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