MicroStrategy’s Bear Market Survival Tactics: From Insolvency to Restarting the Bitcoin Flywheel—Can Strategy Weather the Downturn This Time?

The pioneer of Bitcoin reserve strategy, MicroStrategy Strategy ( (original name: MicroStrategy)), has seen its stock price languish recently. After a 36% pullback from Bitcoin’s all-time high, it has yet to reclaim the $100,000 mark, causing many investors to question whether the Bitcoin flywheel effect has failed. This article uses data from the previous bear market to explore how MicroStrategy can weather this downturn.

(A software company “delayed” by Bitcoin—what exactly is MicroStrategy’s strategy?)

How did MicroStrategy survive the last bear market?

We define the last bear market as the year following Luna’s crash in April 2022, during which Bitcoin fell from $47K in April to $15K.

For data convenience, we use the financial report dated September 30, 2022, as the baseline:

• Bitcoin price was around $19,320
• MSTR price was $210 (pre-stock split), equivalent to today’s $21 price
• Number of Bitcoins held: 129,999
• Average Bitcoin purchase cost: $10,419~$59,187

According to historical data from saylortracker.com, MicroStrategy’s mNAV ((stock price to their Bitcoin holdings value ratio)) was below 1 for a time, and their Bitcoin purchase cost was higher than market price then.

How did MicroStrategy survive the 2022 bear market?

MicroStrategy’s stock price remained sluggish for at least two years during the bear market. What was their situation and response at the time?

Slowing down Bitcoin purchases

From April 2022 to April 2023, MicroStrategy purchased Bitcoin only six times. Excluding purchases in April 2022 when Bitcoin was still at a high, they bought only 240 Bitcoins in a year, at a cost between $17,847 and $28,016.

Insolvent? Negative shareholder equity

As of September 30, 2022, MicroStrategy held 129,999 Bitcoins, valued at $2.51 billion at a Bitcoin price of $19,320. However, their convertible bonds and secured loans totaled $2.415 billion. The financial report even showed negative shareholder equity!

(Unit: thousand USD)

Michael Saylor officially steps down as CEO

After reporting an ugly $900 million loss in mid-2022, then-CEO Michael Saylor stepped down and became Executive Chairman (Executive Chairman), focusing on Bitcoin acquisition and promotion strategy. At the time, many saw this as him taking responsibility for Bitcoin acquisition losses.

(MicroStrategy Q2 net loss of $900 million—Michael Saylor steps down as CEO, continues as chairman to buy more Bitcoin)

Saylor remains a Bitcoin evangelist, sticking to Hodler spirit

Despite external doubts, Michael Saylor maintained his “Bitcoin evangelist” role, often touting that since adopting Bitcoin as an asset (since 2020), the company’s valuation and stock have soared; Bitcoin still outperforms many traditional assets.

Saylor also stuck to the Hodler spirit, always buying at the top and never selling, ultimately enduring the crypto bear market and, as crypto gained mainstream acceptance, becoming a spiritual leader for many.

Is another bear market here? How is MicroStrategy responding this time?

After a 36% pullback from its October all-time high, Bitcoin has yet to reclaim $100,000. With increasing competition and more ETFs, MSTR’s stock has remained sluggish, and mNAV has dropped back to around 1, leading many investors to question if the Bitcoin flywheel effect has failed.

MicroStrategy’s Bitcoin cost is far below market price

As of December 1, 2025, MicroStrategy holds 650,000 Bitcoins, with a total cost of $48.38 billion and an average cost of $74,436 per Bitcoin. Since MicroStrategy began buying in early 2020, their cost is much lower than today’s $92K price, seemingly putting them in an unbeatable position.

To avoid shareholder dilution, switching to perpetual preferred shares

Many investors worry that MicroStrategy keeps diluting shareholder equity by issuing new stock to buy Bitcoin. This year, MicroStrategy launched five perpetual preferred shares. Although preferred shares carry high interest, they have no maturity date, so the company doesn’t risk being forced to liquidate assets to repay principal in a down market. Digital asset finance company (DAT) sees this as a more flexible financial tool.

Issuing preferred shares also avoids diluting current shareholders’ Bitcoin holdings (BPS) and helps increase mNAV while buying Bitcoin. mNAV is now recognized as a key metric for DAT valuation.

Building a reserve fund to cover over a year of dividend payments

MicroStrategy recently announced a $1.44 billion reserve fund to ensure dividend payments for the next one to two years, easing concerns.

(Bitcoin reserve pioneer MicroStrategy acts: $1.44 billion for dividend protection—are investors reassured?)

Repurchasing its own stock or selling Bitcoin?

At the Bitcoin 2025 conference in late May, someone asked Saylor what would happen if Strategy’s mNAV fell below 1. Saylor confidently responded:

“Strategy isn’t like Grayscale, a trust fund with locked capital structure. We can use stock buybacks, preferred stock issuance, or bonds to re-operate. If the price is undervalued, it’s an arbitrage opportunity.”

So far, MicroStrategy has not repurchased its own stock, though several DATs like SharpLink have started buybacks to rescue their stock price—none of which have been notably successful.

Selling Bitcoin is a last resort, only recently mentioned by CEO Phong Le, causing market panic. But I believe this would be self-destructive: if the reserve strategy pioneer MicroStrategy starts selling Bitcoin to survive, it would trigger a massive loss of market confidence, leading to a domino effect of crashing Bitcoin prices and a sharp drop in the company’s stock.

(Will MicroStrategy sell Bitcoin? Strategy CEO admits: If financing is difficult, selling BTC is the last resort)

Can MicroStrategy survive this crisis?

Facing this predicament, independent researcher Spreekaway suggests MicroStrategy’s future could follow three scenarios:

Scenario 1: “Deleveraging survival mode”—pause expansion, accept discounted trading

Scenario 2: “External rescue mode”—macro conditions temporarily save the flywheel

Scenario 3: “High leverage full-speed expansion”—preferred shares become the new flywheel

(MicroStrategy flywheel fails—can only pay shareholder dividends in Bitcoin? Researcher gives three possible outcomes)

Following the last bear market pattern, MicroStrategy entered Scenario 1: “Deleveraging survival mode”—paused expansion and accepted discounted trading, hibernated through the bear market, and when the Bitcoin bull started, entered Scenario 2: “External rescue mode”—macro conditions temporarily saved the flywheel. I’m not optimistic about Scenario 3: “High leverage full-speed expansion” with preferred shares as the new flywheel, as the high dividend burden is heavy.

But if you’re a Bitcoin believer, regardless of whether Bitcoin can break its “three bulls and one bear” pattern, spring always follows the bear’s winter. This time, MicroStrategy’s fundamentals are stronger than last cycle. As long as Bitcoin survives, the pioneer of Bitcoin reserve strategy—MicroStrategy—should not disappear from the market. This is just my personal opinion, not investment advice.

This article, “MicroStrategy Bear Market Survival Guide: From Insolvency to Bitcoin Flywheel Restart—Can Strategy Survive This Slump?” was first published on ABMedia.