Strategy Posts $12.6B Quarterly Loss as Bitcoin Crash Wipes Out Paper Gains

Strategy, formerly known as MicroStrategy, has reported a staggering fourth-quarter net loss of roughly $12.6 billion, ranking among the largest quarterly losses ever recorded by a U.S. public company. 

The hit was driven almost entirely by unrealized losses on its Bitcoin holdings, underscoring how deeply the firm’s balance sheet is tied to crypto market movements rather than its underlying software business.

Crypto Market Crash Erases Billions in Paper Gains

The loss followed one of Bitcoin’s sharpest drawdowns in recent history. During the quarter, Bitcoin plunged nearly 15% intraday, sliding from around $73,100 to a low of $62,400. This move pushed Bitcoin below Strategy’s average acquisition price of roughly $76,000, flipping the firm’s position from massive unrealized gains into deep losses. Just a few months earlier, Strategy was sitting on more than $30 billion in paper profits when Bitcoin surged to record highs.

Strategy Stock Feels the Pressure

The market reaction was swift. Strategy shares dropped sharply after the earnings release and continued falling in after-hours trading. Over the past year, the stock has been down more than 70%, erasing much of the premium investors once assigned to the company’s aggressive Bitcoin accumulation strategy. Since its November 2024 peak, the stock is now down nearly 80%, highlighting how quickly sentiment has turned.

Bitcoin Exposure Magnifies Financial Impact

Strategy remains the largest corporate holder of Bitcoin globally, with more than 713,000 BTC on its balance sheet as of early February. Much of this position was accumulated during the late-2024 bull run, when Bitcoin briefly climbed above $120,000. With prices now well below those levels, unrealized losses have ballooned, making quarterly results highly sensitive to Bitcoin’s volatility.

Saylor Stays Defiant as Critics Circle

Despite the historic loss, Executive Chairman Michael Saylor showed no sign of wavering, posting a brief “HODL” message on X. However, critics have grown louder. Investors like Michael Burry have warned that sustained declines in Bitcoin could trigger cascading losses for corporate holders, reviving long-standing concerns around leverage and exposure to non-yielding assets.

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Ethereum Slide Hits BitMine Too

Strategy is not alone. BitMine Immersion Technologies is facing roughly $8.2 billion in unrealized losses after Ethereum slipped to around $1,930, well below its average purchase price of $3,826. The company holds about 4.29 million ETH but has cushioned the blow by staking over 2.9 million ETH, generating around $188 million in annual yield, while maintaining strong cash reserves and no debt.

Volatility, Not Failure

Amid the turmoil, Anthony Pompliano offered a broader perspective, arguing that Bitcoin’s volatility is a feature, not a flaw. He pointed out that repeated 50–85% drawdowns have defined Bitcoin’s history, yet the network has continued to operate flawlessly for over a decade. While critics celebrate downturns, long-term holders remain focused on scarcity, betting that short-term pain is temporary in Bitcoin’s long-term growth story.

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