Strategy Inc.'s (NASDAQ:MSTR) stock has collapsed so far that its market value now sits below the worth of its Bitcoin (CRYPTO: BTC) holdings. This exposes a rare valuation disconnect that has widened despite improving fundamentals and reduced liquidity risk.
Market Cap Falls Below Bitcoin Treasury For First Time
Strategy's market capitalization has dropped to roughly $48-50 billion after a 52% slide in just 2 months.
During the same period, its Bitcoin holdings reached 650,000 BTC worth about $60 billion.
This inversion means the company now trades at a discount of nearly $10 billion to its Bitcoin treasury alone.
Even after subtracting $8.2 billion of debt, Strategy still holds an estimated $51.8 billion in net Bitcoin value.
That figure remains above the company's market cap, marking the first sustained net asset inversion in the firm's history.
Risk Removed, Selling Accelerates
For much of the year, investors feared Strategy might need to liquidate Bitcoin to fund dividend payments.
The company ended that debate directly by allocating $1.44 billion in U.S. dollar reserves, enough to sustain payments for 21 to 23 months.
Ironically, removing the most widely cited risk did not stabilize sentiment.
Shares continued falling, creating an unusual split where fundamentals improved while valuation deteriorated.
A widely shared post from Bull Theory on X captured the mood.
It said, "This does not look like regular market movement. It looks like large players actively pushing the stock lower."
MSCI Index Risk Looms Over Passive Ownership
MSCI has considered excluding companies whose digital-asset holdings exceed 50% of total assets.
As the largest corporate Bitcoin holder in the world, Strategy is seen as the primary candidate.
Wall Street has circled January 15, 2026 as a decisive moment—the date when Strategy could lose index inclusion.
JPMorgan (NYSE:JPM) previously warned that removal from MSCI indexes could force automated selling of between $2.8 billion and $9 billion worth of Strategy shares.
In an interview on the sidelines of a Binance event in Dubai, Michael Saylor confirmed that Strategy is in discussions with MSCI.
When asked whether the company was engaging with the index provider, he said, "We're engaging in that process," while adding that he was not convinced the JPMorgan estimates were accurate.
Saylor also downplayed the potential impact of an exclusion, saying, "It won't make any difference, in my opinion," arguing that the company's long-term strategy would remain intact regardless of index rules.
However, market observers described the scenario as a "countdown" because any exclusion would result in large-scale selling regardless of fundamentals.
Also, efforts like the CLARITY Act and GENIUS Act aim to reduce regulatory uncertainty in digital assets, which could make direct Bitcoin exposure simpler and safer for institutions.
If holding Bitcoin becomes easier, the rationale for holding a Bitcoin proxy like Strategy weakens.
Strategy Turns Into A Leveraged Bitcoin Vehicle
Once known as a software company, Strategy has evolved into a leveraged Bitcoin exposure vehicle whose equity moves with BTC but with greater volatility.
Cantor Fitzgerald described the stock as the market's preferred "leveraged BTC proxy."
Strategy funds its long-term accumulation by issuing equity and convertible debt, then directing nearly all proceeds into Bitcoin.
While this strategy amplified returns during bull markets, it also increased sensitivity to downturns, dilution, and debt-servicing obligations.
Much of the company's debt carries high interest or preferred dividend rates of 8%–10%, creating ongoing cash requirements.
The $1.44 billion reserve buys time, but it highlights the burden of financing costs that common shareholders ultimately absorb.
Peter Schiff Escalates Warnings As Stock Discount Deepens
Economist Peter Schiff has been critical of Strategy for years, but his tone intensified in February and again on December 1.
In February, he warned that issuing new convertible notes while the stock traded below BTC value would produce a "negative Bitcoin yield," undermining the strategy's intended benefit.
By December, his assessment turned dire.
He argued that Strategy had reached "the beginning of the end," claiming that Michael Saylor was selling shares not to buy Bitcoin but to raise U.S. dollars for debt service and dividend obligations.
He called the strategy "a fraud" and alleged that the stock had become "broken."
Share Count Explosion Craters Per-Share Value
A 10-for-1 stock split in August 2024 expanded liquidity, and subsequent offerings accelerated the share count increase.
In 2025 alone, the company raised roughly $20 billion through new equity and debt instruments.
The share count has grown from around 95 million at the end of 2020 (post-split equivalent) to roughly 295 million by late 2025.
This more than 200% increase has diluted the per-share claim on the Bitcoin treasury and is a one of the major reason why the stock trades at a valuation haircut relative to gross holdings.
Discount Is Rational, Not Market Error
Investors cite several factors driving the gap:
- Servicing $8.2 billion in debt and preferred dividends requires continuous liquidity.
- If Bitcoin ever needs to be sold for obligations, corporate tax applies, reducing net value.
- Leverage magnifies the downside, as a sharp Bitcoin decline could stress cash flow even with reserves.
- Converting large amounts of Bitcoin to cash creates execution and timing costs.
- Index removal could trigger forced selling by funds.
- Future regulatory clarity may make direct Bitcoin ownership simpler for institutions.
These risks create what analysts call a "structural risk haircut," explaining why the stock trades below the value implied by its treasury.
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