MSTR Meltdown: Saylor's Bitcoin Bet Erases $90B as Shares Crash 66%

MicroStrategy’s stock has fallen sharply in recent months. As of January 1, 2026, its shares have dropped 66% from their peak, wiping nearly $90 billion from the company’s market capitalization. This decline coincided with a significant drop in the price of Bitcoin, which fell from $126,000 to around $87,000 over the same period. The company now holds over 672,000 BTC, valued at approximately $58.7 billion.

The impact of this price decline has been particularly pronounced for MicroStrategy. Despite the drop, the company’s Bitcoin holdings still exceed its total debt of $8.24 billion, indicating a strong balance sheet. This is a key factor in understanding why forced liquidation is not a concern for the company. Unlike hedge funds, MicroStrategy does not use margin loans, reducing the risk of asset liquidation due to price movements.

The company’s debt structure and liquidity position provide some stability in a volatile market. MicroStrategy has $2.188 billion in reserves, which is sufficient to cover two and a half years of expenses. Additionally, the company’s software business continues to generate revenue, reducing the need for any immediate Bitcoin sales. These factors help the company remain liquid even if Bitcoin prices continue to decline.

Why Did This Happen?

Several factors have contributed to the decline in MicroStrategy’s stock price. In October, MSCI proposed rules that could potentially delist companies with large Bitcoin holdings from its indexes. This raised concerns about forced index selling, though no final decision had been made. Additionally, JPMorgan increased margin requirements for trading MSTR, leading to some investors reducing their positions. The introduction of Bitcoin-linked products by other major banks, such as Morgan Stanley and JP Morgan, has also shifted capital away from MicroStrategy. These developments have created a cycle of negative sentiment around the stock. Bearish reports, including those from JPMorgan, have further amplified these concerns.

How Did Markets React?

The broader market has also experienced turbulence. Bitcoin is on track to record its first annual loss since 2022, with a year-end price of around $87,474. This decline has been influenced by macroeconomic pressures and a fading sense of momentum in the market. The correlation between Bitcoin and traditional risk assets, such as equities, has become more pronounced in 2025.

Despite these challenges, MicroStrategy’s stock continues to be influenced by Bitcoin dynamics. For example, on December 28, the company acquired 1,229 BTC through an at-the-market offering. The purchase was funded by $108.8 million raised from MSTR sales. These actions highlight the company’s continued commitment to Bitcoin accumulation.

What Are Analysts Watching Next?

Analysts are closely monitoring several key factors that could influence MicroStrategy’s future. One of the most pressing issues is the potential exclusion from major indexes, such as the MSCI Index. If the proposed rule is implemented, it could lead to significant outflows from the stock. JPMorgan has estimated outflows could reach $8.8 billion. This scenario has already contributed to selling pressure in Q4 2025.

Another area of focus is the company’s capital-raising strategy. MicroStrategy plans to raise an additional $11 billion through at-the-market offerings. While this provides liquidity, it also raises concerns about shareholder dilution. The company’s market net asset value (mNAV) has fallen below 1, indicating that its stock now trades at a discount to its underlying asset value.

Looking ahead, analysts remain cautious but note that MicroStrategy’s Bitcoin holdings provide a unique position. Even if Bitcoin were to fall to $74,000, the value of its holdings would still exceed $49.8 billion. This highlights the long-term nature of the company’s strategy, which is focused on Bitcoin appreciation and leveraging its exposure in a low-interest-rate environment.

The broader cryptocurrency market is also expected to see further evolution in 2026. With the introduction of new crypto ETFs and the potential for regulatory clarity under the Trump administration, the market could experience renewed interest. This could influence investor sentiment around Bitcoin treasury companies like MicroStrategy.

MicroStrategy’s future will also depend on the outcome of the MSCI index review and its ability to maintain liquidity and balance sheet strength. The company’s debt maturities do not become a concern until 2028, providing time to adapt to market conditions. Meanwhile, the company’s continued accumulation of Bitcoin and its long-term strategy remain key factors in shaping its trajectory.