Bitcoin Holding Losses from Strategy Expand to Over $4.6 Billion

The value of Bitcoin has dropped below $71,000, increasing unrealized losses for Strategy’s holdings to over $4.6 billion. This decline has pushed the company’s Bitcoin position significantly below its average purchase price of $76,052 per coin according to TradingView. The losses are now the largest in the firm’s history, marking the first time its Bitcoin reserves are trading at a discount to their cost basis as reported.

The downturn coincided with a broader market sell-off that saw $777 million in liquidations in 24 hours. Long positions were the most affected, particularly those tied to institutional investors and high-leverage traders. Bitcoin’s price decline of nearly 19% in 2026 has brought it back to levels last seen in 2024 according to data.

Strategy has held 713,502 BTC since 2020 and has repeatedly purchased the asset at prices above $70,000. These purchases were funded through stock and convertible debt issuance, a model that has worked well in rising markets. However, the recent volatility has exposed the firm’s leverage and capital structure risks as FXStreet reports.

Why Did This Happen?

The Bitcoin price decline was driven by weak institutional demand and ETF outflows. Spot ETFs have recorded net outflows of 10,600 BTC so far in 2026, compared to 46,000 BTC net inflows at the same time in 2025 according to FXStreet. The market remains cautious ahead of the company’s Q4 earnings report scheduled for Thursday.

Strategy’s Q4 earnings could provide insight into how the firm is managing its Bitcoin exposure and balance sheet. The stock has declined by over 70% since its July 2025 peak, reaching levels not seen since mid-2024. This decline has triggered significant paper losses for investors, particularly public pension funds as reported by Yahoo Finance.

The firm’s leveraged strategy has amplified its losses. Eleven state pension funds now hold around 1.8 million MSTR shares, once valued at $577 million but now worth approximately $240 million. These funds have seen an estimated $337 million in unrealized losses according to Yahoo Finance.

How Did Markets React?

The broader financial markets have also seen turmoil. The U.S. Treasury warned that it has no legal authority to bail out Bitcoin or direct banks to buy the cryptocurrency. Treasury Secretary Scott Bessent emphasized that any Bitcoin held by the government is the result of forfeitures, not taxpayer-funded purchases as Yahoo Finance reports.

The message has reinforced market expectations of a non-interventionist approach to crypto. As a result, investors have continued to sell off positions, exacerbating the downward pressure on Bitcoin. The dollar index has risen slightly following the nomination of Kevin Warsh to the Federal Reserve chair, signaling tighter monetary policy expectations according to Bloomberg.

Bitcoin’s behavior in risk-off environments has increasingly resembled that of high-beta assets. This trend is raising concerns about the sustainability of the treasury company model. Companies that rely on equity issuance and Bitcoin price growth are now facing a reversal of fortunes according to CryptoSlate.

Analysts have highlighted the risk of a “reflexive unwind” scenario, where falling prices lead to reduced equity premiums and tighter capital availability. This creates a feedback loop that can accelerate the decline in both Bitcoin and the equities of treasury firms as CryptoSlate reports.

What Are Analysts Watching Next?

Market participants are closely monitoring several key developments. These include Strategy’s Q4 earnings report, Bitcoin’s performance against key levels like $70,000, and the broader macroeconomic environment. If Bitcoin continues to fall, companies like Metaplanet, which already hold nearly $1 billion in unrealized losses, could face additional pressure according to CryptoSlate.

The debate over the sustainability of the Bitcoin treasury model has also intensified. Some analysts argue that the model is structurally vulnerable to leverage and market volatility, while others maintain that transparency and public accounting provide safeguards against collapse as CryptoSlate reports.

The next quarter will be crucial in determining whether this model can adapt to a lower Bitcoin price environment. If the market stabilizes, companies may regain their ability to issue equity and continue accumulating Bitcoin. However, if prices remain weak, firms may shift focus to balance sheet defense and cost management according to CryptoSlate.

For now, investors are left to assess the risks and potential outcomes. The Bitcoin treasury trade, once seen as a bold and profitable strategy, is now under scrutiny as losses mount and capital markets tighten.