MicroStrategy Shares Drop 5% Amid Fading Confidence in Saylor's Bitcoin Strategy

MicroStrategy’s stock fell another 5% on Tuesday, continuing its months-long decline as investor confidence in founder Michael Saylor’s Bitcoin-driven strategy wanes. The company announced a new $116 million Bitcoin purchase in January 2026, bringing its total holdings to 673,783 BTC, or roughly $62 billion at current prices. Despite the accumulation, shares failed to maintain upward momentum even as Bitcoin prices briefly surged following the U.S.-Venezuela conflict.

The recent decline comes after MicroStrategy suffered a $17.44 billion unrealized loss on its Bitcoin holdings in the fourth quarter of 2025. The losses were driven by a 24-25% drop in BTC prices during the period. This marked one of the worst quarters in the company’s history and raised further concerns about its financial stability.

Investors remain skeptical about the long-term viability of MicroStrategy’s Bitcoin-focused model. In late November 2025, CEO Phon Le acknowledged the company could sell some of its Bitcoin under severe crisis conditions, breaking from Saylor’s long-standing "never sell" stance. As of early January 2026, the company has increased its cash reserves to $2.25 billion, but this has done little to restore confidence in its balance sheet.

Why Did This Happen?

MicroStrategy’s aggressive Bitcoin accumulation strategy has faced mounting pressure as BTC prices fluctuate. The company acquired BTC at an average price of $75,026 per coin, but the recent price dip has brought it close to the break-even point. This has amplified concerns that further declines could push the holding into a realized loss.

The company’s stock performance reflects this uncertainty. In 2025, MSTR shares fell nearly 50%, reaching their lowest level since late 2024. Analysts have attributed the decline to a combination of Bitcoin’s underwhelming performance and the company’s heavy reliance on digital assets as its primary balance sheet item.

The situation is compounded by the risk of forced selling. If Bitcoin prices continue to slide, MicroStrategy might be compelled to sell holdings to cover expenses, potentially exacerbating downward pressure on BTC prices.

How Did Markets React?

The market reacted positively when MSCI announced it would not exclude Bitcoin treasury companies from its indexes in February 2026. This decision offered temporary relief for MicroStrategy and other firms with large Bitcoin holdings. Following the announcement, MSTR shares rose 5.7% in after-hours trading, signaling short-term optimism.

However, the broader market remains cautious. Bitcoin’s price has been volatile, and any sharp downturn could reignite concerns about MicroStrategy’s financial stability. The company’s stock is trading at a discount to the value of its Bitcoin holdings, currently about 25% below its digital asset value.

Investors are also watching for any shifts in MSCI’s index policies. The index provider plans to review its criteria for non-operating asset companies in February 2026. If new rules are introduced, they could affect MicroStrategy’s inclusion in key equity benchmarks.

What Are Analysts Watching Next?

Analysts are closely watching MicroStrategy’s next move as it continues to increase its Bitcoin exposure. The company’s recent $116 million purchase in January 2026 shows no signs of slowing down. However, if BTC prices fall further, the company may face increasing pressure to reassess its strategy.

The market is also watching for any regulatory changes that could impact Bitcoin’s adoption. In late 2025, MicroStrategy urged MSCI to abandon its proposed rule to exclude companies with more than 50% of assets in digital assets. The firm warned that such a rule could destabilize the market and contradict U.S. efforts to support digital asset innovation.

As of early January 2026, MicroStrategy holds 673,783 BTC, valued at around $62 billion. The company has accumulated this amount at an average price of $75,026 per coin. Any further decline in BTC prices could push the holding into a realized loss, increasing the likelihood of forced sales.

Investors are also paying attention to how the company finances its purchases. In 2025, MicroStrategy raised $62 million through at-the-market sales of its common stock, increasing its cash reserves to $2.25 billion. This reserve is intended to support dividend payments and interest obligations on outstanding debt. However, the company has not ruled out selling preferred shares if needed.