Strategy’s stock price has plunged sharply alongside Bitcoin, marking one of the steepest drawdowns since the company adopted its bitcoin treasury approach in 2020.

A Year Ago

Exactly one year ago, Strategy (MSTR), the software company that pioneered holding bitcoin (BTC $87,033.52) as a corporate treasury asset, hit a record high. At the same time, Bitcoin itself was approaching $100,000 for the first time, highlighting the strong correlation between the stock and the cryptocurrency.

Current Decline

Fast forward to today: Strategy is now down 68% from its $543 peak, which was reached just days after President Donald Trump’s election victory. Bitcoin has fallen to $83,142, its lowest since April, and on Coinbase it dipped as low as $81,385 on Friday. A critical level for investors remains Strategy’s average purchase price of roughly $74,430.

Bitcoin’s drop from its October peak of $126,000 has accelerated Strategy’s decline. The stock has breached key moving averages and technical support levels, making this drawdown the joint second-worst since the Tysons Corner, Virginia-based company implemented its bitcoin treasury strategy in April 2020.

The slide mirrors past declines, including a 69% drop between February and May 2021 as Bitcoin fell from roughly $60,000 to $30,000. Strategy’s largest drawdown came after Bitcoin reached $69,000 in November 2021, which triggered an 84% sell-off bottoming in June 2022. Since August 2020, the company has endured multiple declines exceeding 50%.

Index Considerations and Market Impact

JPMorgan analysts have warned that major equity benchmarks such as MSCI USA and the Nasdaq 100 may consider excluding Strategy from their indices. Such a move could trigger an estimated $2.8 billion in outflows from MSCI alone as index-tracking funds adjust their holdings. About $9 billion of Strategy’s market capitalization is held by passive investment vehicles, including ETFs, highlighting the potential market impact.

Valuation Perspective

Despite the sharp decline, Strategy still trades at 1.23 times net asset value (mNAV), which reflects the enterprise value relative to its bitcoin holdings. During the 2022 bear market, the company often traded below mNAV, creating a discount to its underlying cryptocurrency assets.