Imagine pouring nearly a billion dollars into an asset you believe will change the world, only to watch your company’s stock get hammered anyway. That’s pretty much the story at Strategy—formerly MicroStrategy—right now. Even after snapping up another 10,625 Bitcoin last week, the share price sits in a deep bear market, down more than 60% from its 2025 highs. It’s a stark reminder that betting big on Bitcoin comes with serious risks, especially when the broader market starts to wobble.
I’ve followed this story for years, and honestly, it’s fascinating how tightly the company’s fate is now tied to Bitcoin’s price action. Sure, the long-term vision might still play out, but in the short term? There are some real storm clouds gathering. Let’s dig into the biggest risks facing MSTR stock heading into the end of 2025 and beyond.
Why Strategy’s Aggressive Bitcoin Strategy Creates Unique Vulnerabilities
The company, led by its outspoken chairman, has turned itself into what many call a leveraged Bitcoin play. With holdings now topping 671,000 BTC—acquired at an average price around $75,000—the balance sheet looks impressive on paper when Bitcoin is flying high. But when crypto pulls back, the stock tends to suffer even more dramatically.
That magnification effect isn’t an accident. It’s built into the strategy. The firm has raised billions through debt and equity offerings specifically to buy more Bitcoin, creating a kind of built-in leverage. When prices rise, shareholders get outsized gains. When they fall, though? The pain is amplified.
Technical Warning Signs Are Flashing Red
If you pull up the daily chart for MSTR, it’s hard not to feel a little uneasy. The stock has plunged from above $450 earlier this year to around $176 today. More importantly, it’s carved out a classic bearish flag pattern—that long downward pole followed by a narrow upward channel that often precedes another leg lower.
Perhaps the most worrying development is the death cross that formed when the 50-day moving average crossed below the 200-day. That’s a signal technicians have watched for decades, and it rarely leads to immediate rebounds in trending markets.
The price also sits well below the Supertrend indicator, which has flipped bearish and acts as dynamic resistance overhead. Add in the fact that shares have broken key support around $230—the lows from earlier in the year—and the path of least resistance looks downward.
- Current price hovering near multi-month lows
- Bearish flag consolidation suggesting continuation lower
- Death cross confirmed on daily timeframe
- Supertrend resistance capping any meaningful rallies
- Broken support at $230 opening the door to $155 or even $100
In my experience watching leveraged crypto-related stocks, these kinds of setups often resolve in the direction of the prevailing trend. And right now, that trend is clearly down.
Bitcoin Itself Faces Significant Downside Risk
Of course, none of this happens in isolation. Strategy’s stock price has shown an incredibly high correlation with Bitcoin over the past couple of years. So any serious weakness in BTC will almost certainly drag MSTR lower.
Looking at Bitcoin’s chart, there are some eerily similar bearish signals. The price has formed a rising wedge pattern since the October peak near $126,000. These patterns typically break to the downside, especially after such a sharp run-up.
BTC has also dropped below the Ichimoku cloud on the daily chart—a major technical level that often defines the trend. It’s trading under all the major moving averages, and the key resistance at roughly $94,600 has held firm on multiple retests.
If Bitcoin continues lower, the next meaningful support doesn’t come in until around $80,600—the November low. A clean break there could open the floodgates toward $75,000, the swing low from earlier in 2025.
When Bitcoin enters a deleveraging phase, risk assets tied to it tend to suffer disproportionately. We’ve seen this play out repeatedly in past cycles.
Current on-chain metrics aren’t encouraging either. Futures open interest has been declining, and funding rates have flattened—both classic signs that leverage is being washed out. That process can be painful and prolonged.
The Bank of Japan Wild Card That Few Are Talking About
One risk that seems underappreciated right now is the upcoming monetary policy decision from the Bank of Japan. Markets are pricing in nearly 100% odds of a rate hike this week—the central bank’s latest move to combat persistent inflation above 3%.
Why does this matter for a U.S.-listed software company turned Bitcoin treasury? Because it creates policy divergence at a time when the Federal Reserve is widely expected to continue cutting rates. That widening interest rate differential has historically triggered unwinding of the famous yen carry trade.
For years, investors borrowed cheaply in Japan and plowed the money into higher-yielding assets worldwide—including risk-on plays like technology stocks and crypto. When the carry trade unwinds, those assets tend to get hit hard as capital flows reverse.
We’ve seen this movie before. Sharp yen strengthening often coincides with global risk-off moves. And given how overstretched some positioning appears in crypto markets, a sudden liquidity squeeze could accelerate the current pullback.
Balance Sheet Risks in a Prolonged Bear Market
Another concern that’s worth considering is what happens if Bitcoin enters a multi-month or even multi-year consolidation or downtrend. Strategy has issued convertible debt to fund its purchases—debt that becomes more burdensome if the collateral (Bitcoin) keeps falling in value.
The company reports impressive “Bitcoin yield” metrics—claiming around 25% year-to-date in 2025—but those numbers obviously depend entirely on Bitcoin’s price appreciation. In a sideways or declining market, that yield turns negative, and questions about debt servicing inevitably arise.
While the average acquisition price remains well below current levels, a sustained drop toward $50,000 or lower would put the unrealized gains under serious pressure. At some point, credit rating agencies and debt investors might start asking tougher questions.
The Underlying Software Business Isn’t Growing Fast Enough
It’s easy to forget amid all the Bitcoin headlines, but Strategy still operates a legacy business intelligence software company. Revenue growth in that core segment has been anemic for years, with the firm increasingly relying on crypto gains to drive earnings.
If Bitcoin enters a prolonged winter, the market may suddenly refocus on the fundamentals of that software business—and those fundamentals simply aren’t compelling enough to justify current valuation multiples on their own.
Investors have essentially been paying a premium for Bitcoin exposure through MSTR shares. Remove the crypto premium, and you’re left with a mature software company trading at growth-stock multiples. That disconnect could become painful.
Potential for Index Exclusion and Forced Selling
There’s also the ongoing drama around index inclusion. Some major providers have expressed concerns about companies whose primary value driver is cryptocurrency holdings rather than operational performance.
If Strategy were to be removed from key indexes—or prevented from entering new ones like certain broad-market ETFs—that could trigger meaningful selling pressure from passive funds forced to rebalance.
These technical flows can be surprisingly powerful, especially in a stock with relatively low float and high short interest.
What Would Change the Outlook?
To be fair, the bear case isn’t set in stone. A decisive break above $94,600 in Bitcoin—followed by new all-time highs—would likely invalidate many of these technical concerns and send MSTR shares soaring again.
Similarly, if the Bank of Japan surprises markets by holding rates steady, or if global liquidity conditions remain accommodative, some of the macro risks could fade.
But based on the current setup—across technicals, fundamentals, and macro factors—the risk/reward appears skewed toward further downside in the near term.
I’ve learned over the years that when multiple timeframes and different types of analysis all point in the same direction, it’s usually wise to respect the message. Right now, that message for MSTR stock seems pretty clear: caution warranted.
Whether you’re a long-term believer in the Bitcoin treasury strategy or just trading the swings, understanding these risks is crucial. The ride has been incredible on the way up, but the downside potential shouldn’t be ignored either.
At the end of the day, this remains one of the most unique—and polarizing—stories in public markets. Just make sure you’re sizing positions appropriately for the volatility that comes with it.
