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In 2025, Strategy (previously known as MicroStrategy) achieved a remarkable capital markets milestone by cornering the supply of new Bitcoin, acquiring more coins than were produced by the global mining network throughout the year.
Over the course of the year, Strategy accumulated around 225,027 BTC for its corporate treasury, raising its total holdings to approximately 672,497 BTC. This acquisition spree surpassed the anticipated post-halving issuance of 164,000 coins, resulting in a significant supply shock.
However, entering 2026, the company faces a stark market environment: its stock price has dropped by half, diverging sharply from the very asset it has stockpiled.
Data from Strategy indicates that its shares fell 52% in the last quarter of the year, concluding with a market capitalization of $48.3 billion, which is considerably lower than the $59.2 billion market value of its Bitcoin holdings.
This disparity is not just a mere sentiment shift; it illustrates the unraveling of a particular structural trade and a stringent reassessment of the company’s leveraged capital framework.
With the onset of 2026, the narrative surrounding Strategy has evolved from being seen as a high-priced proxy to a complicated battleground, where short sellers, arbitrageurs, and debt obligations overshadow the “super-cycle” thesis.
The arbitrage unwind and short interest
During a significant portion of the preceding cycle, Strategy traded at a notable premium to the net asset value (NAV) of its assets.
This premium thrived because investors viewed the stock as an instrument of leveraged volatility. Hedge funds and proprietary trading desks capitalized on this through the “MSTR arbitrage” strategy: purchasing the stock while shorting Bitcoin futures to capitalize on the volatility premium.
However, this dynamic reversed in 2025 as the company inundated the market with equity to finance its acquisition of 225,000 coins, leading to the collapse of the premium.
As a result, savvy market players began unwinding the premium trade or adopting a new strategy: acquiring spot Bitcoin via ETFs and shorting Strategy stock to profit from the narrowing spread.
Market data corroborates the intensity of this struggle. As of Dec. 15, Strategy reported a short interest of 29.14 million shares, which equates to 11.08% of its public float, according to Marketbeat data.
While this represents a 4.62% decline since November, Strategy continues to be one of the most shorted stocks available.
The ongoing short interest reveals that a considerable portion of the market is betting against the company’s ability to sustain its valuation premium in light of significant dilution.
This structural pressure elucidates why the stock struggled to rebound even as Bitcoin hovered around $87,983 amid considerable challenges.
The perception of Strategy has shifted from that of a scarcity opportunity to a tool for dilution. An implied volatility of 71% further highlights the market’s anxiety, treating the equity not as a stable holding company but rather as a volatile derivative.
The debt reality vs. the ‘discount’
A common misconception in retail analysis involves directly comparing the market capitalization to the Bitcoin reserve, labeling the discrepancy a “discount.”
As of the latest update, the company’s Bitcoin reserve was valued at $59.2 billion, while its market capitalization was merely $48.3 billion. To a casual observer, the stock seems to be trading at an almost $11 billion discount to its gross assets.
However, institutional evaluations adopt a more rigorous approach, emphasizing Enterprise Value (EV) to account for the company’s substantial debt load. When adjusted for the billions in convertible notes utilized to fund its acquisition, the perspective shifts dramatically.
By year-end, the company’s Enterprise Value stood at $62.3 billion, which exceeds the value of the BTC reserve by around $3 billion.
This gap illustrates that once debt obligations are taken into account, the supposed “free money” discount disappears.
The market effectively values the company at a very slim multiple of its adjusted net assets, evident in its mNAV (market to Net Asset Value) of 1.05.
The market’s reluctance to assign a higher premium indicates that investors are no longer evaluating the stock based on the gross worth of the coins ($59.2 billion), but rather recognize that the debt ($14 billion implied difference between Market Cap and EV) holds a superior claim on those assets.
The dilution engine vs. ‘BTC Yield’
The cornerstone of Strategy’s accumulation, which involves selling stock to acquire Bitcoin, underwent a significant stress test in the fourth quarter.
The company depends on at-the-market (ATM) equity issuance to finance its acquisitions. In 2025, this repetitive cycle expanded the treasury to levels comparable to that of nation-states, yet it also created a reflexivity trap.
Management emphasizes a Key Performance Indicator (KPI) termed “BTC Yield,” which monitors the percentage increase in BTC holdings per share. The underlying premise is that as long as the company can issue shares at a premium over the cost of acquiring Bitcoin, the resulting benefits accrue to shareholders.
Nonetheless, the market’s attention shifted in late 2025 from “yield” to sheer dilution. With the stock price decreasing by 53% over the last year, Strategy is compelled to issue more shares to secure the same amount of capital.
This results in an increase in the denominator (the share count) that outpaces the numerator (the Bitcoin reserve) growth.
Despite these challenges, the company has shown no inclination to alter its strategy. Strategy has amassed a cash reserve exceeding $2 billion, and management has dismissed any notions of selling Bitcoin to address debt or repurchase shares.
Thus, the commitment to the accumulation strategy remains steadfast, even as the equity market imposes significant pressure.
The year ahead
In light of the discussion, the outlook for 2026 will hinge less on general sentiment and more on how sensitive Strategy’s balance sheet is to Bitcoin’s price fluctuations.
The previous “up-only” correlation has been disrupted, superseded by a complex interplay of leverage, issuance timing, and index flows.
In a scenario where Bitcoin approaches $110,000, the asset gap—the difference between the Bitcoin stash and the debt-adjusted equity value—would potentially widen significantly.
Historically, spreads of this magnitude prompt a repricing as short sellers are forced out and value investors take their place. Under these circumstances, the premium might re-emerge, assuming management moderates the rate of issuance.
Conversely, if Bitcoin remains within the $80,000 to $90,000 consolidation range, the dynamics of the ATM offering could prove problematic.
Ongoing issuance in a stagnant market diminishes the Bitcoin per share, validating skeptics who perceive the stock as a “noisy tracker fund” incurring high fees in the form of dilution.
