Strategy (MSTR) Stock Drops 5.65% Following Bitcoin Crash Below $90,000

TLDR

• Strategy (MSTR) stock fell 5.65% as Bitcoin dropped below $90,000
• MSTR’s premium ratio (market cap to Bitcoin holdings) decreased from 3.4 to 1.6
• This lower ratio may limit the company’s ability to raise capital for more Bitcoin purchases
• Coinbase and Riot Platforms stocks also fell 6% and 5% respectively in premarket trading
• The crypto decline coincides with tech stock weakness and Japanese yen strengthening

Strategy, the company formerly known as MicroStrategy, saw its stock (MSTR) fall by 5.65% during trading on February 25, 2025, as Bitcoin’s price dropped below the $90,000 mark. The stock closed at $282.76, with the decline happening alongside broader drops in crypto-related stocks.

Bitcoin fell to as low as $87,630 on February 25, marking a three-month low with an 8% decrease in a single day. This sharp decline has had a ripple effect across crypto markets and companies with significant Bitcoin exposure.

Strategy, led by Michael Saylor, has positioned itself as the largest corporate holder of Bitcoin, owning more than 2% of the cryptocurrency’s total supply since late 2024. The company recently added 20,356 Bitcoin to its holdings, worth nearly $2 billion at the time of purchase.

The market reaction to Bitcoin’s price drop has affected more than just Strategy’s stock price. The ratio between the company’s market capitalization and the value of its Bitcoin holdings has fallen from a peak of 3.4 in November 2024 to just 1.6 on February 25.

Crypto analyst Miles Deutscher pointed out that this lower ratio may create challenges for Strategy. “The lower this number goes, the harder it will be for Saylor to raise more capital for BTC purchases,” Deutscher stated in a recent post.

The premium of $MSTR's market cap to it's underlying $BTC holdings has collapsed from a high of 3.4 in November to only 1.6 now.

The lower this number goes, the harder it will be for Saylor to raise more capital for $BTC purchases.

It seems like he will have to slow his pace. pic.twitter.com/yljEAgHyot

— Miles Deutscher (@milesdeutscher) February 25, 2025

This shift means that Strategy’s stock value is now closer to the actual value of its Bitcoin holdings, rather than being elevated by the premium investors were previously willing to pay. With this development, the company may face difficulties issuing new shares or using its stock to generate funds for additional Bitcoin purchases if prices don’t recover soon.

Other crypto-related stocks felt similar pressure during the same period. Coinbase (COIN) shares fell nearly 6% in premarket trading, while Riot Platforms (RIOT) dropped about 5%. These movements followed the broader cryptocurrency market decline.

The sell-off wasn’t limited to Bitcoin. Other cryptocurrencies experienced even larger percentage drops, with XRP falling over 14% to $2.11, Ether dropping more than 11%, and Solana tumbling 15% during the same period.

Market analysts have linked this crypto decline to broader trends in traditional markets. Technology stocks have shown weakness, with the Nasdaq futures slipping 0.3% in early trading, extending a three-day losing streak. Since February 18, the index has fallen more than 4%.

Another factor contributing to market uncertainty is the strengthening Japanese yen, which reached 149.76 per USD, approaching a near three-month high. The currency has gained nearly 6% over six weeks as investors anticipate a potential rate hike from the Bank of Japan (BOJ).

Some market observers have drawn parallels between the current situation and events from July 2024, when similar movements in the Japanese yen triggered widespread risk aversion. During that period, Bitcoin plunged from around $65,000 to $50,000 in just a few days.

Other Factors

The recent market behavior suggests that cryptocurrency prices are increasingly moving in sync with US equities, despite earlier optimism following Donald Trump’s election victory in November 2024. At that time, many investors expected the new administration would take a more favorable stance on crypto regulation.

Sentiment in the crypto industry has been further dampened by a major security breach last week. Hackers targeted Dubai-based platform Bybit, stealing $1.5 billion in digital assets, adding to the market’s downward pressure.

For Strategy, the recent price movements highlight the close ties between its stock performance and Bitcoin’s value. As the company holds such a large amount of Bitcoin, its stock price has become increasingly sensitive to movements in the cryptocurrency market.

Investors watching Strategy will likely keep a close eye on Bitcoin’s price movements in the coming days. If prices recover, the company’s premium ratio could increase again, potentially making it easier for Strategy to continue its Bitcoin acquisition strategy.

The latest Bitcoin price of $87,792 as of 10:18 GMT on February 25 represents a significant drop from recent highs, putting pressure on crypto-related investments across the board.

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