Bitcoin Drops Below $60,000, Leaving Strategy with Over $13 Billion in Unrealized Losses as Financing Model Credibility Questioned
Taylor Wilson
Bitcoin fell below $60,000, saddling Strategy with over $13 billion in unrealized losses. Its core playbook — issuing stock to buy bitcoin — is now under market scrutiny as funding costs rise and retail investors pull back.
How large is the $13 billion paper loss?
Strategy holds roughly 844,000 bitcoin at an average cost of about $75,600. Bitcoin last traded near $59,700 — a discount of over 20%.
This means → the unrealized loss already exceeds Dogecoin's entire $12.97 billion market cap — a single reference point that frames the scale.
Under fair-value accounting — booking market-price swings directly into the income statement — the company faces a massive quarterly loss.
Strategy's stock has hit a 28-month low, down more than 81% from its July 2025 all-time high of $457.22.
Why did the "never sell" pledge break?
Strategy's model works in a loop: issue equity and preferred stock → use the proceeds to buy bitcoin → bitcoin rises → issue again.
In early June the company disclosed selling 32 bitcoin — its first sale since 2022, breaking founder Saylor's long-standing "never sell" commitment.
This means → the market is now asking: if the coin stays below cost, can a "buy-only" loop keep turning?
Amina Bank derivatives head Andreja Cobeljic put it bluntly: "The direct cause of bitcoin's drop is a weakening market cycle, but the deeper driver is a blow to Strategy's strategic credibility."
What went wrong with preferred stock STRC?
STRC — Strategy's preferred stock — launched at $100 and has since fallen to roughly $75, leaving many holders underwater.
In plain terms = STRC was designed as a low-barrier, high-dividend product to let ordinary investors ride the bitcoin strategy. With the price down, fewer buyers step in, and the yield climbs passively.
Rising yield → higher cost the next time Strategy issues preferred stock → weaker capacity to keep buying bitcoin at scale.
Analysts note that STRC has no maturity date, no bitcoin collateral, and its dividend can be cut or suspended at the board's discretion — real risk far above what some investors initially perceived.
Are both retail and institutional flows heading for the exit?
Bitcoin spot ETFs saw cumulative net outflows approaching $3 billion in June. Many investors who bought at launch remain underwater.
This means → retail participation is fading, fresh inflows are weakening, and bitcoin is growing more dependent on institutional capital.
Yet precisely now, one of the largest institutional buyers — Strategy — faces questions about the sustainability of its funding engine.
Longtime bitcoin critic Peter Schiff publicly suggested Strategy "sell some bitcoin and buy back its own stock" to close the discount — he expects the stock could trade at a 40% discount to the per-share bitcoin value.
How long can this model hold?
Strategy faces twin pressures: bitcoin stuck below its average cost + funding costs still climbing.
In plain terms = the money it raises to buy bitcoin keeps getting more expensive, while the bitcoin it already owns keeps losing value — exactly the scenario the "issue-stock-buy-coin" model dreads most.
Two Prime founder and CEO Alex Blume warned that Strategy's sustained weakness "is unnerving the market and drawing comparisons to previous major crypto crises."
This reflects a shift in what the market truly cares about — no longer short-term price swings, but whether Strategy's business model can survive a full down-cycle.
Content is for reference only, not financial advice.