Strategy Takes $12.4B Hit as Bitcoin Drops Below Cost Basis
Bitcoin Volatility BitesStrategy’s Bitcoin-heavy balance sheet took a massive hit in Q4 after BTC prices slid sharply. The loss has reignited debate around corporate crypto exposure. Read on to see what really happened.
Quick Summary
- Strategy reported a $12.4B Q4 loss tied mainly to falling Bitcoin prices
- Bitcoin dipped below the company’s average purchase cost
- Management remains bullish on BTC despite short-term pain
Strategy, the software company best known for its aggressive Bitcoin strategy, has reported a staggering $12.4 billion loss for the fourth quarter of 2025. The loss was driven almost entirely by Bitcoin’s price decline, which pushed the asset below the company’s average cost basis for the first time in months.
According to its latest earnings release, the company recorded significant impairment charges on its Bitcoin holdings as prices tumbled late in the quarter. Under current accounting rules, firms must mark down crypto assets when prices fall, but cannot mark them back up unless they sell. That rule tends to magnify losses during downturns, even if the company does not actually offload its Bitcoin.
The market reaction was swift. Strategy shares fell sharply after the announcement, reflecting investor concern over how exposed the firm has become to Bitcoin’s price swings. Bitcoin itself also came under pressure during the same period, adding to broader risk-off sentiment across crypto markets.
Strategy chairman and co-founder Michael Saylor remained defiant. In public comments following the earnings release, Saylor reiterated that the company views Bitcoin as a long-term store of value rather than a short-term trade. He emphasized that Strategy has no plans to sell its holdings and continues to see BTC as “digital property” with multi-decade upside.
As of the end of Q4, Strategy held more than 190,000 BTC, making it the largest corporate holder of Bitcoin in the world. The company’s average purchase price now sits above Bitcoin’s current market value, putting the firm in an unrealized loss position. Still, management stressed that cash flow from its core software business remains stable.
The situation highlights the double-edged nature of corporate Bitcoin treasuries. When prices rise, they boost balance sheets and investor enthusiasm. When prices fall, losses can quickly snowball, especially for firms as concentrated as Strategy.
This article is not financial advice. Cryptocurrency investments involve risk, and prices may fluctuate significantly. Always conduct your own research. Gambling involves financial risk and may not be suitable for everyone. Please play responsibly and seek help if gambling becomes a problem.