Market Update: Strategy (MSTR) and Bitcoin Holdings
As the ongoing market turmoil continues to affect capital raising initiatives, Strategy (MSTR) has notably refrained from expanding its bitcoin (BTC) portfolio over the past week. Furthermore, the firm anticipates reporting a net loss for the first quarter, primarily driven by a staggering $5.91 billion in unrealized losses associated with its bitcoin assets. This significant write-down is a direct consequence of the recent implementation of new accounting standards that mandate cryptocurrency holdings to be valued at market prices.
In addition to the losses, Strategy expects to see a $1.69 billion tax benefit that may help alleviate some of the financial strain. During the last quarter, the company successfully raised a total of $7.69 billion, with approximately $4.4 billion stemming from sales of common stock and the remainder from the issuance of preferred stock. Most, if not all, of these funds were allocated to bitcoin purchases made at significantly higher price points than the current market value of $77,000.
Currently, the average acquisition cost for the company’s substantial holding of 528,185 BTC has escalated to nearly $67,500 per bitcoin. This means that the firm is only realizing a modest gain of about 14% on its investments in cryptocurrency. In early trading on Monday, MSTR shares dipped by 9%, reflecting a year-to-date decline of 10%, although they still maintain a remarkable 77% increase compared to the same period last year.
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