MicroStrategy Stock Risks Falling, as Bitcoin Price Faces Freefall

Key Insights:

• MicroStrategy stock price retests key support after dropping to $1111.
• A look at how much MicroStrategy (MSTR) has lost so far in market cap, courtesy of the bearish market conditions.
• Underlying risks for MicroStrategy as losses pile up.

MicroStrategy stock has been in freefall this week as the bears conducted a relentless assault on Bitcoin. Investors are now curious as to whether the bearish market conditions will break the company’s investment model, considering its heavily leveraged nature.

MSTR stock price was down to $107 at press time, as Bitcoin price fell below $65,000. The stock tanked by 27% since the start of the week. It has so far lost about 76% of its value since mid-July.

MSTR price was down by 17% in the last 24 hours alone. This extended downside led to a retest of a long-term support level. The stock risks losing this support if the Bitcoin price maintains its downward trajectory.

Analysts predict that the king of cryptocurrencies could slide below $60,000, causing further downside for the stock.

How Much Damage Strategy’s Market Cap Has Suffered in the Last Few Months?

While the extent of the shaky market conditions was evident in MicroStrategy’s stock price, the impact on its market cap was even more damning. Its market cap reportedly pushed over $100 billion at its peak in July. However, it has since retreated to $31 billion at the time of observation.

Consequently, the 1-year returns of MicroStrategy stock were down by 68% while its 3-month returns were down by 58%. This implied that the downside intensified since November.

Reports revealed that MicroStrategy’s unrealized losses surpassed $3.5 billion on Wednesday. However, the extended downside in the last 24 hours pushed that figure above $6 billion.

The massive MSTR stock price decline highlights the extensive impact of the current bearish conditions in the market. However, this downside had investors questioning the company’s ability to withstand further downside without the risk of collapse.

These concerns were largely based on MicroStrategy’s appetite for debt leveraging. Consequently, there have been rising predictions that the company might be at risk of collapsing.

The company’s chairman, Michael Saylor, recently addressed some of those concerns. He acknowledged the FUD around the company but stated that MicroStrategy will continue buying Bitcoin.

Are There Additional Risks to MicroStrategy Stock Price Crash?

MSTR was one of the top-performing stocks in the first half of 2025, right up there with Nvidia. Despite sailing the high seas, analysts were still curious about how things would turn out for the company’s business model if the market entered an extremely bearish phase.

MicroStrategy stock is now trading at a fraction of its value, and market sentiment is now at extreme lows. In other words, Strategy is now getting tested, and its extremely bearish stock price performance is one of the consequences.

A natural outcome given the deep correlation between the stock price and the Bitcoin price. On the other hand, both the MSTR stock price and the Bitcoin price are currently trading at sizable discounts that may be attractive for long-term investors.

MicroStrategy might lower its Bitcoin cost basis if it takes advantage of the discounted prices. It is worth noting that the company attracted a lot of mainstream attention when Bitcoin was above $100,000.

That attention expanded its investor base and could come in handy now that both the MSTR price and the BTC price are at discounted levels. It is worth noting that MicroStrategy now holds over 713,500 BTC, making it one of the top institutional investors.

Will MicroStrategy Sell Its Bitcoin?

Investors look worried that the crash may erase so much value from the MSTR stock price, forcing the company to sell its Bitcoin. A scenario that may lead to a death spiral for MicroStrategy.

MicroStrategy may start selling Bitcoin if its mNAV falls below 1. This would only happen if it depletes its cash reserve. Its mNAV is down to 1.08 so far after falling by 12% during Thursday’s trading session.

Moreover, its cash reserve is currently at $2.2 billion, hence MicroStrategy is still a long way from selling BTC. In other words, the positive mNAV suggests that the MSTR price was still at a premium on the company’s Bitcoin. This means it is still appealing to investors, especially at its recent discounted prices.