$337M in Paper Losses: How Strategy’s Bitcoin Bet Hit US Pension Funds Hard

Core Insights - Strategy, formerly known as MicroStrategy, has positioned itself as a significant corporate investor in Bitcoin, but this strategy is becoming increasingly uncomfortable for U.S. public pension funds as Bitcoin prices decline sharply [1][2] Group 1: Financial Impact on Pension Funds - Eleven U.S. state pension funds collectively hold approximately 1.8 million shares of MSTR, which were once valued at around $577 million but have now dropped to about $240 million, resulting in an estimated $337 million in unrealized losses [3][7] - The decline in MSTR shares, which fell below $135, has raised concerns regarding the "double-leverage trap" that conflicts with traditional fiduciary standards [6][7] Group 2: Strategy's Business Model - Under the leadership of executive chairman Michael Saylor, Strategy has adopted a model of financing substantial Bitcoin purchases through a combination of debt and equity, resulting in the company holding over 687,000 BTC [4] - This leveraged approach can amplify gains during bullish market conditions but also exacerbates losses when Bitcoin prices fall, creating a dual exposure for equity holders [4] Group 3: Pension Funds' Investment Strategy - U.S. public pension funds, which manage trillions of dollars for various public workers, initially viewed MSTR as a regulated proxy for Bitcoin exposure, as direct custody of Bitcoin is complex [5] - However, as Bitcoin prices fell below $74,000 in early February 2026, the perceived advantages of this workaround diminished significantly [5]