary financial instruments that Strategy has relied on for years to fund its Bitcoin buys.

It was in August 2020 that the firm first bought Bitcoin through a corporate cash purchase worth $250 million.

The same year, the firm began its debt issuance drive in December, beginning with low-interest convertible notes. As the name suggests, it is a kind of debt that can be converted into equity. These debt instruments helped Strategy raise $650 million.Strategy co-founder and executive chairman Michael Saylor

The firm turned to high-interest senior secured notes, another debt instrument but one backed by assets, in June 2021 and raised $500 million.

So far, Strategy has accumulated a substantial debt totaling $8.2 billion. Nonetheless, its holdings of 638,985 BTC still total more than $74 billion.

Fed's rate cut means cheaper debt for Strategy

In essence, Strategy borrowed a lot of money to buy Bitcoin. If interest rates fall, the cost of its debt will go down.

Low interest rates mean that Strategy will spend less on debt repayments and could even plan further debt issuances to fund the purchase of additional Bitcoin.

In such a scenario, the firm pays lower interest on debts and earns a higher yield on its Bitcoin holdings. This model is essentially a leveraged bet on Bitcoin’s long-term price.

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Bitcoin's price uptick means double benefits for Strategy

If the Fed announces a rate cut today, investors might turn to buying Bitcoin due to increased liquidity in the market and BTC's comparatively higher yield than traditional instruments like bonds.

Related: What are yield coins? Yield bearing assets explained

Bitcoin's position as a potential hedge against inflation also invites investors who fear inflation due to lower interest rates.

Story Continues

All such factors can potentially lead to an appreciation in Bitcoin's price. In such a scenario, the value of Strategy's BTC holdings is also expected to skyrocket.

The MSTR stock was trading at $337.54 at press time, up 0.69% in a day. Bitcoin was trading at $116,173.95, up 1.08% in a day.

Edited by: Mehab Qureshi

This story was originally reported by TheStreet on Sep 17, 2025, where it first appeared in the MARKETS section. Add TheStreet as a Preferred Source by clicking here.

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