The recent sharp decline in Bitcoin is putting renewed pressure on the world's largest corporate cryptocurrency reserve. For the first time since 2023, the price of Bitcoin has fallen below the average acquisition cost of Michael Saylor's leveraged Bitcoin proxy, Strategy Inc. (MSTR.US). The breach of this critical level has not triggered widespread panic but instead reveals a sense of market exhaustion—a signal that the once highly sought-after model of "issuing stock to continuously buy Bitcoin" is now clashing fiercely with increasingly skeptical market sentiment. The company's current Bitcoin holding cost is $76,037, a figure long viewed as a psychological support level for the market. Last Saturday, Bitcoin's price dropped below $76,000, and it probed lower again during Monday's Asian trading session, officially breaching this support. This breakdown confirms a deeper reality: Strategy's stock price has fallen nearly 70% from its all-time high, its equity premium has vanished, capital markets are tightening, and Saylor's entire operational strategy is facing comprehensive pressure.
Currently, the company is not in immediate financial distress, with no margin calls and no market expectation of forced Bitcoin sales. Furthermore, the company has accumulated a $2.25 billion cash cushion through stock issuances. However, if the Bitcoin price fails to rebound and the company's stock cannot attract new investors, its room to maneuver will continue to narrow. Strategy's core operational logic is remarkably simple: issue stock at a price higher than the value of its Bitcoin holdings to raise capital, then use the proceeds to buy more Bitcoin. This capital markets tactic, essentially a form of equity arbitrage to increase cryptocurrency exposure, made the company a favorite among speculative investors during the last crypto bull market.
But that favorable period has clearly ended. Although Strategy still holds over 712,000 Bitcoins, the market value of its holdings continues to shrink. Simultaneously, the broader macro narrative for Bitcoin has been cooling. Once touted as a hedge against inflation and fiat currency debasement, Bitcoin has recently shown little reaction to traditional positive catalysts, including geopolitical shocks, a weaker US dollar, or even favorable regulatory developments. Instead, market attention and capital have shifted towards faster-trading speculative vehicles, ranging from artificial intelligence (AI) concept stocks to volatile gold and silver.
This shift in market sentiment has left Strategy in an increasingly precarious position. With the stock premium gone, issuing new shares not only causes equity dilution but also fails to provide any new strategic advantage. Meanwhile, Bitcoin's price hovering around the break-even point has stripped this level of its former psychological support function. The market widely anticipates that Strategy's stock price will fall further when US markets open on Monday. The company's market capitalization is now almost on par with the value of its Bitcoin holdings, meaning even minor fluctuations in Bitcoin's price could significantly impact the market's view of Saylor's entire Bitcoin investment structure.
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