Strategy Holds 840k BTC but Is Still at a Loss of Over $10 billion: Can the Bitcoin treasury model last?

In July 2026, Strategy, the crypto market’s most watched public company (formerly MicroStrategy), is at a delicate turning point. Bitcoin is trading around $62,000, while this world’s largest corporate holder of the asset has an average cost basis of $75,476 across its 843,775 BTC—meaning its unrealized loss on paper is already over $10 billion.

More noteworthy is that between July 6 and July 12, Strategy sold about $467 million worth of MSTR common stock via its at-the-market offering plan, without adding any bitcoin. This is the company’s second consecutive week with no BTC purchases. Before that, on July 5, Strategy also sold 3,588 bitcoins for $216 million—its largest single BTC sale in company history.

From “keep buying, never selling” to pausing accumulation and even actively reducing holdings, Strategy’s bitcoin treasury model is being put through the harshest stress test the market can offer.

From a software company to a bitcoin treasury: an aggressive capital experiment

Strategy’s transformation began in 2020. At the time, then-CEO Michael Saylor made a decision that seemed aggressive: convert the company’s idle cash into bitcoin. In the years that followed, the former enterprise analytics software company kept funding its growth through stock issuance, convertible bonds, and preferred stock—continuously adding to its bitcoin holdings.

As of July 2026, Strategy holds 843,775 BTC, about 4% of Bitcoin’s total supply of 21 million. Cumulative invested cost is about $63.69 billion. This position size already exceeds the cash reserves of most public companies, making Strategy a benchmark for corporate bitcoin allocations worldwide.

Saylor’s core logic is not complicated: Bitcoin is a long-term scarce asset, while traditional fiat carries the risk of continuous purchasing power dilution. By using capital markets to finance and expand its BTC reserves, the company can inject an increasing amount of bitcoin value into each share of equity. As long as Bitcoin’s long-term price trends upward, this strategy can keep creating shareholder value.

That logic was fully validated during Bitcoin’s bull runs from 2020 to 2025. Strategy’s stock price surged alongside BTC’s rise, enabling the company to keep financing and buying bitcoin at higher valuation levels—forming a self-reinforcing positive feedback loop.

When the flywheel starts to slow

However, any leveraged model that depends on asset price appreciation faces asymmetric risks during price declines.

So far in 2026, Bitcoin has kept sliding from its year-start highs. As of July 14, the BTC price is $62,628, with a decline of 45.66% over the past year. MSTR’s stock decline has been even more severe: down about 38% year-to-date, and it continued to fall by nearly 3% in Monday’s pre-market. MSTR’s 52-week drawdown is as high as about 78%.

Why is MSTR falling much more than Bitcoin itself? The answer lies in two key variables.

The disappearance of the mNAV premium. mNAV (Market Value to Net Asset Value) measures the relationship between Strategy’s market capitalization and the net value of its bitcoin holdings. In bull market cycles, the market is willing to pay a significant premium above MSTR’s BTC holding value—investors are not only buying bitcoin itself, but also a “bitcoin growth leverage.” Strategy’s historical mNAV has been far above 1.0.

But this premium is rapidly evaporating. As of July 2026, mNAV has fallen to about 1.02, approaching parity with net assets—meaning the market premium for Strategy’s BTC holdings is nearly gone. In some periods, mNAV even dips below 1. When the stock price is only equal to, or even trades at a discount to, the net value of its holdings, issuing more shares to finance additional bitcoin purchases no longer has an accretive effect.

Rising financing costs. Strategy’s capital structure includes multiple layers of financing tools. As of June 2026, the company carries about $6.7 billion in convertible bonds and $15.5 billion in perpetual preferred stock, with an annualized interest payment obligation of about $1.71B. Of this, just one preferred stock, STRC, is as large as $10.5 billion.

When the stock price falls, equity financing becomes far less efficient—issuing the same number of shares raises less capital. At the same time, STRC’s trading price remains below $100 face value, meaning investors demand a higher yield to compensate for risk.

The contraction of the mNAV premium and the rise in financing costs create a double squeeze: Strategy is both unable to finance cheaply by issuing stock at high premiums, and it faces an increasingly heavy fixed interest payment burden.

Selling bitcoin: tactical adjustment or strategic shift?

In May 2026, Strategy sold 32 bitcoins for the first time—its first voluntary sale of holdings since 2022. Even though the size was small, the move broke the “never sell” narrative that Saylor had long adhered to.

A bigger turning point came in July. Within the week ending July 5, Strategy sold 3,588 bitcoins in two tranches, raising about $216 million in total proceeds. The company said the proceeds will be used to pay preferred stock dividends and to replenish the dollar reserves previously used for related payments.

Meanwhile, Strategy announced a new Digital Credit Capital Framework. The framework’s core content includes: restricting dollar reserves to preferred stock dividend and interest payments; authorizing up to $1.25 billion in bitcoin sales to fund reserves, dividends, and securities repurchases; and approving a $1.0 billion common stock repurchase and a $1.0 billion digital credit securities repurchase plan.

The market has two interpretations.

A bullish view holds that this is only short-term liquidity management, not a strategic shift. By selling a small amount of BTC to top up cash reserves to $3 billion, Strategy can cover about 20 months of preferred stock dividends and debt interest. Both Benchmark and TD Cowen maintain “buy” ratings. Standard Chartered also keeps its forecast of $100k for bitcoin by the end of 2026, arguing that Strategy’s evolution is more of a communication issue than a solvency issue.

A bearish view points out that when a company built around a “buy and hold” narrative starts selling core assets to pay dividends, it in itself implies that the capital structure is under pressure. JPMorgan warned that Strategy is no longer just an important buyer in the bitcoin market and could also become a seller. Bitwise noted that Strategy’s role as the dominant buyer of bitcoin is fading, and institutional investors will replace it as the main source of demand.

MSTR vs spot BTC ETFs: a tug-of-war between two paths

In January 2024, U.S. spot bitcoin ETFs were approved for listing, fundamentally changing how investors gain bitcoin exposure. Before that, buying MSTR stock was an important way for many institutional investors to indirectly allocate to bitcoin. In the ETF era, investors can hold spot bitcoin exposure directly at low fees (such as IBIT’s annual fee rate of 0.25%).

This shift directly hits MSTR’s valuation logic. When there are more direct, more transparent, and lower-fee tools for bitcoin allocation, why still pay a premium for MSTR? Especially when MSTR itself carries additional financing risk, equity dilution risk, and operating risk.

Data shows MSTR’s shares outstanding have surged from about 193 million, and ongoing equity financing is diluting existing shareholders’ equity. Spot ETFs do not have this layer of dilution.

MSTR’s key differentiating advantage is its leveraged exposure—because the company expands its bitcoin position through debt and preferred stock financing, MSTR’s volatility is typically higher than bitcoin’s own. For investors seeking high-liquidity, high-volatility returns, that may be attractive. But for most institutions aiming for bitcoin allocation, ETFs offer a simpler choice.

Three variables determine the future

The sustainability of Strategy’s bitcoin treasury model ultimately depends on how three key variables evolve.

Bitcoin price. This is the most core variable. If BTC breaks back above the average cost line of $75,476 again, the unrealized loss on paper would turn into unrealized gains; market confidence could recover, and the mNAV premium may expand again. Standard Chartered maintains its $100k-by-end-2026 forecast. But if bitcoin keeps falling, Strategy will face larger unrealized losses on paper and heavier financing pressure.

The trend of enterprise bitcoin adoption. Strategy released a bitcoin bank adoption index in July, showing that it is still pushing for institutional-level bitcoin adoption. If more companies start copying Strategy’s bitcoin allocation, the model may receive a fresh revaluation. But if enterprise adoption slows down, Strategy’s first-mover advantage could turn into a first-mover disadvantage.

Intensifying ETF competition. Continued expansion of the spot BTC ETF market will keep eroding the “bitcoin substitute” investment logic behind MSTR. Strategy needs to provide stronger evidence that it is not merely a BTC holding vehicle, but a leveraged bitcoin asset management model that can create additional value.

Conclusion

Strategy’s bitcoin treasury model is undergoing the harshest test since its inception. From “continuous buying” to “pausing accumulation,” and from “never selling” to “actively selling,” these changes are both passive responses to a downside bitcoin price cycle and proactive adjustments under pressure from the company’s capital structure.

$3 billion in cash reserves gives Strategy time—an approximately 20-month coverage window for dividends and interest. But the time window itself cannot solve the problem. The real answer depends on where bitcoin’s price goes, how the market reprices the mNAV premium, and whether Strategy can find a new value narrative beyond being a “bitcoin treasury company.”

For investors, understanding the difference between Strategy’s model risk and bitcoin’s risk is crucial. MSTR is not bitcoin—it is a publicly traded company making a leveraged bet on bitcoin, which means upside has greater elasticity, and downside risk is amplified as well.

FAQ

Q1: How much bitcoin does Strategy currently hold? What is its average cost?

As of July 14, 2026, Strategy holds 843,775 BTC, with an average purchase cost of about $75,476 and total invested cost of about $63.69 billion. Based on the current market price, the unrealized loss on paper is about $10.7 billion.

Q2: Why is MSTR’s stock price decline larger than bitcoin’s?

MSTR’s amplified downside effect mainly comes from two factors: the contraction of the mNAV premium—when the market is no longer willing to pay MSTR a premium above its BTC holding value; and rising financing costs—when the stock price falls, equity financing efficiency drops, while fixed interest payment obligations for preferred stock and convertible bonds continue to accumulate.

Q3: Why does Strategy sell bitcoin?

In May 2026 and July 2026, Strategy sold small and larger amounts of bitcoin in sequence; the proceeds are mainly used to pay preferred stock dividends and replenish dollar reserves. The company has increased its cash reserves to about $3 billion to cover about 20 months of dividends and interest expenses.

Q4: What are analysts’ ratings for MSTR?

As of July 2026, the consensus rating of 15 analysts is “strong buy,” with an average price target of about $303.64. TD Cowen has a $260 price target, and Benchmark has a $570 price target. But note that analysts’ price targets often rely on medium- to long-term assumptions and do not represent near-term price action.

Q5: What is the difference between MSTR and spot BTC ETFs?

Spot BTC ETFs (such as IBIT) directly track the bitcoin price, with low fees and high transparency. MSTR, by contrast, amplifies its bitcoin holdings through debt and preferred stock, leading to higher volatility and leveraged exposure, but it also faces equity dilution risk, financing cost risk, and company operating risk. The risk-return profiles of the two differ significantly.