In an early morning earnings call, Strategy (formerly MicroStrategy) reported a staggering $12.6 billion net loss for the fourth quarter, driven almost entirely by unrealized losses on its massive Bitcoin holdings. This figure underscores the harsh reality of the Bitcoin price plummeting nearly 49% from its historic high of around $126,080 last October to current levels. As a pioneer of the digital asset treasury (DAT) model, the company now faces its toughest market test yet.
Financial Storm
Bitcoin’s sharp decline in Q4 2025 pushed Strategy to the brink. According to company disclosures, its average Bitcoin holding cost stands at $76,052 per coin. When Bitcoin prices fell below this psychologically significant threshold, all of the company’s holdings officially entered an unrealized loss position.
On the day the earnings report was released (Thursday), Bitcoin’s price plunged further from about $73,100 to near $62,400—a single-day drop of nearly 15%. This extreme volatility sent the market value of Strategy’s Bitcoin holdings into a tailspin.
Accounting Overhaul
It’s important to note that a significant portion of Strategy’s massive loss stems from its adoption of fair value accounting rules in January 2025. Under these new standards, companies must recognize quarterly market value changes of their Bitcoin holdings directly in their income statements. This marks a sharp departure from the previous "impairment cost" model, which only recognized losses during irregular impairment events. The new rule amplifies the impact of market swings on the company’s financial statements.
Mark-to-market accounting drove an operating loss of about $17.4 billion in Q4 alone—a number comparable to the losses posted by some major financial institutions during the 2008 financial crisis.
Holding the Line Amid Challenges
Despite the market turmoil, Strategy appears unwavering in its core strategy. In January 2026 alone, the company added another 41,002 Bitcoins to its holdings. By early February, its total Bitcoin stash had reached 713,502 coins, valued at approximately $45.9 billion at current prices.
This commitment to accumulating Bitcoin aligns with statements made by company executives during the earnings call. CEO Michael Saylor posted a succinct "HODL" on X, while President and CEO Le Feng quoted The Hitchhiker’s Guide to the Galaxy: "Don’t Panic." CFO Andrew Kang emphasized that Strategy holds $2.25 billion in cash reserves, enough to cover two and a half years of dividend payments and debt interest.
DAT Sector Shockwaves
Strategy’s predicament isn’t unique—the entire digital asset treasury (DAT) sector is under heavy selling pressure. DAT stocks typically trade at a premium to their underlying crypto assets, but as token prices have dropped, many DAT stocks are now trading at a discount.
Year-to-date, the median return for DATs listed in the US and Canada is -17%, compared to a 5% gain for S&P 500 constituents. Other DAT companies are also feeling the squeeze. Bitcoin treasury firm Empery Digital has begun selling Bitcoin to fund stock buybacks. Ethereum treasury company ETHZilla, backed by Peter Thiel, also announced the sale of $74.5 million in tokens to repay debt.
The Plight of Bitcoin Proxy Stocks
This situation highlights the vulnerability of Bitcoin proxy stocks during market downturns. Traditionally, investors buy these stocks for crypto exposure, but when the underlying asset drops, these stocks often suffer even steeper losses.
Analysts have started slashing price targets, citing the double blow of accounting losses and market volatility. Strategy’s share price is now down 75% from its July peak of nearly $435. B. Riley Securities analyst Fedor Shabalin commented, "That was a short-lived period of excitement, followed by investors realizing that for these stocks to trade at any premium to their underlying assets, the companies need to generate extra returns wherever possible."
Market Environment and Bitcoin Price
According to Gate market data, as of February 6, 2026, Bitcoin is priced at $64,918.1, with a 24-hour trading volume of $1.95B and a market cap of $1.56T, representing 56.80% of the entire cryptocurrency market. Over the past 24 hours, the price has changed by -10.50%.
Gate’s Bitcoin price prediction data suggests an average price of $78,559.7 for Bitcoin in 2026, with a projected range between a low of $58,134.17 and a high of $85,630.07. By 2031, forecasts put Bitcoin at $210,873.2—a potential return of +108.00% from current levels.
Notably, Strategy’s average purchase cost ($76,052) is close to Gate’s 2026 average price prediction for Bitcoin ($78,559.7), which may partly explain the company’s commitment to its holding strategy.
As the crypto and equity markets fall in tandem, Strategy’s challenges now extend beyond financial losses. Its share price has dropped 26%, shrinking from a premium of more than double the value of its Bitcoin holdings to just a 9% premium today. Has the DAT premium bubble burst? That’s the question the market is now answering. Michael Lebowitz, portfolio manager at RIA Advisors, remarked, "If you want to own Bitcoin, just own Bitcoin directly. I think investors are finally starting to realize that." The sharp swings in Bitcoin prices on the Gate platform and the turmoil in the DAT sector have become reflexively linked: falling prices erode DAT holdings’ value, triggering stock sell-offs, which in turn dampen market sentiment and perpetuate the cycle.
As the Bitcoin market searches for its next catalyst, all eyes are on the next moves from these digital asset treasury companies.
