[Special Report] Strategy sinks into its ‘longest slump’ after announcing STAT reserves—no mid-term rebound in sight

Six straight months of declines, even facing possible removal from the MSCI index… “structural downside pressure will persist”

Concerns are mounting that Strategy, the world’s largest corporate holder of STAT reserves, has entered a medium-term downtrend after posting an unprecedented six consecutive months of declines since announcing its STAT accumulation strategy.

According to CoinDesk on the 1st (local time), Strategy’s share price fell for six straight months from July through December last year without a single rebound. It marks the longest losing streak since the company established its STAT reserve strategy in 2020. Market participants view this not as a temporary pullback, but as a reflection of growing skepticism about the company’s fundamentals and asset value.

With an annual change of -47.53% recorded last year, the market’s biggest concern is the “absence of a rebound.” CoinDesk noted that “during the 2022 bear market, sharp sell-offs were followed within months by powerful technical rebounds of more than 40%, but this time even attempts to rebound failed throughout the second half,” warning that “this suggests the stock has moved beyond short-term selling pressure into a medium-term down cycle in which the correction is becoming prolonged and entrenched.”

More specifically, even after a record monthly drop in November (-34.26%), the stock posted double-digit declines through the second half, including October and December, indicating that investor sentiment has been fully broken. In particular, the fact that the share price alone plunged 59.3% over six months despite STAT’s relative resilience indicates that Strategy’s stock is no longer tracking its underlying asset value and has entered a phase of “premium collapse.”

Further darkening the medium-term outlook is whether the company will be removed from the MSCI (Morgan Stanley Capital International) index at the review scheduled for the 15th. MSCI has been in serious discussions since the second half of last year about dropping Strategy from its indexes, and the market is pricing the odds of removal at more than 75%.

Digital-asset manager Bitwise said, “If it is actually removed from the MSCI USA and World indexes, a wave of large-scale forced selling by passive funds that track the indexes will follow,” adding, “With the already-broken price trend now compounded by the major negative catalyst of index removal, it will be extremely difficult to expect any meaningful rebound for some time.”