Strategy and Other Bitcoin Treasury Firms Face Pressure as Market Momentum Slows
Strategy Corp. (MSTR) and other corporate Bitcoin (BTC) treasuries are feeling the heat as BTC’s volatile performance in 2025 has led to flat or slightly negative annual returns. The year has been marked by both strong rallies and deep corrections. MSTR’s stock prices have plummeted by over 60% from their yearly highs, and peers who raised capital through Private Investment in Public Equity (PIPE) deals have also seen their stock prices erode towards their issuance levels.
Strategy, formerly known as MicroStrategy, is a business intelligence and mobile software firm that has embraced BTC as its primary treasury reserve asset since August 2020.
The firm has amassed 671,268 BTC in its treasury reserves, valued at $60.04 billion, at an average price of $74,972 per BTC. This makes it the largest corporate BTC treasury holder globally, possessing 3.19% of the total BTC supply of 21 million.
The company raises capital through convertible notes, preferred stock, and at-the-market equity offerings to purchase Bitcoin, even during price dips.
In addition to these methods, the firm announced the creation of a dedicated US dollar reserve, funded entirely through the at-the-market (ATM) issuance of new MSTR common stock.
This reserve is explicitly intended to cover:
This reserve is managed separately from the firm’s Bitcoin holdings, making Strategy a dual-reserve entity for the first time. As of December 22, Strategy has increased its USD reserve by $748 million to $2.19 billion, enough to cover approximately $700 million in annual preferred stock dividends for over three years.
Strategy’s stock price has fallen sharply from a yearly high of $457.22 on July 14 to a low of $155.61 on December 1, a drop of over 63%. MSTR is currently trading near $160, approaching its yearly lows and below its 200-week exponential moving average (EMA) at $184.09.
Several factors contribute to this correction in MSTR’s price.
Bitcoin’s strong rally to a high of $126,199 on October 6, followed by a drop below the yearly opening at $93,576 and a move towards the yearly low at $74,508, has left 2025 performance flat or slightly negative. Due to MSTR’s leveraged exposure as a debt-funded Bitcoin play, its stock price fluctuates more than BTC, leading to significant losses for investors even though holdings haven’t changed.
Strategy primarily finances its Bitcoin accumulation through convertible debt, preferred stock, and at-the-market equity offerings rather than selling BTC. While much of its earlier debt is cheap, new loans and preferred stock carry much higher costs, increasing annual interest and dividend payments.
Frequent stock issuances dilute existing investors, so each share represents a smaller portion of the company and its Bitcoin holdings. In a strong but volatile 2025, marked by sharp quarterly swings in the Bitcoin market, this has become a problem for Strategy. The company can no longer easily raise cheap capital, while higher financing costs and dilution pressure cash flows and weigh on the stock price, even if Bitcoin doesn’t fall drastically.
Potential index exclusion risks, such as those from Morgan Stanley Capital International (MSCI), could remove companies with Bitcoin-dominated balance sheets (over 50% of assets) from key stock indices, treating them more like investment vehicles than operating companies.
If Strategy is excluded, passive funds and ETFs tracking these indices would be forced to sell MSTR shares, triggering billions in outflows. Investors are also likely to reallocate capital from high-volatility assets like leveraged Bitcoin proxies such as MSTR to more stable assets. This would reduce liquidity and institutional demand, potentially creating a downward spiral in MSTR’s stock price.
The premium over NAV metric measures how much the market values the company relative to the net asset value of its Bitcoin holdings and other assets, excluding liabilities. The current NAV premium sits at -18.12% (0.82x), implying that the market values MSTR at 82% of the value of its Bitcoin holdings per share (excluding other business values).
This suggests that investors are currently unwilling to pay a premium for Strategy’s leveraged exposure to Bitcoin, as concerns about dilution, rising debt costs, and sideways Bitcoin performance weigh on sentiment, making it difficult for MSTR to raise capital cheaply for further BTC accumulation without pressuring shareholders.
During strong bull markets, this premium often ranged between 1.5x and 2.5x, allowing Strategy to raise capital economically and increase Bitcoin per share through accretive financing.
Strategy’s imitators continue to grow, with over 191 public companies holding BTC in their treasury reserves, according to data from Bitcoin Treasuries.
Many of these public companies follow Strategy’s debt- and equity-funded purchases, but mining firms like Marathon Digital (MARA) combine production with holding. Other companies, like Metaplanet, have global appeal as inflation hedges.
As with Strategy, the stock prices of these companies have fallen between 50% and 80% from their 2025 highs, and premiums over NAV are decreasing as Bitcoin fails to meet expectations.
A report highlighted that Bitcoin treasury firms that raised capital through PIPEs have experienced significant stock declines, with stock prices often gravitating towards their PIPE issuance levels.
The analyst concluded that a sustained Bitcoin rally is the only likely catalyst to prevent further declines in these stocks. Without it, many are poised to continue trending towards or below their PIPE prices.
In 2025, volatile Bitcoin price action and broader consolidation led to Strategy’s and most of its peers’ stock prices plummeting.
The report mentioned that Strategy has made a tactical shift in its Bitcoin accumulation model, as Bitcoin could experience a weak 2026 after entering a bear market last month.
The analysis explained that the company no longer treats its Bitcoin exposure as untouchable in all market conditions. It remains central to its long-term thesis. That said, management now recognizes that maintaining the BTC stack requires the flexibility to defend it with cash reserves, hedging, and selective monetization in crisis scenarios.
The report concluded that MSTR appears to recognize a non-trivial probability of a deep or prolonged Bitcoin downturn. Strategy’s shift from aggressive Bitcoin accumulation to a more conservative, liquidity-focused approach coincides with Bitcoin’s biggest drop of 2025.
“A drop severe enough that almost all technical and on-chain indicators now signal that the market has entered a bearish phase, as seen in the Bull Score Index which fell to zero (the most bearish) for the first time since January 2022, when the previous bear market was beginning,” says an analyst.
Bitcoin is the largest cryptocurrency by market capitalization, a virtual currency designed to serve as money. This form of payment cannot be controlled by any person, group, or entity, eliminating the need for third-party involvement during financial transactions.
Altcoins are any cryptocurrencies other than Bitcoin, but some also consider Ethereum not to be an altcoin because it is from these two cryptocurrencies that forking occurs. If this is true, then Litecoin is the first altcoin, forked from the Bitcoin protocol and therefore an “improved” version of it.
Stablecoins are cryptocurrencies designed to have a stable price, with their value backed by a reserve of the asset it represents. To achieve this, the value of any stablecoin is linked to a commodity or financial instrument, such as the US Dollar (USD), and its supply is regulated by an algorithm or demand. The main objective of stablecoins is to provide an entry and exit ramp for investors wishing to trade and invest in cryptocurrencies. Stablecoins also allow investors to store value, as cryptocurrencies, in general, are subject to volatility.
Bitcoin dominance is the ratio between the market capitalization of Bitcoin and the total market capitalization of all cryptocurrencies combined. It provides a clear picture of the interest that Bitcoin generates among investors. High BTC dominance usually occurs before and during an upward movement, in which investors turn to investing in relatively stable and high market capitalization cryptocurrencies such as Bitcoin. A drop in BTC dominance usually means that investors are moving their capital and/or profits to altcoins in search of higher returns, which usually triggers an explosion of increases in altcoins.
