Bitcoin plummet drags down the market! Strategy Q4 net loss of $12.4 billion, crypto concept stocks collectively suffer

Strategy, due to adopting fair value accounting, recognized a net loss of $12.4 billion in Q4, with 700,000 coins held turning into paper losses.

Fair value accounting reveals staggering losses, with Q4 net loss reaching $12.4 billion

The cryptocurrency market experienced intense volatility by the end of 2025, with the market rally once dubbed the “Trump rally” rapidly fading. According to Strategy (formerly MicroStrategy), which announced its Q4 fiscal year 2025 financial report on 2/5, the company recorded a net loss of up to $12.4 billion for the quarter. This heavy financial blow mainly stems from Bitcoin ($BTC) prices falling sharply after reaching over 126,000 in October 2025, down to about 89,000 by the end of last year.

Because the company has fully adopted digital asset fair value accounting standards, any fluctuations in the crypto market are directly reflected in earnings reports. The financial report shows that the company’s Q4 operating loss was as high as $17.4 billion, almost entirely due to unrealized impairments of digital assets. Compared to a loss of only $670 million in the same period in 2024, this loss has exploded, with diluted loss per share reaching $42.93. Although core software business performance remained relatively stable, with quarterly revenue slightly up 1.9% to $123 million, this modest growth is insignificant compared to the hundreds of billions in asset devaluation.

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Bitcoin falls below average cost basis, 700,000 coins turn into “negative assets”

As Bitcoin prices further crashed into the $64,000 range, Strategy’s large Bitcoin holdings have fallen into a serious “underwater” predicament. As of February 1, 2026, the company held a total of 713,502 Bitcoins, with an accumulated cost basis of $54.26 billion.

Image source: Strategy

According to disclosed data, the average acquisition cost per Bitcoin is approximately $76,052. This means that at current market prices, Strategy’s Bitcoin holdings face an unrealized paper loss of about $7.5 billion to $9 billion. This decline is considered the most severe since the flash crash in October 2025, with asset prices dropping over 12% in a single day. Despite this, in January 2026, the company added 41,002 Bitcoins to its holdings in an attempt to maintain its Bitcoin Per Share growth strategy, but the continuous market downturn has clearly exceeded many investors’ expectations. Critics like economist Peter Schiff have pointed out that such leveraged Bitcoin bets will expose shareholders to unbearable risks during a bear market.

Image source: X/@PeterSchiff Peter Schiff criticizes Strategy’s leveraged Bitcoin strategy

Stock price crashes to a one-and-a-half-year low, crypto concept stocks suffer collectively

Amid poor financial results and Bitcoin’s downward trend, Strategy’s stock (NASDAQ: MSTR) was bloodied on Thursday, plummeting 17% in a single day to around 106, erasing all gains since 2025. The stock has now hit its lowest point in 18 months, down over 70% from the peak of 457 reached in 2025.

Image source: Google Finance Strategy’s stock price drops 17% in one day to around 106

Market sentiment worsened not only for this company but across the entire Digital Asset Treasury (DAT) sector. According to Reuters, the market value of digital asset treasuries has evaporated over $25 billion so far. Among them, Bitmine, which has accumulated large amounts of Ethereum ($ETH), suffered the most, with unrealized losses swelling to $8.1 billion, mainly due to ETH falling below $2,000. Most DAT companies have stopped increasing their holdings, and some miners’ holders have begun selling reserves to sustain operations. Strategy’s previous “premium” over Bitcoin value has nearly disappeared; its market cap relative to its Bitcoin holdings now shows a premium ratio (mNAV) of only about 1.1x, indicating growing skepticism among institutional and retail investors about its leverage model.

Establishing a $2.2 billion cash defense tower, management claims financial resilience remains

In response to doubts about its debt and interest payment capacity, Strategy’s management demonstrated a strong defensive stance during the earnings call.

CFO Andrew Kang emphasized that the company has built a “digital fortress,” currently holding about $2.25 billion in cash reserves, enough to cover the next 2.5 to 3 years of preferred stock dividends and debt interest payments. These funds mainly come from proceeds of previous ATM sales of Class A shares. Additionally, the company’s digital credit product STRC has issued $3.4 billion, with a dividend rate adjusted to 11.25%, still viewed as a financing tool capable of maintaining price stability.

CEO Phong Le stated that the company has no major debt maturities before 2027, so there is no forced sale pressure on Bitcoin. In the most extreme scenario testing, Le candidly said that unless Bitcoin drops to an astonishing $8,000, the company would not face substantial difficulties in meeting its debt obligations. Although market forecasts show the probability of the company selling Bitcoin within this year rising from 10% to 32%, founder Michael Saylor still issued a “HODL” slogan on social platforms, reaffirming his long-term commitment to holding Bitcoin indefinitely.

Image source: X/@saylor Michael Saylor posts “HODL” slogan on social media