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Bitcoin is falling and taking Strategy down with it
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Bitcoin (BTC-USD) is falling fast enough that you should probably look it up right now if you want an accurate price.
On Thursday, it fell below $64,000 for the first time since October 2024.
The cryptocurrency has fallen more than 45% from last year’s record, and the intensifying sell-off has evaporated all the gains investors have made during Trump’s second term.
And it’s taking Michael Saylor’s famous bitcoin treasury firm, Strategy (MSTR), along for the ride down.
Strategy shares tumbled 17% on Thursday ahead of its fourth quarter results. And even with a cautious bounce on Friday morning, the stock is on track for steep weekly losses.
The company holds 713,502 bitcoins with an average purchase price of $76,052, roughly 20% more than what bitcoin is trading for. Strategy reported operating losses of $17.4 billion, compared to $1 billion in the same period in 2024.
Read more: How to navigate a crypto meltdown
The company’s premise sounded too good to be true: sell new shares and debt and keep buying crypto.
For more than a while, it worked as bitcoin rose, even as scores of lesser latecomers turned into copycats. Shares of Strategy, the company that pioneered a new kind of perpetual-motion money machine, skyrocketed over the last several years, rising almost 700% in 18 months from January 2024 to the end of July 2024.
Investors willingly paid Michael Saylor’s firm a premium over the actual price of the digital currency, and the company that had amassed the largest corporate stockpile of bitcoin was worth more than the bitcoin it held. Now, bitcoin has fallen far below the average price at which it was purchased.
The math was dumbfounding, but early investors made stupid money. Until they didn’t.
But don’t bother conducting a welfare check on Saylor and Strategy. He appears fine and is posting through it.
You can find him on X, urging the crypto faithful to stay strong, echoing their mantra and battle cry: “HODL.”
If you’re more of a visual person, you might take heart in the crypto-positive, AI-generated photos of himself he’s put out.
Other people are panicking, though. And the question of why this is happening — broader tech pessimism, the likelihood of a new, hawkish Fed chair, Treasury Secretary Bessent suggesting the government won’t come to the rescue — is less important than what happens next, and why this collapse feels defining.
The politics of the day have gifted crypto holders an ideal set-up. But even with a friend in the White House and allies in the administrative state, prices have struggled. Even more disconcerting is the economic environment. Evangelists have pitched crypto as the ultimate hedge — against inflation, the dollar, and global instability.
Those are the very things investors have been grappling with nearly every day this year. Crypto should be thriving right now. And yet, bitcoin has struggled.
In this moment of great stress, bitcoin is not acting like a next-gen safe haven. Gold is out-hustling crypto. And whatever excitement it once drew from the tech world and from tech-minded investors is being redirected to the AI trade, which is itself acting like a wrecking ball to other software assets.
Pessimism is setting in.
Saylor’s strategy worked when prices were rising. When they weren’t, he had the cushion to struggle through it. But the drawdown this week is so significant because so many crypto critiques are on display. It doesn’t do the things its proponents claim, the numbers are going in the wrong direction, and for those who came late, the Lamborghinis and moon landings never arrived.
Crypto skeptics shouldn’t take this all as an “I told you so” moment. Saylor hasn’t capitulated. Even 50% losses are probably not close to his escape level. He and other evangelists may not even have one.
But this crypto winter is different, and not because bitcoin is dead. It’s because we’re stuck with it.
Hamza Shaban is a reporter for Yahoo Finance covering markets and the economy. Follow Hamza on X @hshaban.
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