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Strategy (NASDAQ:MSTR) pioneered the Bitcoin (CRYPTO:BTC) treasury company strategy that once drove mutual gains. The company bought Bitcoin, which often boosted the cryptocurrency’s price and, in turn, lifted Strategy’s stock. Similarly, any unrelated jump in Bitcoin’s price would also lead to Strategy share gains.
However, this dynamic has weakened. Bitcoin’s price has declined 27% from its October 2025 peak of over $126,000, but Strategy’s shares have fared worse, dropping more than 64% from their peak. Recent purchases illustrate the shift: Strategy revealed this morning it had bought 22,305 Bitcoin for $2.13 billion, yet its stock is falling nearly 7% in midday trading, reflecting the market’s diminished enthusiasm for the strategy.
Bitcoin has encountered significant headwinds and is trading around $90,200 today, down from recent highs. Proponents argue it serves as a store of value — it is called “digital gold” — offering protection against inflation and economic uncertainty. However, market behavior is increasingly challenging this view. Gold prices have risen sharply over increased geopolitical tensions, while Bitcoin has declined.
The Widening Bitcoin-Gold Divide
Billionaire Frank Giustra citing the U.S.’s push to acquire Greenland as an example of why “Bitcoin is not gold.” Saying the latter was truly a safe haven asset and the crypto is a risk-on one, he declared “The facts on this are clear & indisputable.”
Gold has surged to record highs, in part due to concerns over U.S. ambitions in Greenland, while Bitcoin dropped. He also makes the case that Bitcoin can be more easily confiscated than gold, pointing to the government’s Bitcoin reserve, which consists solely of confiscated Bitcoin.
Dilution Weighs Heavily on Strategy Investors
Strategy’s latest Bitcoin acquisition was funded through $1.83 billion in common stock sales and $294.3 million from its perpetual preferred equity Stretch (STRC), leading to ongoing shareholder dilution.
Since adopting its Bitcoin treasury strategy, the company has issued shares repeatedly to finance purchases, increasing outstanding shares and reducing existing investors’ ownership stakes. A year ago, shareholders approved what many thought was an “infinite money glitch” by authorizing Class A shares to grow from 330 million to 10.33 billion and preferred shares from 5 million to 1.005 billion, enabling further dilution for Bitcoin buys. Each acquisition now amplifies this effect, as seen in the stock’s decline despite the latest purchase.
The company’s aggressive capital raises, including at-the-market (ATM) offerings of common and preferred stock, have supported massive Bitcoin accumulation — now totaling 709,715 bitcoin acquired for about $53.92 billion, or an average price of $75,979 per coin.
But this has come at the cost of significant dilution. Shares outstanding have increased substantially through repeated equity issuances, eroding Strategy’s “Bitcoin Yield.” Analysts note that as the bitcoin stack grows larger, generating incremental yield becomes harder, and ongoing equity sales directly dilute common shareholders’ claims on the treasury.
The premium at which Strategy stock trades relative to its net asset value (mNAV) has compressed sharply, recently hovering near 1.0x or slightly above, limiting the arbitrage that once fueled the flywheel.
Compounding those concerns, Strategy’s software business only generates modest revenue — around $460 million to $500 million annually — insufficient to cover rising obligations like preferred stock dividends, that are projected to cost around $775 million annually for years. This reliance on equity raises to fund both Bitcoin buys and dividends heightens the dilution pressure during periods of crypto weakness.
Key Takeaway
Although investors voted for the dilution plan, market reactions suggest they are suffering from buyers’ remorse, with Strategy stock falling regardless of Bitcoin’s direction. Considering executive chairman Michael Saylor has recently acknowledged circumstances where the company might sell Bitcoin — a reversal from prior statements that he would never sell — the market seems to be rejecting further dilution for Bitcoin acquisitions.
That means the question investors face is a critical one: will Bitcoin’s price grow sufficiently to restart Strategy’s flywheel before the stock implodes?