Strategy’s Bitcoin Bet Faces Strain as Stock Drops Over 5%

Strategy, the Nasdaq-listed company, saw its stock MSTR fall more than 5% after Bitcoin (BTC) dropped below $90,000. The company, led by Bitcoin supporter Michael Saylor, is known for holding a large amount of Bitcoin. However, the recent market downturn has impacted its stock, bringing its premium over Bitcoin holdings to a new low.

Strategy’s Premium Shrinks: What It Means

The value of Strategy’s stock compared to its Bitcoin holdings has fallen significantly. Onchain data revealed that MSTR dropped 5.65% in pre-market trading and closed at $282.76 earlier today. Bitcoin’s price fell sharply to $87,630, losing 7.48% daily.

In November 2024, this ratio was 3.4, but now it is just 1.6. This means the software intelligence firm’s stock is now closer to the actual value of its Bitcoin holdings. Instead, it is worth much more.

Strategy has been buying Bitcoin for a long time and now owns more than 2% of Bitcoin’s total supply. Recently, the company bought 20,356 BTC for nearly $2 billion, but now, it might struggle to keep buying more.

Bitcoin’s Downturn May Halt Strategy’s Bitcoin Buying Spree

In a recent X post, Crypto analyst Miles Deutscher weighed in on the current situation. He noted that the lower premium could make it harder for Strategy to raise money for more Bitcoin purchases. 

Strategy usually sells shares or takes loans to buy Bitcoin. However, if Bitcoin’s price does not recover, investors will not want to pay more than what Bitcoin is worth, making it harder for Saylor to raise money.

Since MSTR’s value is closely tied to Bitcoin, a long drop in BTC price could cause problems for the company.

Crypto Market Saw Massive Liquidation

Bitcoin’s price has been falling, causing panic in the crypto market. In just 24 hours, over $1.3 billion was lost due to liquidations, and the total value of the crypto market dropped by about $235 billion, a nearly 9% decrease.

Alongside Bitcoin, Ethereum (ETH), XRP, and Solana (SOL) all saw significant losses during the sell-off. Some analysts at Matrixport warned that Bitcoin’s price could drop even more, especially since there is not much buying activity. 

If Bitcoin’s price weakens, Strategy’s stock could face more pressure. Investors may start questioning whether its Bitcoin plan is sustainable. Many are now watching Bitcoin’s next move and if Strategy could regain its premium value.