The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

By Pranav Kiran

TORONTO, Feb 9 (Reuters Breakingviews) - For cryptocurrencies as in the real world, this winter is proving much, much frostier than the last. Digital-coin enthusiasts have ridden out previous slumps in the market worth of their tokens. A recent $2 trillion plunge in crypto capitalization, though, is hammering companies that transformed into corporate hoarders of bitcoin and its kin. Strategy MSTR.O, the $36 billion progenitor of this trade, has cash and liquid stock to ride out the storm for now. Most everyone else will need to huddle for warmth.

Run by Michael Saylor, Strategy has $2.3 billion in cash, enough to cover roughly two-and-a-half years’ worth of payments on the byzantine array of bonds and preferred stock issued to fund its bitcoin-buying binge. That’s about as long as the price of bitcoin has taken, on average, to recover after a 50% tumble.

The goal will be to tough out a slide that has seen bitcoin slump 43% since a peak in October. The company has managed to find willing investors even in tough times, selling $23 billion in common and preferred stock in 2025, when its share price halved.

Its superpower is promising yield for every corner of the market it can possibly tap. So it became the largest issuer of convertible debt in 2025, feeding a red-hot hedge-fund trade. Then it moved on to preferred equity, offering dividends to income‑seekers.

That funding power is a lot like religion: it runs on belief. Preferred shareholders must trust that dividends won’t vanish. Common shareholders, despite constant dilution, must buy into Saylor’s gospel that bitcoin per share is a real yardstick.

If that faith is tested, the final defense would be to sell bitcoin for cash. Some peers have done just that. But Strategy’s holdings represent over 3% of the market. Liquidating this pile would spark market panic.

Digital asset treasury companies arose as a phenomenon because investors bafflingly valued them at more than the worth of their tokens. By October, the magic was dissipating, with roughly 80% of them trading at a discount, according to research from Altuva Group. That was before the recent crypto-market plunge; things are worse now. If this keeps up, they could be shut out of capital markets. Strive and Semler Scientific joined hands last year to try to ward off a spiraling discount. There will inevitably be more to come – if investors don’t raid the companies to liquidate their holdings first. A shareholder in Empery Digital is now pushing for this. At this point, Strategy’s religion only makes sense for its chief prophet.

CONTEXT NEWS

Strategy on February 5 reported a fourth-quarter loss of $12.4 billion, or $42.93 per share, for the three months ended December 31, compared with a loss of $670.8 million, or $3.03 per share, in the fourth quarter of 2024.

The company's shares are down 12.5% year-to-date.

(Editing by Jonathan Guilford; Production by Maya Nandhini)

((For previous columns by the author, Reuters customers can click on KIRAN/pranavkiran.t@thomsonreuters.com))