Investors Flee as Strategy’s Bitcoin Titanic Takes on Water – What’s Next?

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What to know:

  • Strategy has plummeted more than a clumsy ostrich since its zenith on November 21.
  • The 2x leveraged products MSTX and MSTU are nose-diving with about 90% less value than their respective highs. Ouch! 😬
  • Two of Strategy’s convertible bonds, the famous duo of 2029 and 2030, are hanging around like bad pennies—out-the-money, of course.
  • Is MSTR’s bitcoin stash in peril, or are we just rehashing a sixpence smashing saga? The plot thickens!

As it trades around the $250 mark on this fine Wednesday, Strategy has taken quite a hit—down around 55% from its high-flying $543. And don’t even get us started on the poor chaps holding leveraged MSTR products; the Defiance Daily Target 2x Long MSTR ETF (MSTX) has plummeted 90%, while the T-REX ETF (MSTU) is just shy of an 85% nosedive. One must wonder if it’s a roller coaster or a lead balloon. 🎢

However, let us not forget that despite the downward spiral of bitcoin, Strategy’s audacious BTC acquisition remains, surprisingly, in the black. Since embarking on this wild ride in August 2020, they’ve managed a voluptuous 32% profit on their holdings, with an average cost basis lounging around $66,300 per BTC, which results in an unrealized profit of a staggering $10.65 billion at bitcoin’s current cozy price of about $87,000. Not too shabby, eh? 💰

The forced sales dilemma

Now, if we prod a little deeper into Strategy’s convertible debt, we expose potential “liquidation prices” or forced bitcoin sales. Remarkably, all of the company’s 499,096 BTC remain unshackled, meaning they haven’t pledged a single bitcoin as collateral. Remember when they tangoed with Silvergate Bank? They paid back their earlier convertible note like responsible adults!

According to Bitcoin Overflow scribbles on X, Strategy has a whopping $8.2 billion in outstanding debt, which is meticulously backed by those glorious 499,096 BTC, currently basking in glory at a value of $43.4 billion.

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2025-02-26 20:38