TLDR
- Strategy (MSTR) has spent over $21 billion buying bitcoin since November, but its value has fallen to around $18 billion
- The company announced plans to offer $21 billion in preferred stock with an 8% interest rate to fund more purchases
- Bitcoin price has dropped to around $79,800, setting fresh 2025 lows
- The White House crypto summit disappointed traders with no commitment from the Trump administration to add to government bitcoin holdings
- Strategy stock fell 12-13% on Monday, continuing a pattern of Monday declines following weekend bitcoin price drops
Strategy, formerly known as MicroStrategy, is facing significant challenges as its massive bitcoin investments lose value in a declining cryptocurrency market. The company has spent over $21 billion since November 10 to purchase bitcoin, but the value of these holdings has fallen to approximately $18 billion as of Monday, according to an analysis of company filings.
Strategy’s stock took a major hit on Monday, diving around 13% to $252.15 in early trading. This decline follows a pattern of Monday drops for the company, which has moved more than 5% in either direction on nearly all trading days over the past two weeks.
The cryptocurrency market has been under pressure after the White House crypto summit failed to deliver the hoped-for government commitment to purchase additional bitcoin. Despite President Donald Trump signing an executive order establishing a Strategic Bitcoin Reserve, the lack of immediate plans for government bitcoin purchases disappointed crypto traders.
Bitcoin’s price has fallen to around $79,800, briefly setting new lows for 2025. This represents a substantial drop from previous highs, putting further pressure on Strategy’s investment position.
Strategy announced on Monday that it plans to offer up to $21 billion of preferred stock with an 8% interest rate. This follows a similar $584 million offering in February that established the preferred stock trading under the ticker STRK.
The company has not purchased any bitcoin since February 23, according to its Monday update. This marks the second consecutive week without new bitcoin acquisitions.
Strategy has spent $23.2 billion on bitcoin purchases from October 30 to February 23. These purchases were funded by $16.8 billion in stock offerings and $6.4 billion in debt proceeds.
The company has already used 80% of the $21 billion in planned sales. With both MSTR stock and bitcoin prices retreating, a key question is whether creditors will continue to offer favorable terms.
In February, Strategy received notably generous 0% interest terms while borrowing $2 billion via notes convertible into stock. The company’s 10-K filing warned that if market conditions change, “we may not be able to obtain equity or debt financing in a timely manner, on favorable terms, or at all.”
Saylor’s investment approach now being questioned
Strategy Chairman Michael Saylor’s investment approach is now being questioned. The company spent $21.2 billion buying bitcoin at an average price of $96,458 per bitcoin from November 10 to February 23.
Before this recent spending spree, Strategy held 279,420 bitcoin purchased at an average price of $42,692. The recent purchases of 219,676 bitcoin raised the company’s average purchase price to $66,357.
Strategy stock faces two major risks: continued bitcoin price declines and possible contraction of the premium investors have given the company over the value of its bitcoin holdings.
At Monday’s price, Strategy has a market value of $74.15 billion, based on 294 million shares, which includes shares after conversion of all its convertible notes. This gives the company an 85% premium to the $40.1 billion value of its bitcoin holdings.
This premium has already shrunk from 164% on November 10 before the latest buying spree. The premium allows Strategy to buy $1.85 worth of bitcoin for each $1 of stock it issues.
If investors decide that Strategy doesn’t merit this premium, cheap financing would disappear, along with the rationale for investing in MSTR stock instead of bitcoin or a bitcoin-related ETF.
Coinbase & Robinhood also fell on Monday
Other crypto-related stocks also fell on Monday, with cryptocurrency exchange Coinbase Global dropping 7.5% and trading platform Robinhood Markets down 10%.
The bitcoin price could retreat further without the hoped-for government purchases, though such buys could still happen in the future. President Trump’s order will create a Strategic Bitcoin Reserve using current cryptocurrency holdings obtained through law enforcement activity.
Trump has also directed the secretaries of treasury and commerce to develop “budget-neutral strategies” to acquire additional bitcoin, with the stipulation that they impose no costs on taxpayers. There’s speculation that Trump might exchange some of the nation’s gold reserves for bitcoin.
However, government bitcoin purchases, even if just shifting from one financial asset to another, might be politically problematic as Trump and Republicans work to cut federal spending, with Medicaid cuts under consideration.
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