Bitcoin vs. Legacy Finance: S&P Global Faces Backlash Over Strategy Inc.'s Credit Downgrade

S&P's Controversial Rating of Bitcoin-Centric Strategy Inc.

The cryptocurrency sector has reignited its conflict with traditional finance as S&P Global Ratings assigned a controversial ‘B-’ issuer credit rating to Strategy Inc., the Bitcoin-focused company spearheaded by Michael Saylor. The decision has provoked widespread criticism, with market analyst Adam Livingston branding the rating as “ridiculous” and accusing S&P of failing to understand Bitcoin-driven capital models.

Bias Against Bitcoin-Based Assets

S&P’s assessment deemed Strategy Inc. a high-risk enterprise, primarily due to its substantial reliance on Bitcoin holdings, which the agency interpreted as a liability, rather than an asset. Livingston criticized this stance, stating, “The rating unfairly penalizes Strategy for its Bitcoin reserves, labeling it a capital weakness rather than acknowledging its financial strengths.”

The agency’s report argued that Strategy’s asset composition—largely Bitcoin—posed vulnerabilities to its capitalization, further noting the company’s plans to significantly expand its cryptocurrency reserves. S&P’s downgraded view coincides with CEO Michael Saylor’s ambitious goal to eventually amass $1 trillion in Bitcoin holdings.

Such judgment, according to Livingston, underscores traditional finance’s enduring reluctance to legitimize Bitcoin within mainstream financial frameworks. He added, “If Strategy were holding U.S. Treasuries, S&P would classify them as high-quality capital assets. Instead, Bitcoin is unfairly branded a liability—despite being arguably the hardest and most transparent asset in human history.”

Outdated Models Under Scrutiny

Critics have argued that S&P’s credit rating for Strategy Inc. reveals deeper flaws within legacy financial systems and their mechanisms for evaluating risk in relation to blockchain-based assets. Livingston emphasized that S&P’s capital assessment model adheres rigidly to fiat currency logic, dismissing the benefits of digital asset adoption.

“This represents a pivotal clash between digital currency advocates and legacy financial institutions,” Livingston remarked. He suggested that S&P’s traditional capital model fails to reflect blockchain’s inherent transparency and decentralized reliability—qualities that Bitcoin embodies.

Others within the financial community agree with Livingston’s viewpoint. Mason Foard noted inconsistencies in S&P’s evaluation, highlighting that Strategy’s liquidity metrics and debt levels surpass industries like aviation and cruise lines, which also harbor companies rated higher than ‘B-’. Meanwhile, Matthew Sigel from VanEck pointed out that the rating places Strategy in the high-yield bond category, estimating a default probability of 15% within five years—a critique he claimed misrepresents the firm’s stability.

A Clash Between Bitcoin and Traditional Finance

At its core, the debate over S&P’s credit downgrade reflects the growing philosophical divide between Bitcoin advocates and proponents of traditional financial models. As Bitcoin continues its trajectory toward mainstream adoption, friction between legacy frameworks and emerging paradigms has grown increasingly apparent, exposing systemic shortcomings in accommodating assets like cryptocurrencies within existing evaluation standards.

Strategy Inc.’s credit controversy may ultimately serve to illustrate more about the rigidity of traditional finance than it does about the actual risk profile of companies heavily invested in digital assets. For Michael Saylor and the broader Bitcoin community, the backlash against S&P’s assessment underscores their belief that Bitcoin is not only here to stay but is poised to rewrite investment norms in the years to come.