Bitcoin plunge: What Michael Saylor’s US$12 billion Strategy loss says about the cryptocurrency

[SINGAPORE] When Michael Saylor’s Strategy released its latest earnings report this week, the numbers did more than just disappoint Wall Street – they underscored a new reality for the global cryptocurrency market.

The firm, formerly known as MicroStrategy and long seen as a corporate bellwether for Bitcoin adoption, on Thursday (Feb 5) reported a net loss of US$12.4 billion for the fourth quarter. The loss was driven by a massive drop in the value of its vast holdings as the cryptocurrency slipped below US$65,000.

For observers used to the “to the moon” excitement of the past two years, this sea of red ink raises an uncomfortable question: Has the crypto market stopped growing up, or is this just the steep price of admission for a volatile asset?

As Bitcoin slides from its October 2025 highs of US$126,000, dragging the rest of the market down with it, The Business Times spoke to industry experts to unpack the drivers behind the downturn.

Unrealised impairments

The immediate source of market anxiety isn’t just the price drop itself, but how it wreaks havoc on corporate financials. Strategy’s results have exposed the specific danger of using a volatile asset like Bitcoin as a corporate treasury reserve.

When Bitcoin prices fall, companies holding it on their balance sheets are forced to report massive “unrealised impairments”, said Ryan Chow, CEO and co-founder of Solv Protocol, an onchain Bitcoin asset manager.

This means they must record a paper loss that drags down their overall earnings, even if their actual business operations are healthy.

Chow notes that this hits firms with heavy exposure the hardest.

“Firms like Strategy have reported widened quarterly losses due to unrealised impairments… exacerbating operating losses in the billions,” he says.

This volatility creates a built-in accounting imbalance, says Vincent Chok, CEO of fintech firm First Digital.

Under legacy accounting rules, companies often have to record a paper loss that hits reported earnings, even if they haven’t actually sold any Bitcoin. Conversely, they cannot claim the paper profits when the cryptocurrency’s price rises.

The result is that bad news hits the earnings report instantly, while good news remains invisible until the asset is sold.

The result is a contagion effect: the slump spills over from crypto tokens into the stock market, hammering crypto-linked equities and dragging down broader indices, including the Straits Times Index in Singapore.

A systemic reset, not a scandal

The latest crash differs significantly from previous “crypto winters”. Past downturns were often triggered by singular, catastrophic crimes or failures, such as the collapse of the FTX exchange or the Terra platform.

This time, the downturn seems to be structural – driven by macroeconomic forces such as interest rates and global risk appetite, rather than a single scandal.

Hassan Ahmed, country director for Singapore at Coinbase, describes it as a broader risk-averse environment, rather than a headline-driven panic.

Furthermore, the market structure has changed. As crypto has become more integrated with big institutional money, it has adopted the automated trading habits of Wall Street.

Ahmed points out that once prices breached key technical levels, algorithm-driven selling and forced liquidations accelerated the sell-off. This meant a cascade of automated selling occurred when traders were forced to exit losing positions.

That is a pattern more typical of mature asset classes, he says.

Retail investors: freezing, not fleeing

The behaviour of retail investors has also shifted. In previous cycles, price crashes triggered chaotic panic selling. This time, the mood is defined by a “quiet retreat”, says Chok.

Investors are not necessarily dumping their assets in a frenzy, but are withdrawing from activity due to extreme fear. Chok notes that while sentiment is negative and funds are flowing out of exchange-traded funds, it isn’t the dramatic capitulation of the past.

“It’s a recognition that without regulatory clarity and without guardrails, volatility becomes an unnecessary risk,” he says.

This retreat is exacerbated by “emotional trading”. Solv Protocol’s Chow adds that unlike institutions, retail investors lack diversification, meaning they feel the pain of margin calls – demands from brokers to deposit more cash to cover losing bets – and paper losses more acutely. This leads to a freeze in confidence rather than just a sell-off.

The path to maturation

Despite the heavy losses, industry observers argue that Bitcoin is not “dying”. The market is instead splitting into two distinct lanes: Bitcoin is cementing its role as a long-term store of value, like digital gold, while stablecoins are taking over the practical role of daily payments.

Chow draws a parallel to gold to contextualise the current pain. He reminds investors that gold, now seen as the ultimate safe haven, historically endured long stretches of stagnation and deep corrections.

“Bitcoin, at only 17 years old… is cycling through a maturation phase,” Chow says.

The consensus is that while volatility will persist, the fundamentals of the network remain intact. Chok of First Digital notes that Bitcoin could remain range-bound between US$83,000 and US$95,000 once the dust settles.

Instead of a collapse in the underlying features of Bitcoin, the market seems to be shedding its “get rich quick” speculative phase for a slower, grittier period of institutional adoption.