Strategy hit by billions in bitcoin-driven losses

Strategy, the company best known for its massive bitcoin accumulation strategy, is facing renewed pressure after reporting multibillion-dollar losses tied to the cryptocurrency’s recent decline.

The firm, previously known as MicroStrategy, saw its stock fall sharply alongside bitcoin, which recently dropped below $64,000. The company disclosed a net loss of more than $12 billion after market close, highlighting the risks of its long-term bet on digital assets, News.Az reports, citing foreign media.

Executive chairman Michael Saylor responded to the downturn with a familiar crypto message, posting “HODL”, short for “Hold On for Dear Life”, on social platform X, signaling confidence in bitcoin’s long-term value despite short-term volatility.

While Strategy still operates a software division, generating about $123 million in revenue last quarter, its identity has largely shifted toward functioning as a bitcoin holding vehicle. Many investors have historically bought Strategy stock as a way to gain exposure to bitcoin without directly purchasing or storing the cryptocurrency.

The company’s approach has been relatively simple: buy large amounts of bitcoin, issue shares at prices above the value of its bitcoin holdings, and reinvest proceeds into additional purchases.

That strategy helped drive extraordinary stock performance during the crypto boom. Between 2020 and 2024, Strategy’s shares surged roughly 3,500%, attracting investors seeking indirect access to digital assets through traditional equity markets.

However, falling bitcoin prices are now putting that model under strain.

Strategy has consistently purchased bitcoin across both market highs and lows, accumulating coins at an average price of roughly $76,000. Last week alone, it purchased another 855 tokens at nearly $88,000 each. With bitcoin now trading below those levels, the company is facing unrealized losses on parts of its holdings.

Another key metric, Strategy’s market-to-net asset value (mNAV), dropped to around 1.09, meaning the company’s stock is trading only slightly above the value of its bitcoin reserves. This reduces the premium that once made Strategy attractive to investors.

Some market watchers warn the situation could worsen if bitcoin continues falling. Investor Michael Burry suggested that sustained declines below certain price levels could put additional financial pressure on bitcoin-heavy corporate balance sheets and potentially impact broader crypto markets.

Strategy’s core value proposition has also weakened due to the rapid rise of spot bitcoin exchange-traded funds (ETFs).

Major asset managers, including BlackRock and Fidelity, launched bitcoin ETFs last year, giving investors easier and more familiar ways to gain exposure to the cryptocurrency through regulated financial products.

Although these funds have also experienced outflows during recent crypto weakness, including roughly $545 million withdrawn from US bitcoin ETFs in a single day this week, their scale remains far larger and more diversified than Strategy’s business model.

Despite recent losses, Strategy leadership continues to frame its bitcoin holdings as a long-term strategic asset rather than a short-term trade.

Saylor and company executives have repeatedly argued that bitcoin will recover over time and potentially appreciate significantly, positioning the company to benefit if crypto markets rebound.

For now, however, Strategy remains tightly linked to bitcoin’s price movements, meaning future

News.Az 

By Aysel Mammadzada