MicroStrategy Stock Drops as Bitcoin Falls Below Key Purchase Price

Shares of MicroStrategy, the business intelligence software company turned major Bitcoin investor, fell sharply today. The decline followed a drop in the price of Bitcoin below a critical level for the company’s strategy. Bitcoin traded below MicroStrategy’s average purchase price of approximately $76,052 per coin, raising new questions about the risks of its aggressive crypto accumulation.

The Core of the Concern

For years, MicroStrategy, led by Executive Chairman Michael Saylor, has used its corporate treasury to buy Bitcoin, treating it as a primary reserve asset. This bold strategy has made the company’s stock, traded under the ticker MSTR, a popular proxy for investors seeking Bitcoin exposure without directly owning the cryptocurrency. A key part of its appeal was the so-called “equity premium.” Because the company held its Bitcoin debt-free and had an existing software business, investors were often willing to pay a bit more for MSTR shares than the simple value of the Bitcoin on its balance sheet.

That premium has now effectively vanished. With Bitcoin’s price falling below the company’s average cost, the paper value of its massive hoard—over 713,000 Bitcoin—is below what the company paid. This erodes the financial cushion that supported the stock’s premium valuation. More importantly, it impacts MicroStrategy’s unique funding model. The company has historically raised money by selling new shares or issuing debt, using its strong stock price and valuable Bitcoin collateral to secure favorable terms. A lower stock price and underwater Bitcoin holdings complicate its ability to fund further purchases.

A Strategy Under Pressure

The recent market move highlights the inherent volatility and risk in MicroStrategy’s approach. The company is effectively running a highly concentrated, leveraged bet on Bitcoin’s long-term price appreciation. Even as the market value of its existing holdings decreased, MicroStrategy recently reported purchasing an additional 9,245 Bitcoin. This demonstrates a unwavering commitment to the strategy but also increases the company’s exposure during a downturn.

For general investors, the situation serves as a case study in corporate strategy and risk. MicroStrategy has tied its financial fortunes almost entirely to one volatile asset. While this has generated enormous returns during bull markets, it leaves the company and its shareholders fully exposed during corrections. The stock’s reaction today shows how quickly sentiment can shift when a key psychological threshold, like the average buy-in price, is breached.

What It Means for Michael Saylor’s Bet

Michael Saylor remains a steadfast Bitcoin advocate, consistently stating the company’s strategy is long-term and measured in years, not days or months. From this perspective, short-term price movements below the average cost are viewed as temporary setbacks or even opportunities to buy more at a discount. The company’s recent purchase aligns with this philosophy.

However, the market’s concern is pragmatic. Continued pressure on Bitcoin’s price could strain MicroStrategy’s financial flexibility. If the equity premium does not return, funding future acquisitions could become more expensive or difficult. This could slow the pace of its Bitcoin accumulation, which has been a central driver of investor interest. The coming weeks will be a test of both Bitcoin’s price resilience and investor confidence in MicroStrategy’s unconventional corporate treasury strategy.