Strategy, the enterprise software firm known previously as MicroStrategy, is set to announce its third-quarter results after US markets close on Thursday. The company currently holds a significant Bitcoin position that stands only about 6% above its average acquisition cost, based on prevailing market prices.
Strategy’s Bitcoin position approaches breakeven
According to Strategy’s announcement dated October 26, the firm controls 848,517 BTC acquired at an average price of $75,446 per Bitcoin. With Bitcoin recently trading around $80,000, the total value of Strategy’s holdings is approximately $68 billion. The company’s total spend on this position amounts to $64 billion, resulting in a paper profit of about $4 billion.
Regarded as the largest institutional holder of Bitcoin among publicly-traded companies, Strategy has for several years maintained a Bitcoin-heavy balance sheet, making it a key player among corporate crypto investors.
Strategy’s 848,517 BTC were acquired at an average price of $75,446, leaving the company with an unrealized profit of approximately $4 billion while Bitcoin trades near $80,000.
Challenging start to the fourth quarter
The company began the fourth quarter with tougher conditions. Filing documents dated October 5 reveal that as of the end of September, the value per Bitcoin in Strategy’s portfolio stood at roughly $83,500. Bitcoin’s subsequent pullback since that date has led to an estimated paper loss of around $3 billion, with two months remaining in the quarter.
This shift has once again drawn attention to the strong correlation between Strategy’s stock performance and fluctuations in the price of Bitcoin. In recent years, the software company has often made headlines not for its operating income, but for the gains and losses in its sizable Bitcoin position.
Tax asset regains significance
An important component on Strategy’s balance sheet is its deferred tax asset. In June, when Bitcoin’s price briefly fell below the company’s average cost, Strategy wrote off $4.12 billion in tax assets that could be used to offset future tax liabilities. During the third quarter, this item was reinstated, contributing approximately $4 billion to the company’s net income.
Calculations indicate that if Bitcoin drops below $75,446—Strategy’s average acquisition cost—the company could again benefit from this tax advantage. Should the price retreat to the $58,500 range, the full $4 billion tax credit may be reestablished.
The $4.12 billion tax asset written off in June was restored in the third quarter, boosting Strategy’s net income by roughly $4 billion.
US spot Bitcoin ETF investors face losses
Strategy is not alone in facing potential losses. Data from Glassnode suggest that investors in US-listed spot Bitcoin ETFs have an average entry price of about $81,500, currently sitting roughly 2% above the market price.
Meanwhile, Strategy made no new Bitcoin purchases during the week ending October 25. Instead, the company allocated resources to the buyback of its STRC preferred shares.
Mini dictionary: Glassnode is a blockchain data and analytics platform specializing in on-chain metrics for Bitcoin, Ethereum, and other cryptocurrencies. Its insights are widely used by traders and institutional investors for market analysis and sentiment tracking.
| Investor/Entity | BTC Holdings | Average Cost (per BTC) | Market Value (estimate) | Profit / Loss |
|---|---|---|---|---|
| Strategy | 848,517 | $75,446 | $80,000 | ~$4 billion profit |
| US Bitcoin ETF investors | – | $81,500 | $80,000 | ~2% average loss |
