Strategy’s $64 Billion Bitcoin Bet Just Went Underwater

Strategy’s $64 billion bitcoin bet is underwater this morning. Bitcoin traded at $74,535 at 7:26 AM Eastern, below the $75,451 average that Strategy (NASDAQ: MSTR) has paid for its 849,327 coins, according to the company’s Nov. 2 filing with the SEC. At that price the stash is worth $63.30 billion, about $780 million less than the company paid for it. Sunday’s close was bitcoin’s first daily close below Strategy’s cost since Aug. 20, 80 days earlier; the weekend low was $73,477.

Buying $64 billion of one asset with convertible notes, preferred stock and a steady stream of newly issued shares is a bet, and as of this morning it is a losing one on paper. The limit on that reading is that Strategy has never sold into a drop, and the company has said that falling below its average cost triggers no covenant and forces no sale. Every $1,000 that bitcoin falls from here adds about $849 million to the paper loss. The verdict for anyone who owns the stock: you hold a leveraged bitcoin position that is now below its cost, with a premium on top, and this week decides how much of that premium survives.

What 1,000 shares actually own

Strategy has about 423 million shares, counting both classes. Behind every 1,000 of them sit about 2 bitcoin (2.01, to be exact), worth about $149,600 this morning. Ahead of the common stock stand about $6.7 billion of convertible notes, at their Sept. 30 carrying value, and $14.1 billion of preferred stock at its liquidation preference, offset by $4.92 billion of cash and dollar reserves as of Nov. 1. Net that out and 1,000 shares are backed by about $112,000 of bitcoin value.

At Friday’s close of $128.93, the same 1,000 shares cost $128,930. You are paying about $1.15 for every $1 of net bitcoin behind the stock, or about 1.11 times on the enterprise-value measure Strategy calls mNAV. That premium is the price of the leverage. Each $1,000 move in bitcoin moves the backing by about $2,000 per 1,000 shares, about $160 for every $10,000 you have invested.

What this week decides

Three things land in the next four days. First, Strategy has filed a bitcoin purchase update most Monday mornings this fall; last week’s buy was 811 coins at $80,846, already 8% underwater. A filing today would show whether it kept buying through its cost.

Second, on Wednesday, Nov. 11, MSCI publishes the final list of companies caught by its new rules for non-operating companies. Strategy was flagged in MSCI’s own simulation in May, and removal would take effect after the close on Nov. 30. Index funds tracking MSCI benchmarks hold about 13 million Strategy shares, about 3.1% of the company and about $1.7 billion at Friday’s close, about 0.7 days of the average volume over the last 20 sessions. The signal matters more than the shares: an index provider calling the company a fund rather than a business is an argument against paying any premium.

Third, the quarter-end mark. Bitcoin closed Sept. 30 at $83,556, so at this morning’s price the fourth-quarter paper loss is about $7.7 billion, after a $20.91 billion gain in the third quarter. Those swings do not touch the cash the company needs: dividends on the preferred stock and interest on the notes run about $1.5 billion a year, and the dollar reserve covers about three years of them without selling a coin. CEO Phong Le put the real danger far lower on the February earnings call: bitcoin at about $8,000, held there for years, is where the reserve equals the net debt and the company would have to restructure or raise money. Underwater by $916 a coin is a long way from that.

Sell, hold or trim

Take a 58-year-old who retired early from a software career with $3.1 million and bought 1,000 Strategy shares a year ago, on Nov. 7, 2025, at $241.93, the closing high of the past 52 weeks. He paid $241,930. The shares are worth $128,930, a loss of $113,000, or 47%, and the position is about 4.2% of his portfolio. The stock is down 15% this year, and the company’s bitcoin has gone from a $4.9 billion profit at the last quarterly report to a loss.

The question is what he owns the stock for. If the answer is bitcoin, he is paying a 15% markup on a loan-financed version of it, and a spot bitcoin fund gives him the coin without the preferred dividends ahead of him. If the answer is the leverage, the position should be sized at what he can watch fall by half again, because the stock moves roughly two bitcoin for every 1,000 shares plus whatever the premium does. For most retirement-age holders that argues for trimming to a size that does not change the plan, rather than selling in a panic on a Monday morning.

The tax angle works in his favor. In a taxable account, selling now realizes a $113,000 long-term capital loss, since he has held the shares just over a year. That loss offsets any capital gains he takes this year, then $3,000 a year of ordinary income, with the rest carried forward. He cannot buy Strategy back within 30 days without losing the deduction under the wash-sale rule; a spot bitcoin fund is a different security under the common reading of that rule, though the IRS has not ruled on it. In an IRA there is no deduction, so the decision there is about risk alone.

The bottom line

Strategy paid $75,451 a coin for 849,327 bitcoin, and bitcoin is at $74,535: about $780 million underwater on a $64 billion position, with the stock still at about $1.15 per $1 of the bitcoin behind it. Nothing forces a sale. What this week tests is the premium. If you hold the stock for bitcoin, you are paying up for it. If you hold it for the leverage, keep the position small enough that a second 47% drop is a number and not a problem.

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