Strategy's Position: Dual Decline of MSTR and BTC, Cost Basis Breached
According to an analysis by CryptoQuant analyst Axel Adler Jr., Strategy (formerly MicroStrategy) has seen its preferred stock MSTR fall 78% from its all-time high, while Bitcoin has declined 51% from its peak. The company's holdings of 847,363 BTC were acquired at a total cost of approximately $64.1 billion, translating to an average cost basis of $75,651 per BTC. With Bitcoin's price now trading below this cost line, this marks the first time the position has been underwater since the 2022 bear market.
Notably, MSTR's underperformance relative to BTC has widened to about 28 percentage points, approaching the upper end of its historical range. However, compared to the extreme drawdown seen in late 2022—when MSTR lagged BTC by up to 89 percentage points—the current gap remains below that extreme. This suggests that MSTR's premium compression may still have room to run before reaching previously observed lows.
Amid the price decline, Strategy's purchasing strategy has undergone a clear shift toward defense. Weekly BTC purchases have been cut by roughly two-thirds. Moreover, of the $335.5 million raised through a recent stock issuance, less than 11% (approximately $37 million) was used to acquire Bitcoin, with the remainder allocated to USD reserves. More critically, in late May, the company executed its first net sale of Bitcoin since 2022, selling 32 BTC to fund dividends on its preferred STRC shares. This marks a departure from the pure accumulation model and signals a tactical shift in asset management.
Risk Analysis: Cost Line, Funding Channels, and Liquidation Scenarios
Adler identifies the primary risk as Bitcoin's price persistently remaining below the $75,000 treasury cost line. If BTC stays low for an extended period, it will compress MSTR's premium over net asset value, thereby hindering the company's ability to raise capital through at-the-market (ATM) equity offerings. The effectiveness of ATM issuances is highly dependent on the MSTR premium; a narrowed premium makes new issuance uneconomical.
However, the company's debt structure provides a buffer: virtually all of its debt is in the form of convertible bonds, which carry no margin call risk. Therefore, the baseline scenario is not forced liquidation but rather a gradual erosion of marginal buyers—investors willing to pay a premium for MSTR. The true stress inflection point would be if Strategy transitions from selling equity to systematically selling Bitcoin itself to cover preferred dividends and debt interest. If Bitcoin's price remains depressed for a prolonged period, this path could become reality, directly exerting selling pressure on the Bitcoin market.
In summary, Strategy is facing its most challenging situation since 2022: an unrealized loss on its Bitcoin holdings, active curtailment of buying activity, and even selling coins to meet dividend payments. Market participants should closely monitor the company's future funding dynamics and whether Bitcoin can reclaim its cost basis. For crypto investors, this whale's defensive behavior itself is a significant market signal.