Strategy (MSTR) has seen a sharp decline alongside Bitcoin, marking one of its most significant drawdowns since adopting a bitcoin treasury strategy in 2020.
One Year After Its Peak
A year ago, Strategy reached an all-time high as Bitcoin neared $100,000. At the time, the company had become a pioneer in holding bitcoin (BTC $87,033.52) as a corporate treasury asset, attracting strong investor interest.
Current Slide
Today, Strategy trades 68% below its $543 peak, initially set shortly after President Donald Trump’s election victory. Bitcoin has fallen to $83,142, its lowest since April, with Coinbase recording a brief dip to $81,385 on Friday. Strategy’s average purchase price of $74,430 remains a key support level for investors.
The decline in Bitcoin from its October record of $126,000 has intensified Strategy’s drop. The stock has breached critical moving averages and technical support levels, marking the second-largest drawdown since the company implemented its bitcoin treasury program in April 2020.
Past sell-offs provide context: a 69% drop between February and May 2021 coincided with Bitcoin falling from ~$60,000 to $30,000, while the largest decline followed Bitcoin’s $69,000 peak in November 2021, resulting in an 84% sell-off that bottomed in June 2022. Since August 2020, Strategy has endured multiple declines exceeding 50%.
Market Implications
JPMorgan analysts caution that major indices like MSCI USA and Nasdaq 100 could consider excluding Strategy. Such a move may trigger $2.8 billion in outflows from MSCI alone. Passive investments, including ETFs, account for roughly $9 billion of the company’s market capitalization, highlighting potential market impact.
Valuation
Despite the recent decline, Strategy trades at 1.23 times net asset value (mNAV), reflecting its enterprise value relative to bitcoin holdings. During the 2022 bear market, the stock frequently traded below mNAV, providing a discount to its underlying cryptocurrency assets.
