After Nearly $200 Million in Crypto Losses, Trump Media Will Pivot Away From Bitcoin. Here's What Crypto Investors Need to Know.

Last summer, Trump Media & Technology Group (NASDAQ: DJT) -- the social media company majority-owned by President Donald Trump -- made headlines when it announced plans to transform itself into a Bitcoin (CRYPTO: BTC) treasury company. Trump Media now holds 12,062 Bitcoins, worth nearly $755 million at today's prices, so it followed through on its promise.

However, that Bitcoin position is currently deep under water. Trump Media recently reported a $190 million paper loss on its crypto holdings, due largely to the fact that the price of Bitcoin has been in decline for more than 10 months now. As a result, Trump Media will pivot away from Bitcoin and back into its core business of media and advertising.

The end of the Bitcoin treasury company model?

Trump Media is hardly the only Bitcoin treasury company that's in trouble. This year has seen a shakeout of the top digital asset treasury companies. The one that is on everyone's radar, of course, is Strategy (NASDAQ: MSTR). The company that famously told investors, "Never sell your Bitcoin," is doing just that, and that has the crypto market spooked.

In the past quarter, Strategy reported a nearly $10 billion paper loss on its Bitcoin holdings. The company acquired its 840,447 BTC at an average price of $75,482, but the current price of Bitcoin is just $63,000. You can't make money doing that.

Image source: Getty Images.

The bigger problem is that selling can beget more selling, which can beget even more selling. That's the way markets work. Many crypto investors may be afraid to admit it, but if Strategy is ever forced to sell significant amounts of its Bitcoin at one time, it could trigger a historic market meltdown. And that's when the pain really starts, especially if crypto market losses seep into the equity market.

Lessons for crypto investors

There are a few lessons here. The biggest one is that trying to time the crypto market is ultimately futile. Trump Media got into Bitcoin at nearly exactly the point that the world's top cryptocurrency was rocketing to an all-time high of $126,000. At the time, the company's new Bitcoin strategy looked like a stroke of genius.

But, alas, the company was buying Bitcoin at the top. And we all know how that story ends: If you buy at the top and sell at the bottom, you will lose money. Within months, the price of Bitcoin began to decline, and the losses began to mount.

That's why I'm now keeping my eye on all the crypto companies that are making a sudden pivot into artificial intelligence. For example, some Bitcoin mining companies are selling off their Bitcoin and going all-in on AI infrastructure. They are abandoning Bitcoin entirely.

This is doing it all wrong. Trying to move in and out of Bitcoin on a regular basis will force you to miss out on Bitcoin's biggest gains. Far better to buy and hold for the long-term, confident that Bitcoin has always found a way to bounce back from adversity.

Dominic Basulto has positions in Bitcoin. The Motley Fool has positions in and recommends Bitcoin. The Motley Fool has a disclosure policy.