Summary I maintain Strategy at sell, reflecting a cautious stance amid ongoing Bitcoin cycle developments. Bitcoin has followed cycle theory in terms of timing. A bear market has started, and I expect further downside. While their liquidity remains intact, lower BTC prices will likely lead to multiple (mNAV) compression, creating a negative flywheel for the stock. I expect a bottom to be found some time this year, however, at a more pessimistic sentiment, which might offer a buying opportunity. Introduction Compared to the broader market ( SPX ), Saylor-led Strategy Inc. ( MSTR ) has performed poorly since the beginning of 2026. Data by YCharts My first coverage appeared on December 19, 2025, rating the stock a Sell. Since then, MSTR is down around 23%. During the sharp selloff, however, it briefly dropped to an overall decline of 36%. SA In this piece, I am arguing why I believe that Strategy continues to be headed for further downside in the near term and briefly why that very downside is likely going to present a buying opportunity. Let's dive in. Developments My previous thesis on MSTR was the following: In my view, MSTR today looks like a sell, but there are also arguments for a Hold, because: 1. Current losses were mostly due to de-correlation. If Bitcoin ( BTC-USD ) prices decline further, MSTR has that much further downside plus a downside rerating in NAV premium. 2. Bitcoin prices could be closing in on a local, potential multi-year top, according to cycle theory. 3. Their now lower mNAV and a broken cycle theory could lead to a rebound from here. From that point on, Bitcoin prices have continued to decline, having dropped around 25%. Indeed, we have also seen Bitcoin have a slight rebound from around the time of my article until early January. It gained nearly 13%, before getting rejected at the 50-week moving average, a level that has offered strong support multiple times during the 2024/2025 bull market, and getting sent lower, forming a lower low and establishing a downtrend on the higher time frames, arguably starting the bear market, often referred to as "crypto winter". Having topped out in Q4 2025, the post-halving year, is also consistent with every previous cycle. No top indicators have been swept. Nearly all of that is due to the fact that price did not appreciate as much as at previous cycles' highs, even in proportion. In my opinion, however, this can be largely attributed to the fact that the liquidity environment was completely different than especially during the last cycle. Interest rates remain elevated, and the absence of quantitative easing has made it hard for risk assets to perform. This is also portrayed in the performance of most altcoins, which did not reach new all-time highs. TradingView It therefore seems fair to say that my thesis is playing out so far. It is not done doing so, however, as Bitcoin usually corrects by more than 70%. Peak-to-trough, we are now at just -52%. On the monthly chart, price is about to close a red candle with a large wick to the upside, potentially signaling continued downward pressure. TradingView Other than cycle theory and technical indicators, there are also fundamental backdrops to enable the above to work in the first place. The most prevalent is the war in Iran. Bitcoin fell below $69k on renewed Iran-related stress, then bounced back above $71k when the U.S. strike timing was delayed, and has since slipped back toward the mid-$60k area. Most recently, the US is sending more ground troops there. Continued engagement and an ongoing closure of the Strait of Hormuz could pressure the world economy and prompt the Fed to hike rates instead of lowering them, which can act like poison on risk assets. One of the most important concepts of MSTR is its mNAV. It reflects how euphoric or pessimistic investors are about the stock's future (and thereby mostly the price development of Bitcoin). At the moment, based on diluted shares outstanding, MSTR trades at an mNAV of just 0.94. Usually, a level of 1 is seen as fairly valued. Since the peak in late 2024 at 3, this measure used as a valuation metric for the stock has already compressed significantly. In my view, however, it could still go lower, as during 2022, it reached values of 0.5-0.7. A prerequisite for that is lower Bitcoin prices that would deplete investor sentiment. The combination of both of these instances can lead to significant further downside for Bitcoin from here. Two scenarios I could see happening and their effect on the stock price are: BTC $50k, mNAV 0.7 = decline of 45% BTC $40k, mNAV 0.5 = decline of 68% MSTR Tracker Strategy continues to relentlessly acquire Bitcoin off the market, despite price and sentiment dropping. In March alone, Strategy bought 17,994 BTC for about $1.28B in the week ended March 8, then added another 22,337 BTC for roughly $1.57B in the week ended March 15, and still purchased a further 1,031 BTC for $76.6M in the week ended March 22, taking total holdings to 762,099 BTC. This is true even as prices dropped below their break-even price of $75k. To me, this proves that $75k is not some type of magical number that, once the price reaches it, will be a large catalyst for Strategy in any direction. MSTR Tracker That is notable because one of the most common bear arguments was that Strategy would crack once Bitcoin fell materially below its cost basis. So far, that has not happened. As of March 22, the company’s average purchase price had climbed to $75,694 per Bitcoin, while Bitcoin now trades near $66,396. Despite that gap, Strategy did not sell. The reason the balance sheet has held up better than many expected is that Strategy now has a more deliberate liquidity buffer. Management says it had a $2.25B reserve as of both December 31 and February 13, intended to cover preferred dividends and debt interest, while cash and cash equivalents stood at $2.30B at year-end. None of its outstanding convertible notes were convertible at holders’ option during the quarter ending March 31, 2026, either, which reduces near-term pressure. Technicals from Strategy stock itself remain bearish, but that is not of concern, as buying during fear usually does not entail pretty charts or calm uptrends. TradingView The future looks bullish for Strategy. If they fall further from here, I would view that as a potentially excellent entry point because the long-term setup for Bitcoin still looks structurally intact. Bitcoin’s issuance remains fixed and predictable, with total supply capped at 21 million, while US liquidity is again expanding, as M2 rose from about $21.6 trillion in February 2025 to about $22.7 trillion in February 2026. At the same time, the Fed still has the policy rate at 3.75%, but its March projections cluster future rates below that level and around roughly 3% over the longer run, which supports the case that the medium- to long-run rate path is lower. Meanwhile, the fiscal backdrop remains increasingly fragile, with CBO projecting a $1.9 trillion 2026 deficit and debt held by the public rising to 120% of GDP by 2036. Strategy stock specifically would offer exposure to a large and still growing Bitcoin treasury. So if Bitcoin resumes its long-term uptrend after a deeper drawdown, Strategy should benefit both from the appreciation of the underlying BTC and from renewed valuation expansion in mNAV, making the stock a leveraged expression of a macro and cycle recovery. Cycle theory may eventually break, but it has not yet. Therefore, the most prudent strategy moving forward is still positioning oneself in accordance with it. Conclusion In my view, Strategy is no longer an obviously overheated premium trade, but it is also not yet the kind of panic-priced asymmetric opportunity that tends to generate major alpha, as it was during the 2020 and 2022 lows. The company’s recent actions argue for balance-sheet durability, while the macro tape, Bitcoin volatility, and still-positive mNAV argue that a better entry may come later if the cycle weakens further. Once it reaches that, there will be more fear, uncertainty, and doubt. It will be mentally harder to invest in Strategy, since now the broader market does not yet seem pessimistic enough for it to generate significant alpha. For that we need more depressed valuations and sentiment, which I believe are coming later this year. That later point will present a buying opportunity, which I will then address separately in a bullish piece. Rating: Maintain at Sell.
