Leverage Ratio (MSTR)
A measure of debt relative to assets or equity, in Strategy’s case (Debt + Preferred)/Market Cap.
What is Leverage Ratio (MSTR)?
Leverage ratio assesses financial risk by comparing liabilities to assets, with Strategy defining it as (Debt + Preferred Stock)/Market Cap, targeting 20-30% for “intelligent leverage.” As of May 2025, it stood at 9%, the lowest since 2020, enabling further debt for Bitcoin buys.
In Bitcoin treasuries, higher ratios amplify returns but risk liquidations; Strategy’s 3:1 implies 30% equity loss on 10% Bitcoin drop.
Related Terms
Paper Hands
Traders or investors who sell their digital assets quickly at the first sign of market volatility or negative news, reflecting low risk tolerance.
Public Good
Valuable information generated by prediction markets that benefits society without direct cost to non-participants.
Token
Digital units of value built on existing blockchains, representing assets, utilities, or stakes in decentralized ecosystems.
Market Order
An order to buy or sell a digital asset immediately at the best available current price.
Managed Anonymity
A privacy framework in CBDCs balancing user anonymity with regulatory traceability.
Open Market Operations (OMO)
The Federal Reserve's buying and selling of government securities in the open market to adjust the supply of reserves and influence interest rates.