The world's largest corporate holder of Bitcoin is facing one of the largest unrealized losses in its history as Bitcoin's fall below $60,000 continues to pressure the balance sheet and share price of Strategy (MSTR.US).
Reports indicate that, based on mark-to-market accounting, Strategy is currently grappling with unrealized losses exceeding $13 billion. If recognized in the income statement under fair value accounting rules, this could result in a massive quarterly loss for the company.
Data from BitcoinTreasuries.net shows Strategy holds approximately 844,000 Bitcoins, with an average purchase cost around $75,600 per coin. At the time of writing, Bitcoin is trading near $59,700.
For perspective, Strategy's current paper loss already surpasses the entire market capitalization of Dogecoin, which stands at $12.97 billion. Furthermore, this loss exceeds the market value of numerous major digital assets and blockchain projects, including Monero, Cardano, Chainlink, Bitcoin Cash, Litecoin, BlackRock's BUIDL fund, Uniswap, NEAR Protocol, and Aster, among others.
The expanding paper loss is accompanied by a significant decline in Strategy's share price. As Bitcoin fell to its lowest level since October 2024, Strategy's stock dropped to a 28-month low, plummeting over 81% from its all-time high of $457.22 reached in July 2025.
This sharp decline has reignited skepticism from long-time Bitcoin critic Peter Schiff. He believes Strategy's stock may soon trade at a substantial discount to the value of Bitcoin held per share. Schiff posted on social media platform X, stating, "Strategy continues to crash. I think the stock will soon trade at a huge discount of up to 40% to its Bitcoin-per-share value. The best way to create value for shareholders would be to sell some Bitcoin and buy back stock until that discount disappears."
Market concerns intensified in early June when Strategy disclosed the sale of 32 Bitcoins, its first sale since 2022. While the sale size was minuscule compared to its vast holdings, this move broke founder Michael Saylor's long-standing promise to "never sell Bitcoin" and prompted the market to re-evaluate the core assumptions underpinning its funding model.
Simultaneously, overall funding conditions in the crypto market have continued to deteriorate. Data shows retail investor participation is declining, with Bitcoin spot ETFs seeing cumulative net outflows of nearly $3 billion in June. Many investors who bought during the initial ETF launch phase remain underwater, further dampening new capital inflows.
Analysts suggest this indicates the Bitcoin market is becoming increasingly reliant on institutional funds for support. Ironically, at this very moment, the funding system of Strategy, one of the largest institutional buyers, is coming under market scrutiny.
The core market concern revolves around Strategy's long-term reliance on raising capital through securities like stock and preferred shares, which is then used to continuously purchase Bitcoin. This model helped the company become one of the world's largest corporate Bitcoin holders and served as a significant source of incremental funding driving Bitcoin's price higher.
However, with Bitcoin's price persistently below $60,000, rising financing costs for the company, and a sharp decline in the price of its STRC preferred shares, more investors are questioning the sustainability of this funding model.
The STRC preferred shares have become a focal point. Strategy positioned STRC as a key financing product for the mass market, aiming to attract ordinary investors to its Bitcoin strategy and offer a less volatile investment vehicle compared to common stock through its relatively high monthly dividend yield.
Yet, STRC's performance since listing has fallen far short of expectations. Data shows the preferred share price has dropped from its $100 issuance price to around $75, causing paper losses for many investors who hoped to gain indirect exposure to Bitcoin through this product.
Concurrently, as buying interest wanes, STRC's yield has been climbing. This signifies a significantly higher future cost for Strategy to raise funds through preferred share issuance, thereby weakening its ability to continue purchasing Bitcoin on a large scale.
Analysts note that STRC represents an attempt at crypto-financial innovation in recent years—packaging highly volatile crypto assets into income-generating securities to attract a broader investor base. However, as the market correction persists, the risks of this model are becoming increasingly apparent.
Unlike traditional corporate bonds, STRC has no fixed maturity date, no Bitcoin assets as collateral, and its dividends can be reduced or suspended at the board's discretion, making its actual risk profile much higher than many investors initially perceived.
Alex Blume, founder and CEO of Bitcoin asset manager Two Prime, warned that Strategy's recent persistent weakness is reminding the market of past major risk events in the crypto industry. "The recurring issues at Strategy are making the market uneasy, reminiscent of some of the major crises the crypto market has experienced before," he said.
Andreja Cobeljic, Head of Derivatives Trading at Amina Bank, stated bluntly that while Bitcoin's recent decline is partly due to cyclical market weakness, the true driver of deteriorating sentiment is the erosion of investor confidence in Strategy's funding model. He said, "The immediate cause of this Bitcoin downturn is a weakening market cycle, but the deeper driver is the impact on the credibility of Strategy's strategy."
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