Tag: Strategy

  • Strategy’s Bitcoin Treasury Turns Underwater as BTC Drops Below $75,651 Cost Basis

    Strategy’s Bitcoin Treasury Turns Underwater as BTC Drops Below $75,651 Cost Basis

    Strategy (MSTR), the largest corporate holder of Bitcoin, has entered a critical phase after Bitcoin fell below the company’s average purchase price. The stock has dropped 78% from its cycle peak, while Bitcoin has declined 51%, according to data cited in a report by AxelAdlerJr. At the same time, Strategy has slowed Bitcoin accumulation and increased cash reserves, marking a notable shift in its treasury approach.

    The report said Strategy’s Bitcoin treasury now sits underwater for the first time since the 2022 bear market. The company holds 847,363 BTC at an average purchase price of $75,651, representing a total cost of $64.1 billion. Bitcoin’s move below that level has increased attention on Strategy’s financing model and future buying activity.

    MSTR Falls Faster Than Bitcoin

    Since launching its Bitcoin treasury strategy in 2020, MSTR has generally acted as a leveraged version of Bitcoin. The stock often outperformed Bitcoin during rallies but suffered larger losses during downturns. After the peak of the 2024-2025 cycle, both Bitcoin and MSTR moved lower, yet MSTR declined much faster than the underlying asset. The stock has now fallen 78% from its peak, compared to Bitcoin’s 51% decline from its cycle high. Although severe, the decline still remains above the 2022 bear market bottom when MSTR recorded an 89% drawdown while Bitcoin fell 77%.

    The report also pointed to March 2020 as a contrasting period. During the pandemic-driven market crash, Bitcoin dropped about 75%, while MSTR lost roughly 58%. At that time, the company had not yet adopted its Bitcoin treasury strategy.

    Cost Basis Becomes a Key Level

    Strategy’s average Bitcoin purchase price of $75,651 is a critical threshold. While an underwater position does not automatically force sales, it can affect corporate behavior and capital allocation. As Bitcoin trades below that level, pressure increases on Strategy’s ability to raise capital through its existing model. The report said a shrinking premium between MSTR shares and the company’s Bitcoin holdings reduces the effectiveness of aggressive stock issuance programs. Maintaining Bitcoin below the treasury cost basis could place additional strain on the company’s funding structure and future accumulation plans.

    Buying Activity Slows as Cash Reserves Grow

    The report described a broader shift in Strategy’s operating approach. Weekly Bitcoin purchases have fallen by roughly two-thirds compared with previous periods. Recent capital raises also show a different allocation pattern. Of the $335.5 million generated through stock sales, less than 11% went toward Bitcoin purchases. The remaining funds went into a dollar reserve. As of June 21, that reserve stood at $1.4 billion. The move is characterized as a transition from aggressive accumulation toward a more defensive posture.

    Meanwhile, Strategy recorded its first net Bitcoin sale since 2022. In late May, the company sold 32 BTC to cover dividend payments linked to STRC. The report also tracked the performance gap between MSTR and Bitcoin. That spread currently stands near 28 percentage points, meaning the stock has fallen substantially more than the asset it tracks. Historical data shows the spread has returned toward the upper end of its long-term range, reflecting continued pressure on the Bitcoin proxy stock.

    What’s Next?

    Strategy’s Bitcoin treasury has moved underwater after BTC fell below the company’s average cost basis of $75,651. Meanwhile, MSTR has dropped 78% from its peak and now trails Bitcoin by a wide margin. At the same time, Strategy has reduced Bitcoin purchases, increased cash reserves, and shifted toward a more defensive treasury approach as investors monitor the key $75,651 level.

  • Bitcoin Dips Below $60,000 as Strategy’s Financing Model Triggers Fresh Market Jitters

    Bitcoin Dips Below $60,000 as Strategy’s Financing Model Triggers Fresh Market Jitters

    Bitcoin (BTC) has fallen below $60,000, trading at $59,900 with a 2.76% decline in the last 24 hours, intensifying stress on the cryptocurrency market. Investor concerns are now centered on the sustainability of Strategy’s Bitcoin financing model, which relies on raising capital through common shares, preferred stock, and other securities to buy Bitcoin.

    While this approach helped Strategy build one of the largest corporate Bitcoin treasuries, falling crypto prices and rising financing costs are testing its durability. The company’s preferred stock, STRC, has become a key pressure point. Designed to attract income-focused investors via monthly dividends while funding Bitcoin purchases, STRC has dropped from $100 to around $75, leaving many investors with unrealized losses.

    The yield on STRC has risen as demand weakened, potentially increasing Strategy’s cost of capital and reducing its future Bitcoin buying capacity. This, in turn, could dampen institutional demand for the cryptocurrency. Alex Blume, founder and CEO of Bitcoin asset management firm Two Prime, noted that Strategy’s recent downtrend reminds investors of past corrections. “The recurring issues at Strategy are unsettling the market and evoking memories of previous major crises in the cryptocurrency space,” he said.

    Adding to the unease, Strategy disclosed its first Bitcoin sale since 2022—a modest 32 BTC. However, the move broke founder Michael Saylor’s long-held “never sell Bitcoin” policy, signaling a potential shift in strategy. Analysts stress that STRC is not a traditional bond; it lacks a fixed maturity date, is not secured by Bitcoin collateral, and dividends may be cut or eliminated by the board. This makes the investment riskier than many income-focused investors originally anticipated.

    Andrejica Cobeljic, head of derivatives trading at Amina Bank, explained that the recent pullback is partly due to cyclical weakness, but more importantly reflects fading confidence in Strategy’s model. “The immediate trigger for this leg of Bitcoin’s decline is weakening market cycles, but the deeper underlying force is the erosion of credibility in Strategy’s approach,” he said.

    As retail participation cools and institutional demand for Bitcoin slows, the sentiment shift below $60,000 underscores that market confidence now hinges not only on price action but also on the vitality of Strategy’s financing engine.