Why Strategy (MSTR) Shares Plunged 14.6% This Week

The shares of Michael Saylor-led Strategy (MSTR) fell by 14.6% this week. The Strategy, formerly called Microstrategy, is the table topper among the crypto treasury holders with 649,870 BTC worth around $54.63 billion. The fall in share price is largely attributed to the recent price plunge of Bitcoin. Bitcoin has slipped below $100k level and is currently trading at around $84k.

Why Shares of Strategy Fell 14.6%?

The major reason for the 14.6% fall is attributed to the bitcoin’s price plunge. Amid a crypto liquidation of 2 billion, the price of Bitcoin fell by over 12% in the past week. The crypto market witnessed heavy offloading from Whales, and the BTC ETF recorded a net outflow of $492.10 million in the past week. The bitcoin stumble was largely caused by the macro uncertainties that decreased the odds of Fed rate cuts, which were exacerbated by a stronger-than-expected September job data.

The shrinking premium to net asset value (NAV) also weighed on the share prices. Furthermore, the Strategy’s share fell by 43.53% in the past month alone. The latest close of 170.50 was over 50% down from 455.60 of 6 months ago. Nevertheless, the shares have slightly rebounded in the after-hours trading session, rising to $172.82, up 2.32 or 1.36%.

The Strategy Defends Its Bitcoin Strategy Amid the Share Price Fall

Amid the falling share prices and growing concerns over the company’s business model, the Strategy defended its stand by recounting the company’s strategy back in 2022. “In the depths of the 2022 crypto winter, our average cost basis was $30K while $BTC traded nearly 50% below it at $16K. What did we do? We bought more”, the company tweeted on X. 

Furthermore, Michael Saylor said that if Bitcoin stopped going up, it would be 0% forever, and they had about 80 years to figure out what they were going to do about that. He added that they were pretty indestructible.

Earlier, J.P. Morgan warned that the Strategy is facing a major exclusion risk that MSCI and other index providers may remove the stock. Michael Saylor responded to MSCI exclusion risk warning on Twitter by reiterating the company’s conviction in its long-term growth strategy. He tweeted that their team was building a new kind of enterprise—a Bitcoin-backed structured finance company with the ability to innovate in both capital markets and software. The investors are now closely watching whether the Strategy can withstand the bitcoin price crashes and restore the valuation cushion it enjoyed historically.