Strategy’s 66% fall v. Bitcoin’s strength – Is leverage finally catching up to $MSTR?

As soon as Bitcoin confirmed minor weak point, leverage and premium trades unraveled, pushing Technique (Previously generally known as MicroStrategy) sharply away from Bitcoin’s underlying efficiency.

Technique ($MSTR) has declined by roughly 66% over the previous six months, erasing near $90 billion in market capitalization by 26 December 2025. The decline occurred whilst Bitcoin remained comparatively resilient, highlighting a widening disconnect between the asset and its company proxy.

Supply: Ted Pillows on X

The sell-off coincided with the collapse of Technique’s long-standing NAV premium, aggressive share issuance, and rising issues round leverage, index eligibility, and balance-sheet complexity. As these dangers collected, buyers appeared more and more unwilling to pay for narrative-driven leverage.

So, what precisely was the market repricing right here?

Commerce will get repriced as buyers reassess leveraged Bitcoin publicity

Markets more and more handled Technique as a leveraged monetary construction relatively than an easy Bitcoin proxy.

Technique holds roughly $60 billion price of Bitcoin [BTC] and but, its fairness has been buying and selling at a 20–25% low cost to that underlying worth. This reversal is proof of a transparent shift in how buyers have priced leverage, optionality, and danger focus.

Speaking about leverage, as soon as the NAV premium disappeared, draw back publicity accelerated. What as soon as amplified returns as a substitute magnified losses, reinforcing investor warning in periods of stress.

When the NAV premium collapses, leverage stops working

Premium-driven trades usually unwind quickly as soon as confidence and liquidity situations deteriorate.

Traditionally, Technique traded above the worth of its Bitcoin holdings, reflecting leverage and perceived strategic benefit. By late December, that premium not solely vanished however inverted, signaling structural repricing relatively than short-term volatility.

On the identical time, sustained dilution raised issues round long-term fairness worth seize. Further issuance weakened investor urge for food as balance-sheet dangers grew to become more and more seen.

Leverage turns in opposition to shareholders

Leverage stopped enhancing returns as soon as market situations shifted in opposition to premium-based positioning and elevated balance-sheet danger.

As volatility elevated, leverage amplified draw back publicity, prompting buyers to demand greater compensation or exit positions.

Speaking about steadiness sheets, markets have traditionally favored simplicity throughout stress. This has left Technique’s advanced construction misaligned with investor preferences.

STRC as a defensive sign amid mounting balance-sheet stress

Earnings-focused messaging changed progress narratives as stress intensified throughout the fairness.

Michael Saylor promoted STRC, a cash-dividend car paying 11% yearly, distributed month-to-month. Whereas framed as an earnings resolution, markets largely interpreted the transfer as defensive, relatively than expansionary.

Supply: X

Larger yield signaled capital preservation, relatively than confidence. The shift recommended administration responded to market stress, as a substitute of main with progress expectations.

What’s the downside? The asset or the wrapper?

Lastly, the divergence highlighted a rising distinction between Bitcoin possession and leveraged company publicity.

Bitcoin itself averted a comparable collapse, whereas Technique absorbed many of the draw back. The separation underscored how buyers more and more differentiated the asset from the wrapper.

Remaining Ideas

• Technique’s collapse mirrored a repricing of leverage, dilution, and balance-sheet complexity, not a failure of Bitcoin’s underlying fundamentals.
• As NAV premiums disappeared, buyers shifted away from leveraged proxies, favoring less complicated publicity and cleaner steadiness sheets.