Event Overview
Recently, Strategy (formerly MicroStrategy) raised approximately $700 million through the issuance of new shares for equity financing, continuing to invest the proceeds into Bitcoin assets, thereby maintaining its "sell stock to buy coins" balance sheet strategy. According to various data agencies, the company's stock price has retreated about 70% from its previous historical high, with shareholders' market value significantly pressured during this round of adjustment. This retreat is highly correlated with the ongoing equity expansion and the high volatility of Bitcoin exposure. In terms of scale, Strategy plans to invest approximately $22.46 billion in Bitcoin purchases by 2025, roughly equivalent to the total amount for 2024, indicating that despite significant price fluctuations in Bitcoin and a cautious market sentiment, it still chooses to maintain a high-intensity allocation pace. This series of actions has gradually shifted Strategy from a traditional software company's profit story to a narrative centered around Bitcoin as a core asset, akin to a "Bitcoin spot ETF plus operational premium," making its stock price performance more directly tied to BTC prices and financing conditions.
Equity Dilution Logic
From an accounting and capital structure perspective, Strategy's issuance of approximately $700 million in new shares means an increase in the number of shares based on the existing equity, diluting the relative share of net assets and future profits held by existing shareholders, thus creating a typical equity dilution effect. Institutions like Golden Finance point out that the supply of new shares itself exerts pressure on the stock price: the new chips brought by primary market issuance compete with existing circulating shares for buy orders in the secondary market. If there is a lack of supporting fundamentals or profit expectations for synchronous growth, the stock price often declines to reprice the larger equity scale. For the company's management, the "cost" of equity financing is not explicitly reflected in interest but is manifested in the loss of old shareholders' rights and per-share metrics; for shareholders, they need to expect that the Bitcoin purchased with the raised funds will generate sufficiently high capital gains in the future to compensate for or even exceed the short-term losses caused by dilution, which constitutes the core risk-reward trade-off under the Strategy model.
Bitcoin Leverage
Strategy continues to bind its balance sheet closely to Bitcoin price fluctuations through the path of "issuing shares—converting to cash—buying BTC." Essentially, this is a leveraged structure that uses shareholder equity as a base while adding the price risk of crypto assets. On the asset side, large-scale purchases of Bitcoin create concentrated, scaled positions; on the liability and equity side, these assets are funded through continuously expanding equity. CryptoQuant analysts have pointed out that this balance sheet leverage strategy characterized by equity financing and large holdings has significant costs: on one hand, there is ongoing equity dilution, and on the other hand, there is extreme reliance on high-volatility assets. In the current market environment, with Bitcoin prices having fallen below $90,000 and ETH below $3,000, the overall weak pattern means that Strategy's on-paper risk exposure is amplified—when BTC prices decline, the asset side's market value contracts, while the total number of shares is locked in at a higher level, requiring shareholders to collectively absorb the net asset volatility caused by this, making the company's valuation much more sensitive to the crypto cycle than traditional tech stocks.
Capital and Price Chain
From the perspective of capital flow and price formation, the Strategy model can be broken down into two main paths. The first is the equity financing side: the company issues approximately $700 million in new shares in the capital market, and after completing primary financing, this portion of new chips circulates in the secondary market. If the buy orders are limited, it will translate into significant selling pressure; during this process, the stock price often declines to re-match the larger equity scale with the market's pricing expectations for the company as a "Bitcoin vehicle," achieving a revaluation. The second is the purchasing side: the company plans to invest approximately $22.46 billion in Bitcoin purchases by 2025. Theoretically, large institutional buy orders have the opportunity to provide some support or boost to BTC prices during the period, but against the backdrop of the largest concentration of approximately $28 billion in cryptocurrency options expiring, its marginal impact may be partially offset by other macro and derivative forces. It is important to emphasize that public information has not disclosed the specific buying pace and transaction details of Strategy, making it impossible for external analysis to accurately depict its impact on daily or phase-specific prices. Any detailed breakdown of specific transaction prices and buying points carries significant uncertainty, and only qualitative discussions on the direction and scale of funds can be made.
Comparison with Traditional Tools
From the perspective of capital efficiency, comparing Strategy's approach of increasing equity to accumulate Bitcoin with traditional tools commonly used by companies reveals a distinctly different risk-reward structure. In the traditional model, companies often obtain funds through debt issuance, bank loans, or corporate bonds, and then, depending on the situation, engage in stock buybacks, dividends, or invest in R&D and acquisitions. The advantage of this path lies in the relatively predictable cost of debt, no dilution of equity, and a capital structure that is easier to price in valuation models. In contrast, Strategy chooses to directly exchange equity for high-volatility Bitcoin assets, essentially sacrificing the stability of short-term earnings per share and net assets per share, betting that future BTC price increases will yield higher capital returns. If the same amount of funds were invested in bonds or blue-chip stocks, the expected returns would be more predictable and the drawdowns more controllable, but the upside potential would also be limited. JPMorgan did not include any crypto concept stocks in its recommended list for 2026, reflecting, to some extent, mainstream institutions' reserved attitude towards the overall cost-effectiveness of "public companies with crypto assets as core exposure" in the current cycle, preferring cash flow assets that can be clearly priced within traditional valuation frameworks rather than aggressive allocations dominated by Bitcoin prices.
Industry Mapping Effect
If more listed companies or institutional investors choose to replicate the Strategy model, that is, heavily betting on Bitcoin spot through equity financing or asset revaluation, the volatility structure and valuation system of both the crypto and traditional capital markets may change. On one hand, the simultaneous existence of multiple "sell stock to buy coins" entities will add new stock supply and valuation discounts in the traditional stock market, while forming concentrated buy orders in the crypto market, potentially amplifying price volatility and cyclical resonance in the short term; on the other hand, in an environment where the largest concentration of approximately $28 billion in options is expiring and both ETH and BTC prices are retreating, the market value fluctuations of large institutions heavily invested in spot will interact complexly with the Gamma and Vega exposures in the derivatives market, potentially triggering forced balancing or hedging actions at key price points, further amplifying volatility. Unlike Strategy's "heavy asset holding" path, exchanges like Coinbase are transitioning to a "light asset service" model by increasing the proportion of non-trading income, focusing on custody, staking, compliance services, etc., to reduce self-operated market risk exposure. The two paths form a stark contrast: the former exchanges asset price elasticity for potential excess returns, while the latter primarily focuses on platform and service fees, pursuing more stable cash flows and a more favorable regulatory perspective.
Risks and Outlook
In summary, Strategy's strategy of continuing to leverage Bitcoin holdings through approximately $700 million in equity financing presents distinct pros and cons in terms of capital structure and shareholder returns: on one hand, large-scale Bitcoin holdings may amplify net assets and stock price increases during Bitcoin bull cycles, providing shareholders with capital gain potential far exceeding traditional business; on the other hand, ongoing equity expansion leads to dilution of per-share rights, coupled with the high volatility of BTC prices and the current environment of retreating from historical highs, has caused the company's stock price to drop about 70% from its historical peak, requiring shareholders to endure more severe net value fluctuations and uncertainty. Current public data has not disclosed the total amount of Bitcoin held by Strategy, the precise ratios of this and previous equity dilutions, or the specific timing distribution of the $22.46 billion Bitcoin purchases in 2025. The absence of these key data limits external quantitative assessments of its position risk, timing performance, and strategy sustainability. Observing subsequent developments, how regulators define and constrain listed companies' balance sheet leverage centered on crypto assets, whether institutional investors will increase or continue to lower the weight of Bitcoin concept stocks in their allocations, and how the market will reprice "public companies heavily invested in Bitcoin" in terms of valuation will become important dimensions for judging whether the Strategy model can transition from a case study to a paradigm.
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