Bitcoin News Today: MicroStrategy's Stock Plummets 70% Amid Bitcoin Funding Strategy Fallout

Michael Saylor, founder and CEO of MicroStrategy, reaffirmed the company's commitment to its Bitcoin treasury strategy on Monday, signaling a potential for further Bitcoin purchases even as its stock continues to fall. The company has been aggressively acquiring Bitcoin since 2020, using equity and debt offerings to fund the purchases. Saylor's comments come amid growing concerns over MicroStrategy's financial structure, with its market capitalization hovering below the value of its Bitcoin holdings.

MicroStrategy has raised over $700 million in recent weeks through at-the-market equity offerings, deepening investor worries about dilution. These financing strategies have increased the number of outstanding shares by roughly 20% year-to-date, contributing to a sharp decline in stock price. The stock is now down over 70% from its all-time high.

The stock's performance has also outpaced Bitcoin's modest 3.6% drop in 2025, raising questions about the company's leverage and capital structure. Analysts have warned that the company's aggressive funding model could lead to continued pressure on its shares, especially if capital markets remain tight.

Risks to the Outlook

MicroStrategy's stock dilution is primarily driven by its reliance on at-the-market equity offerings and convertible debt to fund its Bitcoin purchases. This strategy has allowed the company to build a $60 billion Bitcoin reserve, but it has also led to significant share issuance, eroding investor confidence. The company's shares have fallen 36% year-to-date and 55% over the last 12 months.

In November, MicroStrategy announced the creation of a separate U.S. dollar reserve to cover dividends and interest on its convertible bonds. This move, funded by new share issuances, marks a shift in strategy to ensure short-term liquidity. As of December 22, the USD reserve has reached $2.19 billion, which is more than enough to cover three years of preferred stock dividend payments.

The dual-reserve model highlights the growing complexity of MicroStrategy's financial structure. While the company continues to add to its Bitcoin holdings, the increasing debt and equity issuance have raised concerns about its long-term sustainability. Analysts note that leverage has made MicroStrategy more vulnerable to market swings, especially in a tightening capital environment.

What Analysts Are Watching

The company's stock performance has also been impacted by uncertainty around its inclusion in major indexes like the MSCI benchmarks. MSCI is expected to make a decision in January on whether to remove MicroStrategy and similar firms from its indexes. Analysts argue that MicroStrategy's inclusion in the Nasdaq-100 was a technical inclusion and that its exclusion could trigger significant investor outflows.

Kaasha Saini of Jefferies estimates that a removal from the index could result in $1.6 billion in passive outflows, further pressuring the stock. Michael Saylor, however, remains optimistic about the company's prospects, citing ongoing engagement with index providers and the broader market. The outcome of MSCI's review will be a key event for investors, with potential ripple effects across the broader digital asset sector.

In addition to index uncertainty, analysts are also watching for further equity offerings and debt issuance. MicroStrategy's recent $700 million equity sale has already raised concerns about supply pressure, and any new financing could exacerbate the situation. The company's balance sheet leverage and exposure to Bitcoin price volatility remain key risk factors.

What This Means for Investors

Investors are increasingly cautious about the risks associated with MicroStrategy's Bitcoin treasury model. The company's aggressive funding strategy has led to a significant discount between its market value and its Bitcoin holdings, raising concerns about long-term value retention. While Saylor remains bullish on Bitcoin and the company's strategy, the financial engineering involved comes with trade-offs.

For now, the market is pricing in uncertainty. The recent stock decline, coupled with the potential MSCI decision and ongoing capital-raising, suggests a volatile path ahead. Investors are advised to monitor MicroStrategy's capital structure and Bitcoin buying patterns closely. The company's ability to execute its dual-reserve strategy and manage its equity and debt load will be crucial in determining its future performance.