Strategy, the world’s largest publicly traded corporate holder of bitcoin, is facing a sharp rise in unrealized losses on its cryptocurrency holdings as bitcoin prices continue to slide. Despite the drawdown, the company’s shares continue to trade at a premium relative to the value of its underlying assets, highlighting investor confidence in its long-term bitcoin strategy.

The company currently holds 713,502 bitcoin, acquired at an average price of $76,052 per coin. With bitcoin recently trading near $67,000, Strategy is sitting on an unrealized loss of approximately $6.5 billion, equivalent to about 12% below its average purchase price.

Shares tumble ahead of earnings

Strategy’s stock fell roughly 13% in a single session, marking its steepest one-day decline in nearly a year. The shares are now down about 66% year-over-year and close to 80% from their record high reached shortly after the U.S. presidential election in November 2024.

The selloff comes just ahead of the company’s fourth-quarter earnings report, scheduled after market close. While no major surprises are expected in the financial results themselves, investors are closely watching management commentary amid renewed volatility in the bitcoin market.

Trading above the value of its bitcoin

Despite the sharp decline in both bitcoin prices and Strategy’s stock, the company continues to trade at a premium to the value of its bitcoin holdings. This metric, commonly referred to as the multiple of net asset value (mNAV), remains above one , currently around 1.09.

That premium is significant. It suggests the market is valuing Strategy not simply as a passive holder of bitcoin, but as a leveraged vehicle with optionality tied to future bitcoin accumulation. As long as the premium persists, Strategy may be able to issue additional common stock to purchase more bitcoin without meaningfully diluting existing shareholders.

This dynamic has been central to the company’s strategy under Executive Chairman Michael Saylor, who has repeatedly framed bitcoin volatility as a feature rather than a flaw of long-term adoption.

Preferred equity also under pressure

Pressure is also evident in Strategy’s preferred equity offerings. STRC, the company’s perpetual preferred instrument marketed as a high-yield, money-market-style product, is trading near $95, below its $100 par value.

If STRC fails to recover to par by the end of the month, its dividend rate is expected to increase by 25 basis points, bringing the yield to approximately 11.5%. A similar dynamic is playing out in the broader market, with comparable perpetual preferred products also trading below par and facing potential dividend adjustments.

Market sentiment versus long-term conviction

The current environment reflects a broader tension in crypto-linked equities: short-term price pressure versus long-term conviction. Falling bitcoin prices have weighed heavily on Strategy’s valuation, yet the stock’s continued premium suggests investors still believe in management’s thesis and its ability to use capital markets creatively.

As bitcoin volatility persists, the company’s earnings call may offer further insight into whether Strategy plans to continue expanding its bitcoin holdings or whether it will pause amid one of the most challenging drawdowns since adopting its aggressive accumulation strategy.

For now, the numbers show a company deep in unrealized losses, but still trading as a vehicle many investors are willing to value above the raw worth of its assets.