Strategy (NASDAQ:MSTR) is now $630 million underwater on its Bitcoin (CRYPTO: BTC) holdings, wiping out $47 billion in unrealized profits from just four months ago as Bitcoin plunged below the company’s $76,037 average cost basis.
The Profit Wipeout
Bitcoin fell 15% in the first four days of February, pushing Strategy’s position underwater for the first time since the company began accumulating in August 2020.
The company is down on its total Bitcoin holdings as long as the price stays below $76,000, despite BTC still being up 550% since Michael Saylor’s first purchase.
Strategy purchased heavily near Bitcoin’s October peak, leaving the company exposed when prices collapsed.
Saylor posted “The Rules of Bitcoin: 1. Buy Bitcoin 2. Don’t Sell the Bitcoin” on Tuesday, doubling down on his strategy despite the massive profit wipeout.
Peter Schiff’s Attack
Gold bug Peter Schiff argued Strategy’s buying drove Bitcoin’s 550% rise, but now that the company can’t keep buying as much, the price is falling.
“If Bitcoin ever bottoms, it won’t be until after Strategy sells its last satoshi,” Schiff wrote on X.
The criticism highlights a major problem because the company needs Bitcoin prices high to issue stock above NAV to buy more Bitcoin.
Saylor’s Defense: 15 Million Beneficiaries
Speaking at the Bitcoin MENA conference in December, Saylor said Strategy’s equity structure has broadened Bitcoin access beyond direct crypto ownership, with millions of investors now exposed through the company’s shares.
Saylor claimed 15 million beneficiaries hold Strategy’s securities through pension funds, insurance companies, sovereign wealth funds, and retail accounts.
Additionally, he noted 15% of all Strategy securities are held in Charles Schwab retail accounts alone.
Moreover, Strategy says it has provided Bitcoin exposure to about 50 million people and expects that number to reach 100 million in the coming years.
It also claims its actions helped add $1.8 trillion to Bitcoin's value, with 85% of the gains benefiting holders in China, Russia, Africa, and South America rather than corporate investors.
The Concentration Risk Question
Saylor addressed concerns about Strategy owning 3% of Bitcoin’s total supply, arguing the position doesn’t create concentration risk because it represents millions of distributed investors.
If Strategy reaches 5% of the network, Bitcoin hits $1 million per coin, transferring $18-$20 trillion to the 85% who don’t hold corporate Bitcoin.
At 7.5% ownership, Bitcoin reaches $10 million per coin with 70%-75% held by non-corporate entities—transferring $150 trillion to holders outside corporate structures.
Saylor’s argument: “We represent a motor powering the network up. We’re driving the price of Bitcoin from $10,000 to $100,000, $1 million to $10 million by creating common equity that large institutional investors can buy.”
Without corporate involvement, Saylor claims Bitcoin would trade at $10,000 per coin with a $200 billion network instead of $2 trillion.
To reach $20 trillion or $200 trillion, corporations like Strategy, money managers like BlackRock, and banks must enter the network.
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