Mounting losses, index exclusion risks, and a collapsing premium intensify pressure on the world’s largest corporate Bitcoin holder
Strategy Inc. (MSTR) the Virginia-based company formerly known as MicroStrategy, announced the creation of a $1.4 billion reserve to reassure investors that it won’t be forced to sell Bitcoin—at least not immediately—even as the cryptocurrency’s sharp decline rattles its highly leveraged balance sheet. The funds, raised through sales of Class A common stock, are intended to cover at least 21 months of dividend and interest payments, with plans to eventually extend that buffer to two full years.
Despite the move, investor anxiety deepened. Strategy’s shares sank as much as 7.9% on Monday, the steepest drop in more than a year, as fears grew that the company’s mNAV — a valuation metric comparing enterprise value to its Bitcoin holdings — could soon turn negative. CEO Phong Le recently acknowledged that dipping below 1x mNAV could compel the firm to sell Bitcoin to cover dividends, calling it a “last resort” but mathematically unavoidable.
Strategy’s pivot from software development to a full-fledged Bitcoin holding vehicle once drew praise from crypto enthusiasts. But as Bitcoin plunged below $85,000 — falling as much as 7% on Monday — the financial engineering model that fueled Strategy’s rise is showing cracks. The company continues to fund crypto purchases by issuing common stock, a practice that dilutes shareholders and has forced Strategy into costlier forms of capital.
The stock has lost roughly 65% of its value since peaking in November 2024, collapsing the premium that once made it a favorite among momentum traders. JPMorgan analysts warn that Strategy could be removed from major equity indexes, potentially triggering billions in passive outflows.
The company also slashed its 2025 earnings guidance, now forecasting operating results ranging from a $7 billion loss to a $9.5 billion profit, depending entirely on Bitcoin’s volatile year-end price. Net income projections range from a $5.5 billion loss to a $6.3 billion gain.
As the digital asset treasury model unravels under market stress, Strategy faces the harsh reality that its core business does not generate enough cash to sustain dividend obligations — and Bitcoin, for all its promise, pays no dividend at all.
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