Why Strategy Stock Collapsed In The First Half of 2026
Key Points
Strategy has finally been forced to sell some Bitcoin to fund its interest payments.
With the premium on its stock fully closed, its Bitcoin acquisition strategy is being put into question.
The company will likely be forced to sell even more Bitcoin in the near future.
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Shares of Strategy (NASDAQ: MSTR) -- formerly MicroStrategy -- have fallen by 42.8% in the first half of 2026, according to data from S&P Global Market Intelligence. The software provider that pivoted to becoming an aggressive Bitcoin treasury company has seen its strategy (no pun intended) begin to unravel with the price of Bitcoin down severely over the last twelve months.
To fund interest payments, Strategy has begun selling some of its Bitcoin, which has spooked the market. Here's why the stock was falling in 2026, and whether now could be a good time to buy the dip on this fallen giant.
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Following the price of Bitcoin
When Bitcoin was over $100,000 a coin, Strategy actually achieved a market cap of over $100 billion, and had a nice premium to the underlying value of the assets on its balance sheet. Using this premium, Strategy was able to sell shares of its stock to buy more Bitcoin, thereby theoretically creating value per share due to the valuation premium.
With enthusiasm for cryptocurrencies beginning to wane and the price of Bitcoin falling, Strategy's stock premium has fully collapsed. Its share price is now down 80% from its highs, driven by this convergence with the underlying value of Bitcoin on its balance sheet, as well as the price of Bitcoin falling in the last year.
Now, with interest payments piling up on preferred stock and on outstanding debt used to buy Bitcoin, Strategy has been forced to liquidate some of its Bitcoin position to fulfill its ongoing obligations. As of this writing, it has been only 3,500 Bitcoin sold, which is a small amount relative to Strategy's balance sheet, but the signal to markets was nonetheless fear-inducing.
Image source: Getty Images.
Should you buy the dip?
Strategy's old mandate was to keep buying Bitcoin through various forms of fundraising methods, be it debt, preferred stock, or issuing new shares. This party continued as the price of Bitcoin soared. Now, on the other side of the popping of a cryptocurrency bubble, a hangover of this business strategy is starting to rear its ugly head.
The stated value of its Bitcoin assets is over $50 billion at the current Bitcoin price of $64,000, but Strategy has $22.2 billion in liabilities, including a massive amount of preferred stock with double-digit annual interest payments, resulting in over $1 billion in funding requirements each year. With no underlying business to fund these interest payments, Strategy will be forced to sell even more Bitcoin, potentially leading to the dissolution of this entire business model unless the price of Bitcoin rises.
This makes the stock one investors should not buy the dip on right now.
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Brett Schafer has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bitcoin. The Motley Fool has a disclosure policy.
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