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 range of $100.00 for the first time.
How things change. The strategy is now 68% below its peak of $543, reached days after President Donald Trump’s election victory, and bitcoin has fallen to $83,142, the lowest since April, according to CoinDesk data. On Coinbase, it fell further, falling as low as $81,385 at one point on Friday. A key level to watch remains Strategy’s average purchase price of around $74,430.
Bitcoin’s decline from the all-time high of $126,000 reached in early October pushed Strategy into an even steeper fall. The stock fell below key moving averages and technical support levels in a pullback that is the second worst since the Tysons Corner, Virginia-based company adopted its Bitcoin cash strategy in April 2020.
The drop is similar to the 69% drop that occurred between February and May 2021, when bitcoin fell from around $60,000 to around $30,000. The strategy’s biggest decline occurred after bitcoin hit an all-time high of $69,000 in November 2021. This was followed by an 84% sell-off that hit its lowest level in June 2022.
Since August 2020, the strategy has seen multiple drops of over 50%.
Still, JPMorgan warned that major equity benchmarks such as MSCI USA and the Nasdaq 100 could exclude the strategy. Such a move could trigger outflows of about $2.8 billion from MSCI alone, as index-matching vehicles shed their stock holdings. About $9 billion of the company’s market capitalization is captured by passive investments such as exchange-traded funds, analysts wrote.
Even with the recent decline, Strategy still trades at a 1.23 multiple to net asset value (mNAV), which reflects the company’s enterprise value. During the 2022 bear market, the company often traded below its mNAV, creating a discount to its underlying bitcoin holdings.
