Bitcoin Crash Predicts $5.91 Billion Loss in Q1 Earnings

In a tumultuous beginning to the week, shares of Strategy (NASDAQ: MSTR), previously known as MicroStrategy, plummeted drastically following the company’s revelation of an astounding $5.91 billion in unrealized bitcoin losses for the first quarter. This software company, recognized for its substantial bitcoin treasury, disclosed this information in an early Monday filing with the Securities and Exchange Commission (SEC). Despite obtaining $1.69 billion in income-tax benefits to soften the blow, Strategy anticipates experiencing a net loss for Q1 of the fiscal year.

Strategy’s decision to boost their bitcoin holdings backfired significantly between March 24 and March 30. During this timeframe, the company acquired an additional 22,048 bitcoins at an average price of $86,969, amounting to a total purchase of $1.92 billion. Unfortunately, the declining value of bitcoin has exacerbated the already precarious situation for the firm.

As of March 31, Strategy’s Bitcoin holdings stood at 528,185 BTC, with an average purchase price of $67,458. The recent price of Bitcoin has hovered around $78,700, marking a 4.5% drop in value within a 24-hour period. Additionally, Strategy reported proceeds amounting to $7.69 billion from share offerings during Q1, underscoring the magnitude of their financial activities.

Interestingly, Strategy refrained from acquiring any bitcoin between March 7 and April 7, suggesting a possible pause in their aggressive accumulation strategy as market conditions shifted. The pause in bitcoin purchases aligns with Strategy’s adaptation to the evolving market dynamics and potential risks involved.

The recent plunge in Bitcoin prices has been a cause for concern. Bitcoin experienced a sharp decline, dropping from approximately $83,000 to below $74,500 overnight. Although it slightly rebounded to $78,700 on Monday morning, the cryptocurrency has overall decreased by almost 9% over the past month. Various factors such as escalating global tariff worries and uncertainties surrounding macroeconomic conditions have contributed to this downward trajectory.

This downward trend in Bitcoin prices has had a ripple effect across different financial sectors. The Nasdaq has declined by about 10.4% month-to-date, while the S&P 500 has also experienced a dip of over 7%. Companies closely associated with cryptocurrencies, such as Coinbase (COIN), have endured losses, with COIN’s 2025 losses extending to 35%. ETFs linked to Bitcoin, like iShares Bitcoin Trust (IBIT), have also witnessed a decline of more than 6%.

Despite the challenging circumstances and substantial losses faced by Strategy, analysts surveyed by FactSet maintain a somewhat positive outlook. They anticipate a Q1 EPS of -$0.11, an improvement from -$0.31 last year. Furthermore, the analysts foresee revenue totaling $116.8 million for the quarter, a slight increase from the previous year’s $114.9 million. Typically, Strategy reports its Q1 results in late April or early May, although an exact date for the forthcoming announcement is yet to be confirmed.

Before the recent sell-off on Monday, MSTR stock had demonstrated modest gains of 1.4% year-to-date as of Friday’s close. However, the 6% drop on Monday pushed the shares further below their 50-day moving average, raising apprehensions about the company’s technical support levels.

For investors involved in Bitcoin, Strategy’s bitcoin-centric approach exposes them to the heightened volatility associated with cryptocurrencies. The substantial unrealized losses signify ongoing turbulence in earnings for Strategy, with Bitcoin’s price fluctuations continuing to influence market sentiment toward the company. Given Strategy’s heightened exposure to Bitcoin’s price movement, investors are advised to stay vigilant and monitor macroeconomic risks including tariffs and monetary policy that could impact broader markets. As Strategy solidifies its role as a proxy for Bitcoin, the trajectory of cryptocurrencies moving forward will undeniably dictate its future, determining whether the company can withstand the current challenges without further depreciation in shareholder value.