When the price of Bitcoin fell below $63,000 in early February 2026, Strategy (MSTR), the company founded by Michael Saylor, stunned the market with its Q4 financial results: a staggering $12.4 billion net loss, driven mainly by $17.4 billion in unrealized losses from marking its Bitcoin holdings to market value.
This company, whose stock soared more than 3,500% over four years thanks to its "leveraged Bitcoin buying" strategy, has now seen its share price drop nearly 80% from its all-time high in November 2024.
Core Issue: Scale of Losses and Cost Inversion
Strategy’s latest financial report shows a net loss of $12.4 billion for the fourth quarter, primarily due to $17.4 billion in unrealized fair value losses required by accounting standards.
The company’s Bitcoin holdings are currently valued at around $46 billion, with an average purchase cost of $76,052 per coin. This is significant—it marks the first time since 2023 that the market value of Strategy’s Bitcoin portfolio has fallen below its cumulative cost basis. As of February 6, 2026, Gate’s market data shows Bitcoin priced at $64,452.2, roughly 15.3% below Strategy’s average cost.
In-Depth Analysis: Structural Risks Behind the Massive Loss
Strategy’s huge losses reveal underlying structural risks in its business model. The company’s core strategy has always been to raise funds by issuing stocks and bonds, then aggressively buy Bitcoin and wait for price appreciation. This approach worked for years, but now faces mounting pressure.
Financial data shows Strategy holds more than 713,000 Bitcoins, with an average cost basis of $76,052. As Bitcoin trades well below this level, the company’s balance sheet is now underwater.
| Metric | Data |
|---|---|
| Average Cost Basis | $76,052 per BTC |
| Current Bitcoin Price (2026-02-06) | $64,452.2 |
| Total Holdings | ~713,000 BTC |
| Total Cost Basis | ~$54.2 billion |
| Current Market Value | ~$46 billion |
| Unrealized Loss | ~$8.2 billion |
Adding to concerns, the company carries $8.2 billion in convertible debt. Saylor has emphasized that Strategy holds $2.25 billion in cash reserves, enough to cover interest and dividend payments for the next two years, with no margin call risk.
Fundamental Challenge: Leveraged Bitcoin Buying in the Spot ETF Era
Strategy’s business model faces unprecedented challenges. With the launch of spot Bitcoin ETFs, investors now have cheaper, more direct exposure to Bitcoin risk, eroding Strategy’s unique value proposition.
Previously, Strategy’s enterprise value was nearly double its Bitcoin holdings, but that premium has all but disappeared. Key pressure points from convertible debt are approaching: the $1.01 billion convertible bond issued in September 2024 has a conversion price of $183.19, with holders able to exercise put options on September 15, 2027. The $3 billion zero-coupon convertible bond issued in November 2024 has a conversion price of $672.4, with put options exercisable on June 1, 2028. Several other convertible bonds will also face redemption pressure in 2028.
Tiger Research notes that 2028 will be a critical turning point for Strategy’s survival. The company could face about $6.4 billion in redemption pressure. If it cannot repay by issuing new stock or debt, it may be forced to liquidate large amounts of Bitcoin.
Market and Industry Impact: A Spreading Crisis of Confidence
Strategy’s predicament has triggered broader doubts about the corporate Bitcoin treasury model. Globally, companies emulating Strategy’s approach collectively hold over $108 billion in Bitcoin, accounting for 4.7% of total circulating supply.
According to Capriole Investments, nearly one-third of publicly traded companies that have added Bitcoin to their balance sheets now trade below the value of those reserves. The shift in market sentiment is clear: Strategy’s mNAV (enterprise value to Bitcoin holdings ratio) has dropped from a peak of 3.9 in November 2024 to around 1.2, the lowest since March 2023.
Benchmark Co. analyst Mark Palmer points out that, in the current environment, the market’s focus has shifted to how companies can raise capital under challenging conditions. The broader concern is that if Bitcoin prices remain depressed, more companies following similar strategies could face the same predicament. S&P Global has warned that if Bitcoin prices are under severe pressure when debt matures, companies may be forced to liquidate assets at low prices—a restructuring that would be "tantamount to default."
Looking Ahead: Survival Strategies and Market Evolution
Facing the current crisis, Strategy’s management is striving to maintain an optimistic tone. On the earnings call, Saylor reiterated his bullish stance, emphasizing, "We have a crypto president determined to make the U.S. a Bitcoin superpower." However, the market seems unconvinced. Phong Le admitted on the call that if Bitcoin drops 90%, the company would not be able to repay its debt by selling Bitcoin alone and would have to pursue debt restructuring.
Under financial pressure, the company has begun adjusting its financing strategy. Recently, Strategy raised its preferred stock dividend rate to 11.25% to attract investors. It continues to issue preferred shares under the names STRC, STRF, STRK, and STRD to fund Bitcoin purchases. Whether these measures will succeed remains uncertain. Notably, prominent short sellers like Michael Burry have issued stern warnings that a Bitcoin decline could trigger a "death spiral" among corporate holders.
On the other hand, Gate’s long-term Bitcoin price forecast projects an average price of $78,559.7 for 2026, above Strategy’s cost basis. If this prediction materializes, it could offer Strategy some breathing room. By 2031, Bitcoin (BTC) could fluctuate to $210,873.2.
Strategy’s share price has plunged nearly 80% from its November 2024 peak, wiping out tens of billions in market value. Before the launch of spot Bitcoin ETFs, the company was a primary vehicle for indirect Bitcoin exposure. Now, its distinctive "leveraged Bitcoin buying" model faces severe challenges, with the premium over its Bitcoin holdings almost erased. CEO Phong Le acknowledged in the earnings call that continued Bitcoin declines could force the company to restructure its debt, as selling Bitcoin alone would not suffice. Ultimately, the outcome of this financial experiment may hinge on Bitcoin’s future price trajectory.
