Bitcoin Collapse Puts the 'Strategy Model' to the Test

As Bitcoin (BTC) slid below $63,000, Strategy’s aggressive “bitcoin accumulation strategy” has been put to a critical test. With the selloff deepening, assessments are emerging that the corporate Bitcoin investment model—once widely praised by the market—is running up against structural constraints.

According to Bloomberg on the 5th (local time), Strategy said in its earnings release that it posted a net loss of $12.4 billion in the fourth quarter of last year. The result reflects mark-to-market losses on the company’s sizable Bitcoin holdings. In particular, after the recent sharp drop in Bitcoin, the value of Strategy’s holdings fell below its average purchase price ($76,052), pushing it into an accounting “loss zone” for the first time since 2023.

As a result, the company’s core playbook—“accumulating Bitcoin by leveraging an equity premium”—has effectively stalled. In the past, Strategy repeatedly exploited periods when its stock traded well above the net asset value (NAV) of its Bitcoin holdings, raising funds through equity issuance or bond sales and then plowing the proceeds back into Bitcoin purchases. But with the stock premium now gone and capital markets tightening, its capacity for additional financing has shrunk markedly.

This earnings release also included no plans for a new capital raise or bond offering. Market watchers say it is unusual not to see signals of additional buying, which had appeared in almost every quarter since 2020. Analysts also note that Saylor’s recent messaging has turned notably more defensive than in the past.

Saylor stressed that Strategy is not exposed to margin-call risk and that it holds about $2.25 billion in cash—enough to cover interest costs for at least two years. Still, if Bitcoin remains below the firm’s purchase price for an extended period, financial strain could intensify, leaving a lingering source of uncertainty.

Strategy currently holds about 713,000 bitcoins, worth roughly $46 billion at market prices. It also continued its accumulation strategy by purchasing an additional $75.3 million worth of Bitcoin at the end of January. Even so, the prevailing view in the market is that it will be difficult for the pace and scale of buying to match the past.

Meanwhile, hedge fund manager Michael Burry recently warned that the decline in Bitcoin could trigger a “death spiral” among corporate holders, explicitly mentioning Strategy. Criticism from short seller Jim Chanos—who has long highlighted Strategy’s structural risks—is also resurfacing. They have argued that excessive reliance on leverage for an asset that does not generate income is bound to hit limits.

Over the past four years, Strategy has functioned as a high-beta (high-risk, high-return) alternative for exposure to Bitcoin. Since 2020, its shares have surged more than 3,500%, far outpacing major stock indices. But with the advent of spot Bitcoin ETFs giving investors simpler and cheaper options, Strategy’s standing appears to be increasingly unsettled.

Saylor recently said it “could take 10 years for Strategy to generate meaningful returns,” moving to reset expectations. The remark is interpreted as an attempt to emphasize that the structure is geared toward investing in Bitcoin’s long-term trajectory rather than near-term earnings or share-price moves. But the market’s judgment is unsparing: Strategy shares are down about 30% so far this year. If Bitcoin undergoes further correction, observers say Saylor’s experiment could once again face fundamental questions.