MicroStrategy Inc. (MSTR) is preparing to report a multibillion-dollar loss for the fourth quarter of 2025, a direct consequence of Bitcoin's approximately 24% price drop during the period. This marks a stark reversal from the previous quarter, where the company booked a $2.8 billion profit. The expected loss stems from an unrealized markdown on the company's massive Bitcoin treasury, valued at roughly $60 billion, which rapidly depreciated in the late-year crypto market sell-off.
The company's financial exposure to Bitcoin volatility was amplified by an accounting change implemented in Q1 2024. MicroStrategy began valuing its Bitcoin holdings at current market prices instead of cost, making its earnings far more sensitive to price swings. "It is going to be a sizable loss," noted Aaron Jacob, a senior adviser at Taxbit and associate professor at Brigham Young University, highlighting the quarter's sharp contrast to prior gains.
This event tests the core investment thesis pitched by founder Michael Saylor, who has long framed Bitcoin volatility as "a feature, not a bug." The company's reinvention as a leveraged Bitcoin proxy has come under increasing pressure in 2025, with its stock falling 48% for the year. Investors are questioning the sustainability of a model reliant on a non-income-producing asset, especially concerning future costs like dividends and interest payments. To alleviate balance sheet pressure, the company raised cash on December 1 by selling common shares.
Concurrently, market activity around MicroStrategy reflects heightened scrutiny. Derivatives data shows MSTR with an extraordinarily high open interest ratio of 86.2% of its market cap, far exceeding peers like Tesla (22%) and Meta (10.4%). Furthermore, a prediction market on Polymarket indicates traders now assign a 76% probability that MSTR will be removed from the MSCI index by March 31, a sentiment that has risen alongside the stock's 66% drop over the past six months.
Adding another layer, a product linked to Saylor called STRC is being promoted with an 11% monthly cash dividend, drawing skepticism about its legitimacy and underlying cash flow. Proponents argue it is backed by a strong balance sheet, contrasting it with traditional high-yield 'junk' credit.
Despite the bleak quarterly forecast, both MicroStrategy stock and Bitcoin saw a rally on the first trading day of 2026, with MSTR up 5.2% to around $160 and Bitcoin gaining 2.6% to $90,549.
