Key Points
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Strategy has built a large Bitcoin position, selling stock and preferred stock to fund its Bitcoin purchases.
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Now that Bitcoin’s price has dramatically declined, Strategy may have no choice but to change its approach.
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Strategy (NASDAQ: MSTR) had a simple business model; it basically issued stock, preferred stock, and debt, and used the proceeds to buy Bitcoin (CRYPTO: BTC). It just held the Bitcoin, acting as a “Bitcoin treasury.” That model appears to be broken following Bitcoin’s deep price decline, and investors should be worried about the implications.
The right decision for the business and shareholders
To be fair, Strategy is making the right move by shifting from a buy-and-hold model to a more dynamic one, noting that it may sell up to $1.25 billion in Bitcoin. The purpose of the sales is to fund stock buybacks and to support payments on the preferred stock and bonds it sold. It also wants to build a cash reserve roughly equal to 12 months of preferred stock and interest payments.
Given the drop in the value of Bitcoin and the decline in Strategy’s own stock price, the old model simply couldn’t be supported anymore. A pivot was necessary and shows the company is willing to evolve along with the evolving cryptocurrency market.
The strategy shift speaks to a bigger problem
From a big-picture view, however, investors buying Strategy likely see it as a way to buy Bitcoin without actually buying Bitcoin. But the massive decline in the price of Bitcoin, which has lost 40% of its value over the past year and is now down around 50% from its high in 2025, is a troubling sign. Cryptocurrency lovers may have moved on to other options, like prediction markets. Notably, Robinhood (NASDAQ: HOOD) saw its crypto revenue fall nearly 50% in the first quarter of 2026, while revenue from prediction markets rose 320%.
You could argue that Strategy’s buying during the Bitcoin downturn has helped to soften the depth of the decline. That would speak to the value of a company acting as a “Bitcoin treasury.” However, you could also argue that this business shift is a sign that the current drawdown is too much for even Strategy to absorb as more and more traders move on to the next hot fad.
It is entirely possible that cryptocurrencies come back into favor, but it is also possible that the crypto market is now different from what it was. To be fair, Bitcoin has always been volatile, with the deepest drawdown exceeding 80%. If you are a long-term believer in Bitcoin, you might want to hold on to your Strategy shares or, perhaps, buy more. An investment in Strategy is a way to outsource your Bitcoin “investments” without doing that work yourself, but you have to recognize the material risks you are taking on. Simply buying and holding Bitcoin clearly isn’t a workable long-term strategy, since a company built around that business model was forced to change.
Most investors should probably avoid Strategy
More conservative investors, however, should probably view Strategy’s model shift as an indication that Bitcoin may have been an investment fad. Given that people’s willingness to own crypto is the only thing supporting crypto prices, Strategy’s Bitcoin sales could be the canary in the coal mine. And even if Bitcoin prices rise from here, you have to ask yourself if the risk is worth the reward, given the huge volatility in the Bitcoin market. For most investors, the answer will probably be that it isn’t, and that means Strategy won’t be worth owning, either.
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Reuben Gregg Brewer has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bitcoin. The Motley Fool has a disclosure policy.
