- Strategy’s 847,363 BTC holdings have fallen below their average purchase price.
- MSTR has plunged 78% from its peak, amplifying pressure beyond Bitcoin’s drop.
- Bitcoin purchases have slowed as cash reserves fell to $1.4B amid scrutiny.
The largest corporate holder of Bitcoin, Strategy, is facing a new period of market stress after its Bitcoin treasury fell below its average purchase price for the first time since the 2022 bear market, according to CryptoQuant analyst Axel Adler Jr.
The shift comes as Strategy’s stock, MSTR, has plunged 78% from its cycle high. The decline has significantly outpaced Bitcoin’s losses and raised questions about the company’s role as one of the market’s biggest institutional buyers.
Bitcoin Holdings Fall Below Cost Basis
Adler said Strategy holds 847,363 BTC with an average acquisition price of about $75,651 per coin. The company has invested roughly $64.1 billion into Bitcoin. With Bitcoin recently trading below that level, Strategy’s treasury is now sitting at an unrealized loss for the first time in nearly four years. Specifically, the firm holds BTC with a loss of over $12.38 billion.
Being underwater does not force the company to sell. However, Adler argued that it changes the economics of Strategy’s Bitcoin accumulation strategy.
The company has historically funded purchases through stock issuance. That model worked because MSTR traded at a premium relative to the value of its Bitcoin holdings.
According to Adler, if Bitcoin remains below Strategy’s average cost basis, that premium could weaken. In turn, the company may find it harder to raise capital and continue buying Bitcoin at the same pace.
MSTR Underperforms Bitcoin
Data from the report shows MSTR has fallen much more sharply than Bitcoin during the current downturn.
Bitcoin is down about 51% from its cycle peak, while MSTR has dropped 78%. The larger decline reflects the stock’s leveraged exposure to Bitcoin.
While severe, the dip is still below the 89% decline recorded during the 2022 bear market bottom.
Adler noted that since adopting its Bitcoin treasury strategy in 2020, MSTR has effectively acted as a leveraged Bitcoin proxy. As a result, it tends to amplify both gains and losses.
The report also found that MSTR is currently underperforming Bitcoin by about 28 percentage points, near the upper end of its historical range.
Bitcoin Buying Slows as Cash Pile Grows
Adler also pointed to changes in Strategy’s capital allocation that may signal a broader shift in strategy. According to the analysis, the company has reduced weekly Bitcoin purchases by roughly two-thirds.
Of the $335.5 million recently raised through stock sales, less than 11% was used to buy Bitcoin. Most of the funds were directed into a dollar-denominated reserve, which had grown to about $1.4 billion as of June 21.
The report further noted that Strategy completed its first net Bitcoin sale since 2022. The company sold 32 BTC to cover dividend obligations tied to its STRC preferred shares.
Adler described these moves as signs of a more defensive, “risk-off” approach. Preserving liquidity now appears to be taking priority over aggressively expanding Bitcoin holdings.
Analysts Differ on the Risks
Not everyone agrees that investors should be worried. Bitcoin advisor Adam Livingston argued that concerns about Strategy’s financial position are overstated.
According to Livingston, the company can meet its dividend obligations through modest equity dilution. He estimated that issuing about 0.5% new shares per month, or roughly 6% per year, would be enough.
That approach would allow Strategy to avoid tapping either its Bitcoin holdings or cash reserves.
Livingston added that MSTR investors generally accept dilution in exchange for amplified Bitcoin exposure. In his view, the company’s financial structure remains sustainable.
$75,000 Becomes a Critical Bitcoin Level
Adler said Strategy’s average Bitcoin purchase price near $75,000 is now the key level to watch.
If Bitcoin stays below that threshold for an extended period, pressure could build on the company’s ability to raise capital through stock issuance.
Even so, Adler stressed that Strategy’s debt consists largely of convertible instruments. As a result, the company does not face traditional margin-call risks.
The bigger concern is not forced liquidation. Instead, it is the possibility that one of Bitcoin’s largest structural buyers becomes less active.
According to Adler, the situation would become far more serious if Strategy were forced to sell Bitcoin regularly to meet dividend payments or debt obligations.
At the moment, shrinking Bitcoin purchases, rising cash reserves, and the company’s first Bitcoin sale in years suggest that one of Bitcoin’s most influential corporate supporters is taking a more cautious approach amid difficult market conditions.
Related: Bitcoin ETFs Bleed $469M as Miner Predicts $42K-$44K Bear Market Bottom
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