What Happened?
Shares of bitcoin development company Strategy (NASDAQ:MSTR) fell 3.1% in the afternoon session after a sharp drop in the price of Bitcoin coincided with warnings that the company might be excluded from major stock indices.
The value of Bitcoin slid to around $80,500, a level just 8% above Strategy's average entry price, which put the company's vast holdings close to being unprofitable. Compounding the issue, reports noted that MSCI was considering excluding companies holding digital assets from its indices. JPMorgan warned that such a move could trigger between $2.8 billion and $8.8 billion in outflows from funds that track these indices. The combined pressure from these events pushed the stock to its lowest price in a year.
The shares closed the day at $170.25, down 3.9% from previous close.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy Strategy? Access our full analysis report here.
What Is The Market Telling Us
Strategy’s shares are extremely volatile and have had 67 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 1 day ago when the stock dropped 4.7% on the news that markets faded the Nvidia rally in the morning session, as investors remained uncertain about future rate cuts.
While the trading day began with significant enthusiasm, pushing the Dow Jones Industrial Average up more than 700 points and the Nasdaq Composite up 2.6%, momentum quickly evaporated as the session wore on. The primary catalyst for this sharp reversal was a stronger-than-expected jobs report, which reduced the implied odds of a December interest rate cut to less than 40%. This macroeconomic anxiety overshadowed stellar corporate performance. Nvidia initially surged 5% on blockbuster earnings and CEO Jensen Huang's bullish outlook on "off the charts" demand for Blackwell chips. However, the stock eventually turned negative, acting as a heavy weight that dragged the broader indices into the red. The sell-off partly reflects a deepening caution regarding high-flying tech valuations in a "higher-for-longer" rate environment. Consequently, investors appeared to rotate capital away from volatile growth sectors and toward defensive staples, evidenced by Walmart's 6% gain following its own earnings beat. Ultimately, the market could not sustain the morning's euphoria, as traders prioritized rate realities over AI potential.
Strategy is down 42.9% since the beginning of the year, and at $171.40 per share, it is trading 62.4% below its 52-week high of $455.90 from July 2025. Investors who bought $1,000 worth of Strategy’s shares 5 years ago would now be looking at an investment worth $7,764.
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