Underwear exposed! The world's largest $BTC "casino" suffered a quarterly loss of 12.4 billion, the flywheel has stopped turning, and a textbook-level negative feedback loop is unfolding?

The market is experiencing a sharp correction, with $BTC sliding toward the $60,000 range and panic spreading. At this moment, the world’s largest corporate $BTC holder, Strategy, released its Q4 2025 financial report, with data that is truly shocking. The company reported a net loss of $12.4 billion in a single quarter. On the day of the earnings release, its stock price plummeted about 17%, nearly 80% below its all-time high in November 2024.

This star company, which once saw its stock soar due to the “$BTC Treasury Strategy,” is now gambling its future with a set of fragmented data. The core contradiction lies in the stark contrast between record-breaking accounting losses and a new all-time high in holdings.

The huge losses are mainly due to the new fair value accounting standards. Starting January 1, 2025, the company must revalue all $BTC holdings at market prices at the end of each quarter, with price fluctuations directly impacting earnings. The ongoing decline in $BTC prices has caused the market value of holdings to shrink, translating directly into $17.4 billion in operating losses and $12.4 billion in net losses.

However, amid market volatility, Strategy’s accumulation behavior is almost obsessive. In January 2026 alone, it bought 41,002 $BTC. As of February 1, 2026, its total holdings reached 713,502 coins, about 3.4% of the total, ranking first among global corporate holders. Its total cost basis is $54.26 billion, with an average cost of $76,052 per coin. At the current market price of around $65,000, unrealized losses have exceeded $7.8 billion.

Ironically, Strategy’s traditional core business—enterprise analytics software—has almost been forgotten in the earnings report. In Q4 2025, software revenue totaled $123 million, up just 1.9% year-over-year; gross profit was $81.3 million with a gross margin of 66.1%. While this business remains profitable and stable, its contribution is marginal compared to the company’s hundreds of billions in fundraising, holdings costs, and losses.

The company’s core has fully shifted to $BTC, using complex instruments like stocks, bonds, and preferred shares to offer investors leveraged exposure to $BTC, turning itself into a “shadow of $BTC.” During the earnings call, CEO Phong Le admitted the company currently has $6 billion in net debt, with a leverage ratio of about 13%. He simulated an extreme scenario: if $BTC drops 90% to $8,000, its reserves would equal net debt, making repayment impossible, and requiring restructuring, issuance of new shares, or new debt.

Strategy’s business model is built on the “$BTC flywheel”: assuming the coin’s price spirals upward long-term, capital markets will always be willing to provide premium financing, creating a positive cycle. But when $BTC falls below its average cost, risks become glaring.

Its issued perpetual preferred stock, STRC, currently offers a high dividend yield of 11.25%, aiming to attract investors seeking high fixed income. But high yields come with high risks; STRC’s ability to pay depends entirely on long-term $BTC appreciation and the company’s ongoing financing capacity. Currently, STRC trades below its $100 face value, at $93.67, reflecting market concerns.

Another key indicator is mNAV, which measures the company’s stock valuation relative to its $BTC reserves. When mNAV exceeds 1, the market is willing to pay a premium for its “leverage strategy,” facilitating financing. Currently, this indicator has compressed to 1.07. If it falls below 1, the financing channel may close, and the company will lose its buffer and replenishment capacity.

The most frightening aspect isn’t the current losses but the potential negative feedback loop: $BTC price drops → company’s net assets shrink → mNAV falls below 1, premium disappears → inability to raise new funds → inability to pay high-interest dividends → forced sale of $BTC for cash → increased selling pressure, further price declines… Such a cycle could drag the company into a deep abyss.

In facing this crisis, founder Michael Saylor emphasized a long-term perspective during the earnings call. He highlighted that $BTC is entering an unprecedented period of policy and financial tailwinds: the U.S. government’s stance has fundamentally shifted, with the President and 12 cabinet members explicitly supporting; major banks are launching full-chain $BTC services, strengthening its financial attributes.

Regarding concerns about quantum computing and other technological threats, Saylor responded that commercial-grade threats still require at least 10 years to materialize, and the $BTC community has the capacity for global consensus upgrades. He announced that Strategy will initiate a global $BTC security plan, collaborating with various resources to develop response strategies.

If the market continues to decline, the $12.4 billion quarterly net loss may just be the beginning. The real test will come when panic spreads, “premium” disappears, new funds dry up—will faith withstand gravity? For investors, Strategy now resembles a high-risk, high-reward option: bet right, and the flywheel can restart; bet wrong, and it falls into a negative feedback cycle. The outcome of this gamble is uncertain, but it has already sounded an alarm for the entire industry—overly obsessive faith and unchecked leverage will ultimately face reality’s backlash.

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