NEW YORK, Feb 5, 2026, 10:42 EST
- Strategy shares plunged as bitcoin continued its steep decline just before the company’s quarterly earnings report
- Investors are zeroing in on the gap between bitcoin’s price and Strategy’s average cost, along with looming convertible debt maturities
- Bulls say the company can weather the volatility; bears caution that bigger losses might cut off funding
Shares of Strategy (MSTR) dropped Thursday, weighed down by another dip in bitcoin. The move ramps up pressure on the company’s leveraged exposure to the top cryptocurrency just hours ahead of its quarterly earnings release.
By late morning, Strategy had fallen roughly 12% to $113.11, with bitcoin sliding about 9% to around $67,500, according to market data.
The timing is crucial since Strategy’s earnings now serve as a stand-in for a larger issue: can the corporate “bitcoin-treasury” approach hold up when prices drop and investors grow more selective?
Investors are closely monitoring signs that Strategy’s funding might be drying up or that it could face a tough choice between raising cash and holding onto bitcoin during the downturn.
A sharp fall in bitcoin has pushed Strategy’s average purchase price above the current market, Investors.com reported, tightening the firm’s margin for error. Strategy holds billions in convertible debt—bonds that can convert into shares—set to start maturing in 2027. According to the report, the company’s bitcoin holdings stand at about $50.2 billion, with $2.25 billion in cash. If conditions deteriorate, Strategy may face pressure to either sell bitcoin or issue stock.
Wall Street is bracing for another quarter where the software business takes a backseat to the bitcoin stake. Barron’s noted analysts expect roughly $119 million in revenue and pointed to the company’s market-to-net-asset value, or mNAV — which compares the share price to the value of its crypto holdings — as a crucial measure of how easily Strategy can raise cash without heavy dilution.
The strategy’s premium has waned after bitcoin dropped and the stock plunged from its peak, eroding the cushion that once allowed selling shares at a high valuation to bankroll further buys.
StockStory’s earnings preview on Barchart forecasted revenue of $122.3 million for Strategy, highlighting the company’s repeated revenue misses over the last two years. The report also noted uneven performance among data-and-analytics software peers: Palantir surged after a strong quarter, while Commvault dropped despite beating estimates.
Some investors are laying out the risks in stark terms. Michael Burry warned in a Substack post, reported by Business Insider, that if bitcoin falls below $70,000, Strategy might “find capital markets essentially closed.” He described the potential outcomes as “sickening scenarios” now within reach. https://www.businessinsider.com/big-short-…
The risk lies in a feedback loop: a sharper bitcoin decline could swell Strategy’s losses, squeeze its valuation premium, and complicate efforts to raise new equity or debt. That might push the company to tighten cash flow — or, in a worst-case scenario, dump bitcoin into a sinking market, potentially dragging down sentiment across crypto-linked stocks.
For the moment, Strategy is banking on long-term bitcoin gains to offset short-term losses. The coming hours will reveal if the company’s balance sheet can still support an aggressive approach.
