A year ago, Strategy (MSTR), the software company that became a pioneer in buying bitcoin as a corporate treasury asset hit an all-time high and bitcoin, the largest cryptocurrency, was within $100.00 for the first time.
How things change. The strategy is now 68% below its $543 peak, hit days after President Donald Trump’s election victory, and bitcoin has fallen to $83,142, its lowest since April, CoinDesk data shows. On Coinbase, it fell even more, falling as low as $81,385 at one point on Friday. A key level to monitor remains Strategy’s average purchase price of around $74,430.
Bitcoin’s fall from the record high of $126,000 it hit in early October has pushed the strategy into an even steeper slide. The stock has broken below key moving averages and technical support levels in a decline that is the joint second-worst since the Tysons Corner, Virginia-based company adopted its bitcoin treasury strategy back in April 2020.
The decline is similar to the 69% fall between February and May 2021 that occurred when bitcoin fell from around $60,000 to around $30,000. The biggest strategy drawdown occurred after bitcoin hit a then-record high of $69,000 in November 2021. That was followed by an 84% selloff that bottomed out in June 2022.
Since August 2020, Strategy has experienced multiple declines of more than 50%.
Still, JPMorgan warned that major equity benchmarks such as the MSCI USA and Nasdaq 100 could rule out Strategy. Such a move could trigger an estimated $2.8 billion in outflows from MSCI alone as index-matching vehicles shed their holdings of the stock. About $9 billion of the company’s market capitalization is captured in passive investments such as exchange-traded funds, the analysts wrote.
Even with the recent decline, Strategy still trades at a multiple of 1.23 to net asset value (mNAV), which reflects the company’s value. During the 2022 bear market, the company often traded below its mNAV, giving a discount to its underlying bitcoin holdings.
