ChainTech Africa

 

 May 23, 2025 – Precious Aryatugumya

 Shares of Strategy Inc. (STRAT) plummeted by over 6% in Friday’s trading session, dragging down the broader   cryptocurrency sector amid renewed scrutiny over corporate Bitcoin treasury strategies. The decline follows a   string of analyst downgrades and growing investor concerns about the sustainability of Bitcoin-centric balance   sheet approaches adopted by several high-profile firms in the industry.

Strategy’s Bitcoin Bet Under Fire

Strategy Inc., once a poster child for corporate crypto adoption, has come under increasing pressure as Bitcoin’s price volatility continues to challenge its financial reporting and investor confidence. The company, which has allocated a significant portion of its cash reserves to Bitcoin since 2021, is now facing backlash as recent crypto market pullbacks erode the value of those holdings.

Friday’s 6% stock drop was the steepest daily decline in months for Strategy and came amid broader declines across crypto equities. Shares of other companies with substantial crypto exposure, including Coinbase (COIN), Marathon Digital (MARA), and Riot Platforms (RIOT), also slipped between 3% and 5%.

Investor Sentiment Wavers

“The market is beginning to question whether holding Bitcoin as a treasury asset is more a liability than a strategic advantage,” said Melinda James, an analyst at Horizon Research. “With crypto markets showing heightened sensitivity to macroeconomic shifts and regulatory risks, the volatility is starting to look less like innovation and more like recklessness to institutional investors.”

A recent quarterly filing revealed that Strategy’s Bitcoin holdings, while still profitable relative to acquisition cost, have declined in fair market value by nearly 18% over the last three months. This has reignited debate around the mark-to-market accounting treatment required under U.S. GAAP, which can magnify earnings volatility.

Broader Market Impact

Bitcoin (BTC) itself has fallen roughly 4% over the past week, trading near $63,400 at the time of writing. Analysts point to a mix of factors weighing on the market: tighter liquidity, ongoing regulatory uncertainty in the U.S., and increased profit-taking after a robust Q1 rally.

The weakness in crypto-linked equities was mirrored in the performance of the broader digital asset market. The CoinDesk Market Index, which tracks a basket of digital assets, fell 3.2% on the day.

What Comes Next?

As institutional adoption of crypto matures, companies like Strategy may be forced to rethink how and why they hold Bitcoin on their balance sheets.

“There’s still a place for digital assets in corporate finance, but perhaps not in the concentrated, speculative form we’ve seen over the past few years,” noted James. “Risk mitigation, diversification, and clearer communication with stakeholders will be key if firms want to maintain trust while engaging with crypto.”

For now, investors appear to be stepping back from companies deeply entangled with Bitcoin, awaiting a more stable environment—or at least more predictable financial outcomes.