Published on: 2026-01-02
MicroStrategy stock (now Strategy Inc, ticker MSTR) trades less like a typical software company and more like a high-beta Bitcoin proxy. When Bitcoin declines, MSTR stock often falls harder because investors are not only pricing Bitcoin risk but also dilution risk, financing risk, and shifts in the premium or discount relative to the value of the company’s Bitcoin holdings.
The performance snapshot shows how severe that leverage can look in drawdowns: down 62.09% in six months, down 49.37% year to date, and down 52.06% over one year, even while the long-term picture remains strong at +264.97% over five years and about +1,770% all time.
That combination is typical of an asset-linked equity with cyclical booms and deep retracements.
MicroStrategy holds a very large Bitcoin position, so the simplest answer to why MSTR stock is dropping is that Bitcoin has been falling, and MSTR is a leveraged expression of that move. Recent disclosures show the company holding 672,497 BTC with an average purchase price of around $74,997.
When Bitcoin pulls back, investors also become less willing to pay a premium for “Bitcoin exposure plus leverage,” and that is when MSTR stock can drop faster than Bitcoin itself.
MicroStrategy has been funding Bitcoin buys partly through repeated share issuance. In late December, the company disclosed it sold 663,450 shares for $108.8 million and used the proceeds to buy 1,229 BTC at an average price of around $88,568.
It also reported raising $2.67 billion in December via stock sales, which is a meaningful supply overhang for any equity, especially in a risk-off tape.
This is the central non-obvious point that many readers miss. Even if Bitcoin eventually recovers, existing shareholders care about Bitcoin per share, not only the total Bitcoin held. Heavy issuance can weaken per-share exposure during the very periods investors want it to be most resilient.
MSTR stock can trade at a premium to the implied value of its Bitcoin holdings because investors factor in future Bitcoin accumulation, capital-market access, and optionality. In drawdowns, that premium often compresses because the market becomes skeptical that issuance will be accretive rather than dilutive.
The compression can hit the stock even if Bitcoin is only modestly down, because it is a valuation reset on top of the underlying asset move.
MSTR stock has also faced periodic “flow risk,” meaning potential forced buying or selling tied to index membership decisions and passive fund mechanics.
In mid-December, estimates circulated that exclusion from a major large-cap index could have triggered passive outflows of around $1.6 billion. Even when those events do not occur, the risk itself can pressure prices during periods of fragile sentiment.
MicroStrategy still has an operating business, but the stock’s day-to-day pricing is driven by its Bitcoin balance sheet and funding strategy. That is why the share price behaves like a Bitcoin-linked instrument rather than a normal enterprise software name, particularly during sharp crypto selloffs.
From a technical perspective, the message is straightforward. Momentum is bearish until the stock proves otherwise.
| Indicator | Value | Signal |
|---|---|---|
| RSI (14) | 31.307 | Sell |
| MACD (12,26) | -1.73 | Sell |
| ADX (14) | 45.953 | Sell |
| Stochastic (9,6) | 23.415 | Sell |
| Williams %R | -93.46 | Oversold |
| ATR (14) | 1.8102 | Lower volatility |
| Moving Average | Level | Signal |
|---|---|---|
| MA5 | 153.04 | Sell |
| MA10 | 154.36 | Sell |
| MA20 | 155.76 | Sell |
| MA50 | 158.54 | Sell |
| MA100 | 164.03 | Sell |
| MA200 | 171.83 | Sell |
Recent lows: MSTR recently printed fresh lows around the mid-$150s, with a late-December close near $155.39.
Trend structure: A six-month drawdown of the magnitude you shared typically means rallies are sold until the market sees clear evidence of trend reversal, such as higher highs and higher lows over multiple weeks.
Volatility regime: MSTR stock tends to overshoot in both directions. In downtrends, that often means sharp bear-market rallies followed by renewed selling if Bitcoin does not confirm a sustained uptrend.
Support: The recent low zone in the mid-$150s is the nearest reference point because it is where buyers last defended price.
Resistance: The first meaningful resistance is the prior breakdown area above recent consolidation zones. In plain terms, if the stock rallies, watch whether it holds gains for more than a few sessions. Failure to hold is usually a sign that supply remains heavy.
For MSTR stock to change character, Bitcoin usually needs to shift from “falling with spikes” to “base-building with higher lows.” A one or two-day bounce rarely fixes the problem if broader risk appetite remains weak.
The market can accept dilution in a bull phase when the premium is strong, and Bitcoin is rising. It punishes dilution when the premium compresses. Recent updates show substantial issuance capacity still available under at-the-market programs.
What readers should track is not only “did they buy more Bitcoin,” but “did Bitcoin per share improve after the financing.”
When MSTR trades at a healthier premium, buying Bitcoin through equity issuance can look smart because it can increase Bitcoin exposure per share. When the premium collapses, the same strategy can look like a value transfer away from existing holders. The premium trend is therefore as important as Bitcoin’s spot price in the short term.
A clean framework for readers is this:
MSTR stock return ≈ Bitcoin return + change in premium to Bitcoin value + dilution effect
In strong markets, the premium widens, and dilution is “forgiven,” allowing MSTR to outperform Bitcoin. In weak markets, the premium compresses and dilution becomes painful, so MSTR can underperform Bitcoin by a wide margin. Your 6-month performance figure is consistent with that downside stacking effect.
Because MSTR stock prices three risks at once: Bitcoin downside, premium compression relative to Bitcoin's value, and dilution from share issuance used to fund additional Bitcoin purchases.
It is not “safe” in the low-volatility sense. MSTR stock is typically more volatile than Bitcoin because equity embeds financing and dilution dynamics on top of Bitcoin's price movements.
Recent disclosures put holdings at 672,497 BTC, purchased at an average price of around $74,997.
The biggest risk is that the market forces a lower valuation multiple on the Bitcoin holdings at the same time the company issues shares, which can weaken per-share exposure and keep the stock under pressure even if Bitcoin stabilizes.
A bullish setup usually includes three ingredients: Bitcoin forms a base with higher lows, MSTR stops making new lows, and issuance pressure eases or becomes clearly accretive to Bitcoin per share.
In the short run, the market tends to focus more on Bitcoin, dilution, and the premium or discount to Bitcoin value. Over longer horizons, operating performance matters, but it is not the primary price driver in most weeks.
MSTR stock is falling because Bitcoin is down, and the market is simultaneously discounting dilution and compressing the premium investors are willing to pay for MicroStrategy’s Bitcoin-heavy balance sheet. The key insight is that MSTR is not just a Bitcoin proxy. It is a Bitcoin proxy with an active financing engine that can either amplify gains in bull markets or amplify pain in drawdowns.
What comes next depends on three observable signals: Bitcoin stabilizing into a higher-low structure, issuance pressure easing or becoming clearly accretive, and the Bitcoin premium stopping its decline. Until those improve together, the technical and fundamental setup argues for continued volatility and downside sensitivity.
Disclaimer: This material is for general information purposes only and is not intended as (and should not be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by EBC or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.
