Strategy Inc. Faces Billions in Unrealized Losses Amid Bitcoin Downturn

Strategy US5949724083

Michael Saylor's Bitcoin-focused corporate vehicle, Strategy Inc., reported a substantial $17.44 billion unrealized loss on its Bitcoin holdings for the fourth quarter of 2025. The company's share price has now declined by 66% from its all-time peak. Despite this sustained pressure on the stock, Saylor continues to direct the firm to purchase more Bitcoin, even as analysts highlight fundamental risks embedded within its business model.

Strategy's current market capitalization stands at approximately $47 billion. This figure now sits notably below the roughly $60 billion market value of its Bitcoin treasury. A key metric, the market value to net asset value (mNAV), has fallen to just above 1.0. This indicates that investors are essentially assigning no premium to Saylor's Bitcoin acquisition strategy. The equity suffered a 48% decline throughout 2025, with a steep 53% drop occurring in the final quarter alone.

Accounting Rules Reveal Quarterly Volatility

The loss, disclosed on January 5, 2026, is a direct result of Bitcoin's sharp correction in late 2025. The cryptocurrency fell from its October peak of $126,198 to around $88,000 by year-end, a decline of 25%. Since the start of 2025, Strategy has applied accounting standards requiring the quarterly mark-to-market revaluation of its digital asset holdings. This contrasts with the prior quarter, where the company booked an unrealized gain of $3.9 billion.

Strategy's treasury now contains 673,783 Bitcoin, acquired for a total of $50.55 billion. This translates to an average purchase price of $75,026 per coin and represents over three percent of the total Bitcoin that will ever exist.

Liquidity Buffer Funded by Equity Sales

To mitigate liquidity pressure, the company has established a cash reserve of $2.25 billion. This cushion was financed through the sale of its own stock. Management states the reserve is designed to cover dividend payments to preferred shareholders for 32.5 months, service interest on outstanding debt, and prevent forced Bitcoin sales during market weakness. The reserve grew by $62 million in the final week of December 2025 and the first days of January 2026.

The core structural challenge remains: Strategy holds a non-yielding asset in Bitcoin but owes obligations in U.S. dollars. It must meet interest, debt maturities, and dividends in cash. A critical juncture arrives in 2028, when convertible notes worth $5 billion come due. If Bitcoin prices are depressed at that time, the company could face a distressed sale of assets or a costly refinancing.

Management Doubles Down Amid Warnings

Michael Saylor is maintaining his aggressive accumulation strategy. In early January, Strategy purchased an additional 1,286 Bitcoin at an average price of $90,000 each, for a total cost of $116 million. This buying continues despite a credit rating of B-minus from S&P Global, assigned in October 2025. The rating agency specifically cited the structural mismatch between the firm's Bitcoin assets and its dollar-denominated liabilities.

Analyst Sentiment Diverges from Price Action

Despite the severe price decline, analyst ratings skew heavily positive. Of the 16 analysts covering the stock, 13 maintain a "Strong Buy" recommendation, one suggests a "Moderate Buy," and two advise "Hold." The average price target among them is $486.29, implying a potential upside of roughly 200% from current levels. However, all acknowledge that Strategy's share price trajectory remains inextricably linked to Bitcoin's volatility, promising significant swings in both directions.