By Vicky Ge Huang

Crypto's brutal descent found a new low point on Thursday, with bitcoin posting its biggest one-day drop since the 2022 crash and the company run by the token's leading evangelist posting a $12 billion loss.

Bitcoin tumbled to $63,596.56 at 4 p.m. Eastern time, sliding 13% during its worst 24-hour trading period since June 2022. Minutes later, Michael Saylor's Strategy said crypto's late-2025 swoon had left the bitcoin-stockpiling company with a staggering paper loss in the fourth quarter.

Strategy's fourth-quarter net loss widened to $12.4 billion, or $42.93 a share, from $670.8 million, or $3.03 per share, a year earlier. In the most-recent period, the company recorded an unrealized fair-value loss of $17.4 billion on its digital assets, complying with accounting rules that require companies to value their holdings at current market prices.

Saylor, who co-founded the software company formerly known as MicroStrategy, has spent the past six years transforming his business into a storehouse of bitcoin. He has issued stock and debt to raise billions of dollars for his crypto-buying spree, and by Feb. 1 held 713,502 bitcoins. Dozens of other public companies followed Saylor's lead, emboldened by a surge in crypto prices during the early months of the second Trump administration and the performance of Strategy's shares.

The price of bitcoin, ether and other digital assets reached their peak in October, then began a retreat that has accelerated sharply in 2026. The decline has weighed heavily on the shares of Strategy and its many imitators. Strategy touched an unwelcome milestone Saturday: For the first time in more than two years, bitcoin fell below the average price the company paid to acquire the digital tokens.

Strategy shares have fallen 68% in the past year. The stock fell 1.2% in after-hours trading following the company's earnings.

The selloff in bitcoin gained steam this past week, when crypto exchanges sold trader assets automatically because the value of their collateral has dropped too low. The token traded at $62,955 as of late Thursday afternoon.

Bitcoin trades well below Strategy's average purchase price of $76,052, and investors fear a further slide might eventually force the company to sell their holdings.

Saylor has long implored investors to never sell their bitcoins. But he rattled the crypto market late last year by suggesting that Strategy could in fact shed some tokens or bitcoin-backed derivatives if its mNAV, or its enterprise value divided by the value of its crypto holdings, were to drop below one. Early on Thursday, though, Saylor took to X, the social-media platform, to write: "HODL," a reference to an inside joke that means: hold on to your bitcoin.

Strategy's mNAV stood at about 1.1 as of Thursday evening. The company has continued to buy bitcoin in recent weeks.

When the so-called mNAV drops below one, it means the company trades at a discount to its crypto holdings and may have difficulty selling shares to buy tokens. And to buy back stock, it might have to sell tokens.

While Strategy is at the epicenter of the crypto selloff, the company itself faces no immediate consequences for bitcoin's decline, analysts said.

The company has mostly relied on selling common and preferred shares to fund its bitcoin acquisitions. It has $8.2 billion in convertible, unsecured debt that matures between 2028 and 2032. Strategy has built up cash reserves of more than $2 billion to help ensure it can meet future dividend and debt-interest payments.

In 2023, Strategy paid $161 million to settle its $205 million bitcoin-collateralized term loan from the collapsed bank Silvergate Capital. Since then, the company has stayed away from bitcoin-linked bank loans, opting instead for share sales and convertible debt to finance its holdings.

"The company has an immense amount of flexibility, and that's by design, " said Mark Palmer, senior research analyst at Benchmark. "Because management has been through cycles before and understood that it needed to have a resilient capital structure in the face of the volatility of bitcoin."

The outlook, however, is less optimistic for the hundreds of smaller firms that have followed Strategy into the crypto-treasury business. With most of their mNAVs trading below one, those firms are either trying to merge with rivals or holding still.

Patrick Horsman, chief investment officer at BNB Plus, said his firm, which stockpiles crypto exchange Binance's BNB token, is looking to merge with similar companies to help weather the new crypto winter.

"It's disappointing," Horsman said of the drawdown. "I think everyone's kind of beaten down a little."

"We think there's strength in scale, and there's a number of digital-asset treasury firms that I think we could look to roll up together and be a bigger and stronger organization," he said.

Write to Vicky Ge Huang at vicky.huang@wsj.com

(END) Dow Jones Newswires

February 05, 2026 18:03 ET (23:03 GMT)

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