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Will a $20 Billion Bitcoin Windfall Fuel a Massive MicroStrategy Short Squeeze Oct. 29?

Strategy reports earnings October 29 after three brutal quarters of multibillion-dollar Bitcoin markdowns, and a massive reversal in fair value accounting could send short sellers scrambling before the week is out.

By Rich Duprey
Published October 25, 2026, 11:15am ET · 2 min read

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A large, golden Bitcoin coin is centered, emitting bright white sparks and light. Blue lightning bolts crackle in the background, which features dynamic financial market charts with green and red candlesticks and numerical data, all against a dark blue gradient background.
A prominent Bitcoin coin surrounded by dynamic market charts illustrates the significant potential for cryptocurrency-driven financial gains, hinting at events like MicroStrategy's anticipated windfall. © Morrowind / Shutterstock.com

Strategy (NASDAQ:MSTR | MSTR Price Prediction) reports third-quarter results on Oct. 29 after the bell. After three straight quarters of multibillion-dollar markdowns on its Bitcoin (CRYPTO:BTC) treasury, fair value accounting could finally swing in its favor.

From Back-to-Back Markdowns to a Possible $20 Billion Swing

Last quarter, Strategy posted EPS of -$24.45 against a $3.07 consensus, driven by an $8.32 billion unrealized loss on digital assets. That followed a $14.46 billion loss in Q1 and a $17.44 billion loss in Q4 2025.

The balance sheet improved anyway. Holdings grew 11% to 846,000 BTC, convertible debt fell 18% to $6.7 billion, and the USD Reserve reached $3.75 billion, covering more than two years of obligations. The board also authorized $1.0 billion buyback programs for both MSTR and STRC.

Since then, Bitcoin rose 26.84% over 90 days to about $80,793, and Strategy previously estimated a $20.91 billion digital asset gain. Shares closed at $146.01, up 6.71% in a week but down 48.75% over a year.

MSTR price target

Wall Street Expects a Return to Profit

Metric Consensus Year-Ago Actual YoY Change
Q3 FY2026 EPS $17.9802 $8.42 +113.5%
Q3 FY2026 Revenue $129.36 million $128.69 million +0.5%
FY2026 EPS -$19.1198 N/A N/A
FY2026 Revenue $501.70 million $477 million +5.2%

Quarterly EPS estimates range from -$0.99 to $52.82, a spread that shows how much depends on the Bitcoin mark.

MSTR earnings explorer

Gain Line, Dividend Vote and Options Positioning Take Center Stage

The unrealized gain line dominates everything. Last year, a $3.89 billion gain produced $8.42 in EPS, so a figure near the $20.91 billion estimate would reset the earnings picture entirely.

I’ll also be watching the October 28 shareholder vote on daily dividends for preferred instruments like STRC. Approval could improve liquidity and restore preferred issue capacity. That matters because preferred dividends cost $400.7 million in Q2 alone, and STRC now pays 12.00% annualized.

Accumulation pace also matters. Holdings stand at 848,500 BTC, but BTC Yield ran just 4.5% year to date through Q2 versus 22.8% in 2025.

The software side keeps improving. Subscription services revenue rose from $45.97 million in Q3 2025 to $62.86 million last quarter.

On the squeeze setup, shorts pressed into the stock during Bitcoin’s slide, according to company data context. Options traders tilt bullish, with a full-chain put/call ratio of 0.55 and Oct. 30 call volume of 178,619 versus 100,146 puts.

MSTR analyst ratings

A Profitable Quarter Could Rewrite the Bear Case

Strategy approaches the report on a four-quarter EPS miss run. CEO Phong Le has told shareholders the company is “levered and amplified Bitcoin”, and that leverage magnifies losses as well as gains. Bitcoin has slipped 3.92% over the past month, so the fourth-quarter mark is already moving. A large gain coupled with a successful dividend vote gives bears their hardest test in a year. Riding a leveraged crypto proxy works until it doesn’t, which is the whole point of our free bubble survivor’s handbook: how to profit while the mania runs and how to recognize the exit.

Contact [email protected] for any questions or corrections.

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Rich Duprey

After two decades of patrolling the dark corners of suburbia as a police officer, Rich Duprey hung up his badge and gun to begin writing full time about stocks and investing. For the past 20 years, he’s been cruising the markets looking for companies to lock up as long-term holdings in a portfolio while writing extensively on the broad sectors of consumer goods, technology, and industrials. Because his experience isn’t from the typical financial analyst track, Rich is able to break down complex topics into understandable and useful action points for the average investor. His writings have appeared on The Motley Fool, InvestorPlace, Yahoo! Finance, Money Morning, and, of course, 24/7 Wall St. He has been featured in both U.S. and international publications, including MarketWatch, Financial Times, Forbes, Fast Company, and USA Today.

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