In 2025, Strategy (formerly MicroStrategy) pulled off a feat in the capital markets that effectively cornered the supply of new Bitcoin, purchasing more coins than the global mining network produced in the entire year.
During the year, Strategy added approximately 225,027 BTC to its operating treasury, bringing its total holdings to approximately 672,497 BTC. This purchasing campaign exceeded the estimated issuance of 164,000 coins after the halving, creating a mathematical supply shock.
Yet the company heads into 2026 facing a grim market reality: Its stock price has halved, violently decoupling its stock price from the assets it hoards.
Strategy data shows that shares plunged 52% in the final three months of the year, ending with a market capitalization of $48.3 billion. This is significantly less than the $59.2 billion market value of its bitcoin holdings.
This difference is not merely a shift in sentiment; it represents the unwinding of a specific structural transaction and a ruthless reevaluation of the company’s capital structure.
As 2026 begins, the narrative has shifted from Strategy as a more expensive proxy to a complex battleground where short sellers, arbitrageurs and debt obligations outweigh the ‘super cycle’ thesis.
The arbitrage is settled and the short interest
For much of the previous cycle, Strategy traded at a significant premium to the net asset value (NAV) of its investments.
This premium existed because investors treated the stock as a leveraged volatility instrument. Hedge funds and proprietary trading desks monetized this by setting up the “MSTR arbitrage” trade: buying the stock and shorting bitcoin futures to reap the volatility premium.
However, that dynamic reversed in 2025 when the company flooded the market with equity to finance its 225,000 coin yield, resulting in the bounty collapse.
As a result, sophisticated market participants began unwinding premium trading or entering a new structure: long spot bitcoin through ETFs and shorting strategy stocks to accommodate the narrowing spread.
Market data confirms the intensity of this battle. According to Marketbeat, Strategy had a short interest of 29.14 million shares on December 15, representing 11.08% of the public stock market value. facts.
While this represents a decline of 4.62% from November, Strategy remains one of the most shorted stocks on the market.
The persistence of short interest suggests that a significant portion of the market is betting on the company’s ability to maintain its valuation premium amid heavy dilution.
These structural pressures explain why the stock failed to recover even when Bitcoin was worth nearly $87,983, despite the significant headwinds it faced.
The market went from seeing Strategy as a scarcity game to seeing it as a mechanism for dilution. An implied volatility of 71% further underlines the concerns, with the stock valued not as a stable holding but as a high-octane derivative.
The debt reality versus the ‘discount’
A crucial mistake in simple retail analysis is directly comparing the market cap to the Bitcoin stack and labeling the difference as a ‘discount’.
At the time of writing, the company’s Bitcoin reserve was valued at $59.2 billion, while its market capitalization was only $48.3 billion. To the casual observer, the stock appeared to be trading at a discount of nearly $11 billion to its gross assets.
However, the institutional analysis takes a harder line and focuses on enterprise value (EV) to take into account the company’s enormous debt load. Adjusted for the billions in convertible bonds used to finance this accumulation, the picture changes.
The company’s Enterprise Value at the end of the year was $62.3 billion, which is approximately $3 billion higher than the value of the BTC stack.
This spread shows that once debt obligations are factored in, the “free money” discount evaporates.
Essentially, the market is pricing the company at a razor-thin multiple of its adjusted net assets, reflected in its mNAV (market-to-net asset value) of 1.05.
The market’s refusal to assign a higher premium suggests that investors are no longer pricing the stock based on the gross value of the coins ($59.2 billion), but are instead well aware that the debt ($14 billion implied difference between market cap and EV) has a higher claim on those assets.
The Dilution Engine vs ‘BTC Yield’
Strategy’s accumulation engine, which has sold shares to buy Bitcoin, faced a critical stress test in the fourth quarter.
The company relies on the issuance of shares at market (ATM) to finance its purchases. In 2025, this rinse-and-repeat loop scaled the treasury to the nation-state level, but also introduced a reflexivity trap.
Management promotes a Key Performance Indicator (KPI) known as ‘BTC Yield’, which measures the percentage increase in BTC holdings per share. The thesis is that as long as the company can issue shares at a premium to the cost of acquiring bitcoin, the growth will benefit shareholders.
However, in late 2025, the market focus shifted from “yield” to crude dilution. With the share price down 53% in the past year, Strategy needs to issue more shares to raise the same amount of capital.
This increases the denominator (the number of shares) faster than the numerator (the Bitcoin stack) grows.
Despite this, the company shows no signs of turning around. The strategy has amassed a cash reserve of more than $2 billion, and management has poured cold water on any suggestion of selling bitcoin to pay down debt or buy back stock.
So the commitment to the accumulation strategy is absolute, even if the stock market takes a heavy toll.
The coming year
Given the above, the 2026 outlook is less dependent on broad sentiment and more on the specific sensitivity of Strategy’s balance sheet to Bitcoin’s price action.
The previous correlation of ‘only up’ has been broken and replaced by a complex interaction of leverage, issuance cadence and index flows.
In a scenario where Bitcoin rises towards $110,000, the asset gap, the difference between the coin stack and the debt-adjusted stock value, would widen significantly.
Historically, spreads of that size force a repricing as short sellers get squeezed out and value investors step in. Under these circumstances, the premium could return, provided management slows the pace of issuance.
However, if Bitcoin remains in the current consolidation zone of $80,000 to $90,000, the ATM supply mechanisms will face a challenge.
Continued issuance in a flat market erodes BTC per share, validating skeptics who see the stock as a ‘noisy tracker fund’ with high costs in the form of dilution.
