Strategy Stocks Suffer as Bitcoin Finds Floor

Bitcoin may have finally found its floor after a long correction period, according to Jurrien Timmer, Fidelity's director of global macro. In his power-law curve model, Bitcoin held its lower boundary and spent enough time correcting to satisfy the mild four-year-cycle winter.

The chart shows that Bitcoin's recent low at $59,572 was within 2.3% of the model line, indicating a recovery from the trough. However, Timmer warns that adoption curves can eventually break, and this model organizes Bitcoin's price history, not makes it repeat.

Strategy's market capitalization fell by roughly $79 billion from its peak and accounted for most of the damage identified by the FT. The company's treasury stocks fell further than Bitcoin itself, with a decline of around 55% over the past year compared to Bitcoin's 30% decline.

The share-price premium that supported Strategy's financing strategies has also contracted, making it harder for management to raise more capital without giving away ownership. To recover, investors need evidence from the shares and the financing behind them, including a sustainable net-asset-value premium, cash coverage, and increased per-share exposure after new purchases.