In early 2025, Michael Saylor’s technology company MicroStrategy officially rebranded to Strategy and adopted a Bitcoin-themed visual marketing program to reflect its core focus as the world’s largest corporate BTC holder.
As of Dec. 30, Strategy has accumulated 672,497 Bitcoin (BTC), valued at nearly $59 billion and acquired at an average price of $74,997 per coin. With Bitcoin trading near $88,000, the company is sitting on an unrealized gain of roughly 17%.
However, despite the paper profits, pressure has been building. Strategy must continue servicing dividends and financing costs tied to the preferred shares and debt used to fund its Bitcoin purchases, creating fixed cash obligations regardless of Bitcoin’s price moves.
Those concerns resurfaced in November when Bitcoin slid to $82,000. To reassure investors about its ability to meet dividend and debt payments, on Dec. 1, Strategy said it established a $1.44 billion cash reserve to cover at least 12 months of preferred dividends and debt interest.
As 2026 approaches, investors are questioning whether the model can withstand deteriorating market conditions.
From business intelligence to Bitcoin treasury
Strategy first started buying Bitcoin in August 2020, announcing its first purchase of 21,454 BTC for $250 million as a strategic treasury reserve asset. Ever since, the company has evolved into a full-scale capital markets strategy.
Through at-the-market (ATM) equity programs, convertible notes and preferred stock issuances, Strategy has raised capital to acquire Bitcoin without selling its core holdings.
The result is a structure that offers leveraged exposure to Bitcoin while maintaining a legacy software business that still generates operating revenue, though its contribution to valuation has diminished significantly.
Notably, Strategy’s profit swings in 2025 were also heavily influenced by a shift to fair-value accounting for Bitcoin, which requires the company to revalue its BTC holdings each quarter and book unrealized gains or losses in net income. This change has made earnings more volatile, as movements in Bitcoin’s price now flow directly through reported results, even when no Bitcoin is sold.
“Strategy stopped being a software story the day Bitcoin became 98% of the narrative. Today it’s a Bitcoin hedge fund wearing a BI ticker,” Marvin Bertin, co-founder and CEO at Maestro, told Cointelegraph.
He said the analytics business still exists, but is negligible next to the company’s massive BTC balance sheet.
Related: Strategy survives first Nasdaq 100 shakeup since entering the index
For years, Strategy’s Bitcoin holdings made the company a preferred vehicle for investors seeking equity-based Bitcoin exposure, effectively serving as a proxy for BTC at a time when direct ownership or regulated spot products were not widely available.
However, Bitcoin ETFs have now introduced cheaper exposure for institutions. Moreover, MSCI is consulting on potential index-rule changes that could exclude crypto-heavy “digital asset treasury” companies, which Strategy says could force passive outflows if implemented.
MSCI is a major global index provider whose benchmarks are used by trillions of dollars in passive and active investment funds to decide what stocks to buy. Strategy’s removal from an MSCI index matters because index-tracking funds are often forced to sell the stock, which can reduce demand, liquidity and visibility.
Related: Strategy adds nearly $1B in Bitcoin as market slump pressures MSTR stock
Can Strategy’s Bitcoin model survive 2026?
Jamie Elkaleh, chief marketing officer of Bitget Wallet, told Cointelegraph that Strategy’s model “remains sustainable as long as the crypto market stays constructive.”
However, heading into 2026, he warned of “persistent dilution, sensitivity to interest-rate conditions, and the possibility that investor sentiment turns against leveraged crypto balance sheets.”
“If markets tighten or appetite for equity-financed BTC exposure weakens, this approach becomes far more difficult to execute,” Elkaleh added.
Bertin echoed this sentiment, noting that Strategy’s Bitcoin model works well in strong bull markets, where the company can issue preferred stock and equity at a premium to its BTC holdings.
However, in flat or choppy markets, that premium could turn into a discount, making new issuance value-destructive. Bertin warned that rising rates, competition from spot Bitcoin ETFs and investor fatigue could stall the model, while dividend obligations may eventually force the company to sell Bitcoin.
Related: MSCI’s Bitcoin snub is like penalizing Chevron for oil: Strategy CEO
What happens to Strategy if BTC drops 20%–30%?
Bitcoin is a highly volatile asset. Historically, the cryptocurrency has even fallen 20%–40% during bull markets before resuming its trend.
“We could easily see a significant correction in crypto assets in the coming bear market of 2026 and beyond, and a 20%-30% correction in Bitcoin isn’t that unlikely to happen,” Joel Valenzuela, Dash DAO core member, said.
A drop this size wouldn’t immediately threaten Strategy’s survival, but it could break the mechanics of its business model, Bertin said. He explained that a sharp decline would shrink the value of its Bitcoin holdings and erase the equity premium that allows the company to issue shares above Net Asset Value (NAV), which is calculated by subtracting the fund’s total liabilities from its total assets and then dividing by the number of outstanding shares.
At the same time, Strategy would still face large cash obligations from high-yield preferreds and convertible instruments. That would leave few attractive options, including issuing stock at a discount, selling Bitcoin to cover payouts, or operating as an expensive proxy in a market now dominated by low-cost Bitcoin ETFs.
“It risks turning Strategy from the flagship of corporate Bitcoin into the case study in how leverage and dilution quietly kill a great narrative,” Bertin said.
However, Elkaleh noted that the scale of Strategy’s holdings “provides long-term optionality for recovery if the broader crypto cycle stabilizes.” He still warned that, in the short term, any major BTC drawdown would meaningfully strain its capital structure.
Related: Strategy responds to MSCI letter, makes case for index inclusion
Bull case vs. bear case scenarios
In the optimistic scenario, Bitcoin resumes its rally, restoring Strategy’s NAV premium, which has briefly dropped below 1 in recent months, meaning its market value was less than the value of its underlying Bitcoin holdings minus liabilities.
Elkaleh said Bitcoin could break above $150,000 next year, enabling Strategy to resume accretive issuance and deliver equity gains of 100% or more.
In his bullish case, Bertin predicted a strong Bitcoin breakout with sustained ETF inflows restoring Strategy’s equity premium, allowing it to issue stock above NAV, retire costly debt and once again outperform Bitcoin as a high-beta institutional proxy.
However, he warned that in the bear case, the NAV discount persists, equity raises “become value-destructive, preferreds and converts are a growing tax on the treasury, and ‘never sell’ collides with basic balance-sheet math.”
Valenzuela also warned that forced Bitcoin sales could trigger “a cascading liquidation event,” potentially affecting broader crypto markets.
“The overlooked angle is that the bull case is just a hope, while the bear case is an accounting certainty,” Bertin said.
Related: Saylor pitches Bitcoin-backed banking system to nation-states
There is no single metric that defines Strategy’s success in 2026. Investors will need to monitor Bitcoin holdings, average acquisition cost, leverage ratios, preferred and debt issuance and crypto market performance.
What’s clear is that Strategy is no longer viewed as a traditional operating company. It has become a leveraged Bitcoin vehicle with an operating business attached, a structure that can outperform dramatically in a bull market, and underperform just as sharply when conditions reverse.
As Elkaleh put it, Strategy offers “amplified Bitcoin exposure along with the risks that come with leverage and dilution.”
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