Strategy's Bitcoin Bubble Bursts: Why Holding BTC Is Safer

Investors in Strategy (NASDAQ: MSTR), which tripled from early September 2024 to late November of that year, have seen their shares plummet 80% from its all-time high.

This decline is largely due to the company's business model, which relies heavily on dilution and issuing debt to accumulate Bitcoin. When Strategy's price drops faster than Bitcoin, this strategy doesn't yield as much.

The company had to sell 3,588 Bitcoins to fund dividends for its digital credit securities, which are not available to retail investors. This expense adds to the burden of a company that generates almost all revenue through its Bitcoin treasury model.

Strategy's reliance on dilution means it will have to issue more shares and sell more Bitcoin to meet financial obligations if the asset continues to decline.