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Strategy, formerly known as MicroStrategy, is facing mounting pressure as its massive Bitcoin (BTC) reserve nears breakeven. With Bitcoin down more than 30% from its all-time high, the company’s average BTC acquisition cost of $67,549 is no longer a distant risk. At press time, Bitcoin was trading around $77,471, significantly below its previous highs, leaving Strategy exposed to unrealized losses.
Since November 2024, Strategy has amassed 275,965 BTC at an average price of $93,228. With Bitcoin’s current value, the company is sitting on $4.6 billion in unrealized losses. This massive decline in the value of its holdings has raised concerns about the firm’s financial stability, especially as an 8-K filing with the U.S. Securities and Exchange Commission (SEC) suggests that Strategy may need to liquidate part of its Bitcoin position to meet financial obligations. If the company is unable to secure new financing through debt or equity, selling its Bitcoin at a loss might become unavoidable.
The disclosure has sent ripples through the crypto community, particularly because of Strategy co-founder Michael Saylor’s famous “Never Sell” mantra. Saylor has long championed the idea of holding Bitcoin as a hedge against inflation and fiat currency devaluation. However, the latest developments suggest that the company may have to reconsider its stance if Bitcoin continues its downward trend.
The risk goes beyond financial losses; Strategy’s “never sell” philosophy has become a key pillar for institutional Bitcoin holders. A potential reversal could undermine confidence in Bitcoin as a corporate treasury asset and introduce significant volatility into an already fragile market. Experts like Nathan Chiron, Chief Revenue Officer at iExec, warn that a sell-off could signal a psychological shift, affecting not just Strategy but the broader institutional Bitcoin narrative.
Also Read: Fed’s Secret Liquidity Boost, US-China Tensions, and Bitcoin’s $500B Loss
While Bitcoin’s volatility is well known, the pressure on Strategy is intensifying as its position in BTC grows. With further price declines, the firm may face mounting challenges to its debt-fueled accumulation strategy, highlighting the risks of leveraging highly volatile assets.
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses.
I’m your translator between the financial Old World and the new frontier of crypto. After a career demystifying economics and markets, I enjoy elucidating crypto – from investment risks to earth-shaking potential. Let’s explore!
