The miracle of valuing the company’s stock far higher than its bitcoin holdings came unglued. Then bitcoin plunged.
By Wolf Richter for WOLF STREET.
Digital Asset Treasury companies – the DATs – are getting crushed as the hot air comes out of cryptos. They’re an ingenious concept, pioneered in 2020 by Michael Saylor, CEO of MicroStrategy, which is now Strategy, when he transformed a tiny enterprise software outfit from the Dotcom Bubble and Bust into the largest corporate holder of bitcoin, by funding bitcoin purchases mostly with the sale of shares and also some debt, while his fans put a much higher price on the company’s stock than on the bitcoin it was holding. And the stock price exploded. And soon there were the copycats because this was just too good to pass up.
Today, Strategy, the “largest corporate holder of bitcoin,” as it says, reported a pre-tax loss of $17.5 billion for Q4, and a net loss of $12.6 billion, and a net loss per share of $42.93, as the price of bitcoin had plunged by the end of Q4.
In its report, Strategy also gave an update on its bitcoin holdings as of February 1: It held 713,502 bitcoins, acquired over the years at an average cost of $76,052 per bitcoin.
At the moment, bitcoin trades at around $63,000, having plunged by roughly 50% from its all-time high four months ago. At this price, Strategy’s bitcoin holdings are $9.3 billion in the hole, but that doesn’t really matter as long as Strategy can keep raising new money by selling more shares.
Strategy is a money-raising machine. In all of 2025, it raised $25 billion from the sale of shares and debt, to buy bitcoin with the proceeds. In Q4 alone it raised $5.6 billion. And its fans were still buying this stuff so far this year: Since the end of Q4, it raised an additional $3.9 billion, it said today.
Strategy’s stock is kind of funny, with its two WTF spikes.
During the Dotcom Bubble and Bust, the stock of enterprise software company MicroStrategy had spiked into the sky and then imploded by 99.6% amid admissions of revenue overstatements. But it survived, unlike many other outfits of that era, and still has this business, which produced $123 million in revenues in Q4.
But in 2020, Saylor pivoted to the new and ingenious business model, a first in this world possibly, of selling mostly shares and also some debt and use the proceeds to acquire bitcoin, while flooding the media with all kinds of bitcoin hype, which caused the stock to explode to $473.88 a share at the peak in November 2024, surpassing even the Dotcom Bubble high.
Its market cap, at the peak in mid-July 2025 of nearly $130 billion, far exceeded the value of its crypto holdings of $73 billion at the end of Q3 2025. In other words, the company was valued at nearly $2 for each $1 in cryptos it held.
Since that peak, shares [MSTR] have plunged by 77%, including 17% today, straight into our pantheon of Imploded Stocks, for which the minimum requirement is a 70% plunge from the more or less recent all-time high.
The earnings report is through Q4 and does not yet reflect the price action of bitcoin more recently, but the stock price may reflect it (data via YCharts):
The ingenious miracle came unglued.
After the pivot in 2020, Strategy’s stock was valued at a far higher price than its bitcoin holdings. So when it sold shares via its “Common Stock ATM Program” (which allows for opportunistic sales of Class A common stock) and used the proceeds to buy bitcoin, the stock would rise further because for each $1 billion of bitcoin it bought, its market cap would rise by $2 billion or whatever, as the stock’s fans put a far higher value on the shares than what the company’s bitcoin holdings were worth.
That premium these fans were willing to pay for holding a leveraged bitcoin fund was the miracle. It was ingenious for Saylor to think it up and execute it so flawlessly.
And for a while, the price of bitcoin also surged – Saylor helped that surge along by being a voluminous very public buyer of bitcoin – and those two factors came together, and the stock price exploded.
More recently, the opposite of both has happened. The company’s stock price has fallen in relationship to the value of its bitcoin holdings as the miracle premium is getting wrung out of the stock. And bitcoin itself has fallen.
This is why Strategy’s stock has plunged by 77% though bitcoin has “only” plunged by 50%.
And in case you missed it: PayPal Shares Plunged 86% from the 2021 Goofball High and Right into our Imploded Stocks
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Most, if not all the Crypto stocks will be finding their way onto Wolf’s list of imploded stocks. Coinbase will be the next one.
Crypto, bitcoin, is a creature of the block chain arithmetic that claimed that an alternative currency was about to be approved, bitcoin, that never goes down,
Bitcoin: buy high, HODL to zero.
Correction. “All crypto stocks” will land on the imploded stock list.
Crypto is good for money laundering & criminal activity.
Crypto brings out the worst of Wall street.
Crypto has been a bubble that has risen on a wave of hope.
That many steps of that hope have been delivered along the way and those who have held it have been rewarded.
Last year it pretty much achieved peak financial legitimacy (at least in the US). So what else is there left to hope for? Without hope what value does it have?
The value is what the next fool will pay. I will commit to buying one bitcoin for $1,500. But I want an original early vintage. I don’t want any of these crappy new bitcoins they make today.
His next move should be to create MegaStrategy which will buy Strategy stock and sell its own stock at a 2x premium to buy more Strategy stock. Then make GigaStrategy, etc. Infinite money!
Brilliant! If there’s a catch I can’t see it. Time for an IPO!
MW: Strategy’s sinking stock, heavy losses put the policy of ‘don’t ever sell your bitcoin’ to the test
Bitcoin ETF suffers worst decline in over a year — and new investors are now sitting on ugly losses
DRUDGE: SHITCOIN
Who would have ever thought that selling binary strings of numbers that are completely arbitrary and utterly worthless would implode to zero?
“completely arbitrary and utterly worthless”
You are missing the point! fees…all those professionals cashing in along the way…
MW: Software stocks fall for an eighth straight day, with a sweeping roster of decliners
IGV -4.97%
Wolf Man invested his life savings into cryptos. 😁
TBH, if the stock market were based on any sense of rationality, Tesla would be a $25 stock.
If Tesla investors were rational people, there would not even be a discussion about a trillion-dollar pay package for Musk. In all of its history, Tesla generated a combined profit of $41 billion. These people are so out there, they live on Mars.
I don’t know how, because Strategy is more than one stock, but somehow it’s behaving like a closed call ETF for bitcoin. It’s picking picking up yield maxing morons and crypto morons.
Bitcoin is like a religion for many who bought into it. Not convinced it’s done until the ones buying it are out of a job for a time (recession) and will need real $ to pay for their life.
The ones exploiting this bubble need to move on to other speculative assets. Maybe they already moved on with gold / silver + AI and this is the end. That would be very refreshing. But if the devotes keep funneling their paychecks into Bitcoin in the next months why wouldn’t smart money move back in to exploit it unless they are worried about bubbles elsewhere imploding and the contagion from that.
If Bitcoin is a ripple, the AI bubble is a tsunami. We are looking at a tens-of-trillions-of-dollars wipeout of imaginary money.
So the big 6 have sent so much $ to NVIDiA for AI investment. It’s almost inevitable it will be NVIDIA that folds, kinda like a Lehman.
Then I guess the government will make the others whole? Maybe a EV car ride into Washington event after the fall? Or perhaps the robots will carry litters for the billionaires.
Do Tesla next please
I watched some of the call. Amusing.
I don’t understand why the preferreds aren’t getting hammered. Ok, so they have lots of cash to cover them for 2.5 years. Then what? Odd that the real risk isn’t priced in at all.
what a trade if you get it right!
That ain’t the half of it wolf. The Biggest of banks also lent money to folks who bought bitcoin with these monies. Lots of money. You’ll hear none of this on tv. Not on cnbs, not on faux noise.
You know and why shouldnt the biggest banks lend money to clients in order to buy bitcoin? These banks already know that they are too big to fail. Ain’t that special?
Those loans are secured by the collateral, bitcoin. Just like regular margin loans, or securities-based loans (SBLs) for billionaires or margined precious metals or anything. If the value of the collateral drops below a certain limit, the banks issue a margin call, and if the client cannot come up with the cash, banks seize the collateral. Banks can lose some money on these deals, but not a lot. Their clients can – and do – lose everything.
Saw something today that a lot of the bitcoin miners are turning the machines off, they aren’t profitable unless bitcoin is at 70,000 or more.
I don’t follow this stuff – I feel like I should research why it takes so much energy to mine bitcoin, but I’m reminded of the old high school sports cheer:
“ apathy, apathy, that’s our cry!
A – P – A – T…h… aaahhh… whatever…”
But spun electrons once bought a pizza!
Its should be called bet-con. No assets backed. Don’t be the one holding an empty bag.