MicroStrategy’s “Bitcoin” Strategy and Current Status
Since its pioneering inclusion of Bitcoin in its corporate treasury in 2020, MicroStrategy (now renamed Strategy) has been a flagship example of enterprise-level Bitcoin investment. However, amid the crypto market’s extreme volatility, the company is currently facing significant unrealized losses.
- Massive Unrealized Losses: As of July 13, 2026, Strategy held approximately 843,775 Bitcoin, with an average purchase cost of approximately $75,476 per coin.Given that the price of Bitcoin fluctuated between $62,600 and $64,740 from July 13 to 17, 2026, Strategy’s Bitcoin position has an unrealized loss of approximately $10.7 billion.Previously, in the first quarter of 2026, the company had disclosed unrealized losses of up to $14.5 billion on its Bitcoin holdings.
- Strategy Adjustment: Faced with market pressure, Strategy’s “never sell” strategy has begun to show signs of easing. In early June 2026, the company sold 32 Bitcoin for the first time since 2022.Additionally, between July 6 and 12, 2026, Strategy raised $466.7 million by selling approximately 4.82 million shares of MSTR stock, with the aim of increasing its U.S. dollar reserves to $3 billion to support preferred stock dividends and debt interest payments, thereby reducing the risk of being forced to sell Bitcoin.
- Management Perspective: Executive Chairman Michael Saylor has long been a staunch advocate of Bitcoin, believing that “fiat currency is the problem.”However, market analysts such as JPMorgan Chase (JPMorgan) have pointed out that Strategy’s sale of Bitcoin “spooked the market” and increased “two-way risk.” Standard Chartered analyst Geoff Kendrick also believes that the “mixed messages” conveyed by the company’s leadership are damaging sentiment toward Bitcoin in the broader market.
The “Deeply Overexposed” Phenomenon and Market Liquidation Risks
The phrase “Forward is 170% deep in the red” mentioned in the article title does not refer to a specific company or an exact loss percentage; rather, it is more likely a metaphor used to describe the massive losses or extreme exposure—far exceeding the initial investment—suffered by some entities in the crypto market due to high leverage or sharp price fluctuations.
- Large-Scale Liquidation Events: The crypto market is known for its high volatility, and large-scale liquidation events are not uncommon. For example, on June 20, 2026, the cryptocurrency futures market liquidated over $170 million in positions within 24 hours, with short positions at Bitcoin and long positions at Ethereum suffering severe losses.Meanwhile, on September 25, 2025, the total market capitalization of cryptocurrencies plummeted by nearly $170 billion within 24 hours. These events illustrate the risks of “deep losses” and forced liquidations that highly leveraged positions may face during extreme market conditions.
- Losses for Short-Term Holders: As of July 17, 2026, data shows that approximately 86.5% of short-term Bitcoin holders were in a loss position, further confirming the widespread impact of the market correction on investors.
Structural Risks of the Corporate Crypto Treasury Model
The “Digital Asset Treasury” (DAT) model pioneered by MicroStrategy—which treats Bitcoin as a core corporate reserve asset—can amplify returns during bull markets but also exposes inherent structural risks during bear markets.
- Liquidity Spiral Risk: When the price of Bitcoin falls, the net assets of companies holding large amounts of Bitcoin shrink, which may trigger a decline in stock prices and the disappearance of market premiums. This, in turn, makes it difficult for companies to continue raising capital through additional stock issuances or debt, creating a “liquidity spiral” or “death spiral.”As early as November 2025, analysts warned that the market capitalization of many crypto treasury companies had fallen below the value of their Bitcoin holdings, potentially exposing them to a wave of sell-offs.
- Regulatory Scrutiny: Regulators are also keeping a close eye on this model. In March 2026, the U.S. Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA) jointly announced that they would investigate more than 200 publicly traded companies that had announced crypto treasury plans, citing widespread “abnormal stock price fluctuations” immediately prior to the release of such announcements.This indicates that regulators are taking a cautious stance toward potential market manipulation and disclosure issues underlying companies’ use of crypto assets for treasury management.
- Weakening Market Demand: In the first half of 2026, the crypto market underwent a brutal shakeout, with the Bitcoin retreating approximately 40% from its peak and the overall market capitalization shrinking by about 30%.Buying activity from institutions and enterprises has significantly weakened; the Bitcoin spot ETF even saw net outflows of approximately 120,000 Bitcoin (as of July 17, 2026), indicating that institutional demand for crypto assets is cooling.
Market Outlook and Risk Management
The MicroStrategy case, along with broader market liquidation events, collectively reveal the structural risks enterprises face in the crypto market.Although Bitcoin, as an emerging asset class, holds long-term potential, its inherent volatility, regulatory uncertainty, and the prevalence of highly leveraged trading require enterprises to carefully assess risks and implement sound risk management measures when incorporating it into their treasury strategies.
In the future, when allocating digital assets, companies may need to place greater emphasis on optimizing their capital structure, ensuring adequate liquidity reserves, and dynamically managing market risks, rather than relying solely on the long-term appreciation expectations of a single asset. This will help companies effectively mitigate potential market downside risks while reaping the potential returns of digital assets.
