Strategy Inc., the company formerly known as MicroStrategy that has staked its entire corporate identity on Bitcoin accumulation, is set to report what could be one of the largest quarterly losses in its history when it releases Q4 2025 results. The expected hit to the bottom line underscores the extreme volatility inherent in the company's unprecedented all-in bet on cryptocurrency.

The Magnitude of the Loss

According to analysis from Bloomberg, Strategy is likely to report a "multibillion-dollar unrealized loss" for the fourth quarter, representing a dramatic swing from the $2.8 billion profit posted in Q3. The reversal reflects new accounting rules that require companies to mark cryptocurrency holdings to market value each quarter, translating Bitcoin's price swings directly into reported earnings.

Strategy owns 672,497 Bitcoin—roughly 3.2% of the total supply—valued at approximately $60 billion at current prices. When Bitcoin's price moves, the company's financial statements move with it.

"The decline in Bitcoin's price will result in a multibillion-dollar unrealized loss for Strategy in Q4, reflecting a significant decrease in the value of its Bitcoin holdings on its bottom line."

— Bloomberg analysis

The Stock's Devastating Quarter

While Bitcoin fell approximately 25% during the fourth quarter from its October highs near $126,000 to around $89,000, Strategy's stock suffered an even more severe decline. MSTR shares plummeted 53% during the quarter, dropping from $360 in early October to approximately $152 by year-end.

The outsized stock decline relative to Bitcoin's drop reflects Strategy's leveraged exposure to the cryptocurrency. The company has financed much of its Bitcoin accumulation through convertible debt and preferred stock issuances, creating a structure that amplifies both gains and losses.

The Leverage Problem

Strategy now carries more than $8.2 billion in convertible debt and has issued over $7.5 billion in preferred stock to fund its Bitcoin purchases. This capital structure creates several concerns:

  • Interest and dividend obligations: The company must service its debt and pay preferred dividends, but Bitcoin generates no income
  • Cash flow constraints: The legacy software business produces minimal positive cash flow
  • Potential forced selling: If cash needs exceed operational resources, the company may need to sell Bitcoin or issue more equity

The situation has led some analysts to question whether Strategy could face structural pressures if Bitcoin remains depressed or declines further.

The MSCI Index Threat

Adding to Strategy's challenges is a January 15 deadline regarding potential exclusion from the MSCI Index. Under a new rule, companies classified as digital asset treasuries—those holding more than 50% of assets in cryptocurrencies—may be reclassified from operating businesses to investment funds.

JPMorgan has estimated that such a reclassification could trigger outflows of up to $8.8 billion as index funds that track MSCI benchmarks would be forced to sell their Strategy positions.

The Bull Case Persists

Despite the challenges, Strategy's bulls point to several factors that could support the stock:

  • The company is currently trading at roughly a 21% discount to the net asset value of its Bitcoin holdings
  • Any Bitcoin rally would generate rapid appreciation in both the cryptocurrency and the stock
  • The company's brand as the premier publicly traded Bitcoin proxy could attract renewed interest during bull markets

Some analysts, including those at Benchmark, maintain price targets as high as $705, suggesting they see the current weakness as a buying opportunity.

What This Means for Investors

Strategy's Q4 results will provide a stark illustration of the risks inherent in concentrated cryptocurrency exposure. The company has effectively transformed itself from a software business into a leveraged Bitcoin holding company, with all the volatility that implies.

For investors considering the stock, the key questions are:

  • Do you have conviction that Bitcoin will appreciate significantly from current levels?
  • Are you comfortable with the leverage and the potential for extreme volatility?
  • Can you stomach potential short-term losses in pursuit of long-term gains?

The Q4 loss, whatever its final magnitude, won't change Strategy's fundamental thesis—that Bitcoin is the best long-term store of value. But it will test whether shareholders have the fortitude to ride out the inevitable volatility that comes with Michael Saylor's high-conviction, maximum-leverage approach to cryptocurrency investing.