Strategy, known as the world's largest publicly traded Bitcoin holding company, is facing a harsh market assessment. Despite holdings approaching 700,000 Bitcoin, its stock price has fallen to half its peak, exposing the limitations of "Bitcoin belief investing."
Strategy is a company that has embraced Bitcoin not simply as an investment asset, but as a core financial strategy. It has invested large amounts of funds raised through convertible bond and corporate bond issuances into Bitcoin purchases, effectively establishing a Bitcoin leverage model. The calculation was that a rise in Bitcoin's price would lead to a dramatic increase in the company's value.
However, recent market trends show that this formula no longer holds true. While Bitcoin fluctuated near its all-time high, Strategy's stock price actually experienced a steep decline. The company's debt structure and interest rate environment began to have a greater impact on stock prices than the Bitcoin price itself.
The crux of the problem lies in leverage. Strategy has been aggressively borrowing to purchase Bitcoin, accumulating interest costs and maturity burdens. If Bitcoin's price fails to rise above a certain level, the leverage effect quickly turns into a backlash. In fact, the stock price has shown far greater volatility than Bitcoin spot, exacerbating the decline.
The changing investment environment is also a factor. With Bitcoin spot ETFs gaining traction, investors' need for indirect exposure to Bitcoin through stocks has diminished. The "Bitcoin proxy" role previously provided by Strategy has weakened, and stocks are now perceived as a riskier option.
Despite this, Strategy shows no signs of shifting course. Founder and Chairman Michael Saylor defines Bitcoin as the ultimate store of value in the digital age and maintains a long-term holding strategy. He is betting on Bitcoin's long-term upside potential rather than short-term stock price fluctuations.
Market sentiment is mixed. If Bitcoin enters a long-term bull market, Strategy could be the most dramatic beneficiary. Conversely, if interest rates remain tighter than expected or Bitcoin volatility increases, the current strategy is likely to continue to burden the company's value.
Despite holding an overwhelming 700,000 Bitcoins, its stock price has plummeted by half. Strategy is now facing a sharp test: its conviction in Bitcoin and the financial realities it must endure as a publicly traded company.
