In 2025, Strategy (formerly MicroStrategy) effectively cornered the supply of new Bitcoin in the capital markets, performing the feat of purchasing more coins than the world's mining networks produced in a year.
Over the course of the year, Strategy added approximately 225,027 BTC to the company's treasury, bringing its total holdings to approximately 672,497 BTC. This purchase campaign exceeded the estimated circulation of 164,000 coins after the halving, creating a mathematical supply shock.
But as the company enters 2026, it faces harsh market realities. Stock prices have been cut in half, severely decoupling them from the very assets they have accumulated.
The company's stock price plunged 52% in the last three months of the year, ending the year with a market capitalization of $48.3 billion, according to Strategy data. This is significantly lower than the $59.2 billion market value of the company's Bitcoin holdings.
This difference is not simply a change in emotion. That means unwinding certain structural transactions and relentlessly reevaluating a company's leveraged capital structure.
As 2026 begins, the story has shifted from strategy as a proxy for premium prices to a complex battleground where short sellers, arbitrageurs, and debt weigh more heavily than “supercycle” theory.
Arbitrage mitigation and short-term interest rates
For most of the last cycle, Strategy was trading at a significant premium to the net asset value (NAV) of its holdings.
This premium existed because investors treated stocks as leveraged volatility products. Hedge funds and proprietary trading desks monetized this by conducting “MSTR arbitrage” trades, buying stocks and shorting Bitcoin futures to collect volatility premiums.
However, that dynamic reversed in 2025 when the company flooded the market with shares to fund the acquisition of 225,000 coins, resulting in the premium collapsing.
As a result, sophisticated market participants have begun unwinding premium trades and entering into new structures of going long spot Bitcoin via ETFs and shorting strategy stocks to capture narrowing spreads.
Market data confirms the intensity of this battle. As of Dec. 15, Strategy Inc. held short interest of 29.14 million shares, representing 11.08% of publicly traded shares, according to MarketBeat data.
Although this is a 4.62% decline from November, Strategy remains one of the most shorted stocks on the market.
Sustained short interest indicates that a significant segment of the market is betting on the company's ability to maintain its valuation premium amid significant dilution.
This structural pressure explains why despite the significant headwinds faced by Bitcoin, the stock was unable to rise despite holding near $87,983.
The market has gone from seeing strategy as a play on scarcity to seeing it as a dilution mechanism. The implied volatility of 71% further highlights the concerns, valuing the stock as a high-octane derivative rather than a stable holding company.
The reality of debt and “discounts”
A major mistake in simple retail analysis is comparing market cap directly to the Bitcoin stack and labeling the difference as a “discount.”
At the time of writing, the company's Bitcoin reserves are valued at $59.2 billion, while its market capitalization is just $48.3 billion. To the casual observer, the stock appeared to be trading at a nearly $11 billion discount to total assets.
However, institutional analysis takes a more aggressive stance and focuses on enterprise value (EV) to explain a company's high debt. Things change when you adjust for the billions in convertible bonds used to fund this accumulation.
The company's enterprise value reached $62.3 billion at the end of the year, which is about $3 billion more than the value of BTC Stack.
Looking at this spread, you can see that the “free money” discount disappears once debt is taken into account.
Essentially, the market has priced the company at a very thin multiple of adjusted book value, which is reflected in the company's mNAV (market to net asset value) of 1.05.
The market's refusal to grant a higher premium suggests that investors are no longer pricing the stock based on the total value of the coin ($59.2 billion), but are instead acutely aware that the debt (the implied difference between market cap and EV of $14 billion) has a senior claim on these assets.
Comparison of dilution engine and “BTC yield”
The strategy's accumulation engine, which has been selling stocks to buy Bitcoin, faced a significant stress test in the fourth quarter.
The company relies on at-the-market (ATM) stock issuance to fund acquisitions. In 2025, this “rinse and repeat” loop expanded the national treasury to the nation-state level, but also introduced the trap of reflexivity.
Management is driving a key performance indicator (KPI) known as “BTC Yield.” This measures the growth rate of BTC holdings per share. The argument is that as long as a company can issue stock at a premium to the cost of acquiring Bitcoin, that increase will benefit shareholders.
However, market focus shifted from 'yield' to raw dilution in late 2025. With its stock price down 53% in the last year, Strategy will need to issue more shares to raise the same amount of capital.
This causes the denominator (number of shares) to increase faster than the numerator (Bitcoin stack).
Despite this, the company shows no signs of changing direction. Strategy has more than $2 billion in cash on hand, and management has thrown cold water on any proposal to sell Bitcoin to pay down debt or buy back stock.
Therefore, committing to an accumulation strategy is a must, even if the stock market is taking a big toll.
The coming year
Given the above, the outlook for 2026 will depend less on broad sentiment and more on the specific sensitivity of Strategy's balance sheet to Bitcoin price movements.
The previous “upward-only” correlation has collapsed and been replaced by a complex interplay of leverage, issuance pace, and index flows.
In a scenario where Bitcoin rises towards $110,000, the asset gap, or the difference between Coinstack and debt-adjusted equity value, would widen significantly.
Historically, spreads of this size force repricing as short sellers are squeezed out and value investors come in. Under these circumstances, premiums could return if management slows down the pace of issuance.
However, if Bitcoin remains in its current consolidation zone of $80,000 to $90,000, the ATM service system will face challenges.
Continued issuance in a sideways market erodes BTC per share, validating skeptics who see stocks as “noisy tracker funds” that charge high fees in the form of dilution.
