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The Bitcoin investment strategy of Michael Saylor's Strategy (formerly MicroStrategy) is experiencing large unrealized losses even though its holdings have been profitable over the long run. The risks of the company's aggressive accumulation strategy are highlighted by recent data showing that it has lost almost $1 billion on its most recent Bitcoin purchases. Dollar-cost averaging (DCA) has been used consistently by Strategy to accumulate Bitcoin at different price points, even during market corrections.
Even though this strategy has produced a 37.71% overall gain across all holdings, it has had a negative short-term impact. The company recently revealed that it had purchased billions of Bitcoin at prices ranging from $95,000 to $106,000 per BTC. However, these investments are sitting at a significant loss as Bitcoin is currently having trouble regaining the $92,000-$94,000 range.
On Jan. 27, 2025 a $1.11 billion Bitcoin purchase at an average price of $105,596 per BTC—now down more than 16%—caused the biggest loss. This emphasizes the risk of making rash purchases during local market peaks. Strategy's enduring belief in Bitcoin is one of its main advantages. The company has successfully transformed into a Bitcoin ETF thanks to Michael Saylor's unwavering belief drawing in investors who wish to gain exposure to BTC through conventional markets.
Yuri MolchanFurthermore, the business has proven to be resilient by weathering market volatility in recent years, without panic-selling further solidifying its standing as a steadfast supporter of Bitcoin. The risks associated with this strategy are substantial, though. Strategy's ongoing acquisitions of Bitcoin at different price points have exposed it to significant volatility, resulting in significant short-term declines that may erode investor confidence. The risk of timing is another issue.
Tomiwabold OlajideThe firm's recent losses as a result of its aggressive averaging down strategy underscore the risk of investing in dips without obvious signs of recovery. Should Bitcoin fail to recover, Strategy might have to reconsider its strategy. Bitcoin's inability to hold above $100,000 has been a significant setback despite the fact that it has continued to rise over time. Strategy may make money on its recent purchases if Bitcoin regains its six-figure status.
Dan Burgin
Vladislav Sopov