Strategy stock plummeted over 55% from its November 2024 peak, wiping out billions in market value as Bitcoin tumbled below $90,000. The stock crashed from its $396.5 high to $240 by February’s end. Ouch. That’s an 11% nosedive in just 24 hours as Bitcoin wobbled. Not a great look for the crypto posterchild.
The company’s market premium versus its Bitcoin holdings shrank dramatically, dropping from 3.4 times to just 1.6 times. This rapid decline sparked immediate concerns about possible forced liquidation. Could Strategy be forced to sell its precious Bitcoin stash? Not so fast.
Strategy currently holds a massive 499,096 Bitcoin worth approximately $43.7 billion. They paid an average of $66,350 per coin, with a total purchase cost of $33.12 billion. Do the math: that’s still a $6.45 billion unrealized gain, despite the recent carnage.
Bitcoin itself took a beating, falling from $108,000 in December to the high $80,000s by late February. Michael Saylor remains confident as he predicts Bitcoin’s market value will grow from $2 trillion to 20 trillion dollars in the next 4 to 8 years. The upcoming Bitcoin halving in April 2024 could influence price movements as it has historically after previous halvings. The crypto market shed $325 billion in days. Talk about volatility.
Despite the dramatic drop, analysts consider forced liquidation “highly unlikely.” The company’s $9.26 billion in convertible debt provides some breathing room. Most of it doesn’t mature until after 2028, with the latest coming due in 2032.
Plus, the Bitcoin isn’t directly pledged as collateral. Even a 50% Bitcoin crash would leave assets 100% above debt levels.
The company hasn’t changed course. After rebranding to emphasize its crypto focus, Strategy set an ambitious $10 billion Bitcoin revenue target for 2025 and launched a Bitcoin Hub co-working space. They’re in this for the long haul.
The broader crypto decline hit leveraged ETFs tied to Strategy particularly hard, with MSTX and MTSU dropping nearly 50% in five days. Some analysts predict further downside, possibly to the $80,000 range.
Still, long-term believers remain unfazed by the current volatility. Same story, different day.
