strategy (NASDAQ:MSTR)’s business model was simple; It originally issued stock, preferred stock, and debt, and used the proceeds to buy Bitcoin (Crypto:BTC). It held Bitcoins and acted as a “Bitcoin treasury”. This model appears to have broken down after the massive drop in Bitcoin price, and investors should be concerned about its implications.
Right decision for business and shareholders
To be fair, the strategy is making the right move by shifting from a buy-and-hold model to a more dynamic model, given that it could sell up to $1.25 billion in Bitcoin. The purpose of the sale is to finance stock buybacks and to support payments on preferred stocks and bonds sold. It also intends to build up a cash reserve equal to approximately 12 months of preferred stock and interest payments.
Nvidia missed out in 2009? This rare signal is shining again. In 2009, a “double down” signal flashed for a little-known chip maker called Nvidia. For the first time in years, the same “Total Conviction” signal is shining for a company 1/100th the size of Nvidia. continue “
Given the decline in the value of Bitcoin and the decline in the strategy’s own stock price, the old model could no longer be supported. A pivot was necessary and shows that the company is willing to grow as well as evolve cryptocurrency market.
Change in strategy points to a bigger problem
However, from a bigger picture perspective, investors buying the strategy may view it as a way to buy Bitcoin without actually buying Bitcoin. But the steep decline in Bitcoin’s price, which has lost 40% of its value in the past year and is now nearly 50% below its 2025 high, is a troubling sign. Cryptocurrency lovers can turn to other options like prediction markets. Remarkably, Robin Hood (NASDAQ: HOOD) saw its crypto revenue decline by nearly 50% in the first quarter of 2026, while revenue from prediction markets increased by 320%.
You could argue that the buying strategy during the Bitcoin downturn has helped mitigate the depth of the decline. This would explain the value of the company acting as a “Bitcoin treasury.” However, you could also argue that this business reversal is a sign that the current decline is too much even for the strategy, as more and more traders are moving toward the next hot fad.
It’s entirely possible that cryptocurrencies come back into favor, but it’s also possible that the crypto market is different now than before. To be fair, Bitcoin has always been volatile, with the deepest declines exceeding 80%. If you are a long-term believer in Bitcoin, you may want to retain your strategy shares or, perhaps, buy more. Investing in strategies is a way to outsource your Bitcoin “investment” without doing the work yourself, but you have to recognize the material risks you are taking. Simply buying and holding Bitcoin is clearly not a practical long-term strategy, as the company built around that business model was forced to change.