Is the worst in the crypto market already over, or does it still lie ahead?
Looking at market positioning, risk assets have started 2026 with some momentum, showing a noticeable rebound. Still, it may be too early or too optimistic to call this the start of a trend reversal.
Strategy is central to the action [MSTR]. Technically, MSTR has started the new year with a 3.43% rally, with Bitcoin [BTC] profits that clearly feed through to the share price. That said, it’s still far from smooth sailing.
Source: TradingView (MSTR/USD)
What’s behind MSTR so far is a multi-billion dollar fourth quarter loss.
In short, the company is expected to report a huge hit after Bitcoin’s 24% decline wiped out a $2.8 billion profit from the third quarter. Shares fell 48% in 2025 and are 70% below their November 2024 peak, fueling growing concerns.
As a result analysts project full-year operating results between a loss of $7 billion and a profit of $9.5 billion. However, with Bitcoin ending the year near $87,600, the numbers are likely to end up on the downside.
In short, the skepticism surrounding MSTR’s Bitcoin model is back in full force. With the company bracing for a huge fourth-quarter loss, the big question is: could this trigger Bitcoin’s first major flash crash in early 2026?
MSTR’s billion-dollar losses point to the risk of a flash crash
Flashback to the October crash, it wasn’t random.
Instead, Smart Money strategically exited the market ahead of MSCI’s announcement that MSTR might be excluded from the index given Bitcoin’s large holdings in the government bonds of over 671,000 BTC.
Now that the fourth quarter performance is in the books, another shake-up cannot be ruled out. As the chart below shows, Strategy stocks just posted their first six-month losing streak since adopting a Bitcoin strategy in 2020.
Source:
All together that amounts to a whopping 134% loss.
Consequently, MSTR’s technical weakness is now visible on paper, with the Q4 report expected to highlight these massive losses and in turn raise questions about the sustainability of its Bitcoin model.
Looking ahead, there is likely to be a market frenzy surrounding the report. Moreover, with caution still in place, and BTC dropped approximately 25% from pre-October crash highs, a flash crash still remains on the table.
Final thoughts
- The multi-billion dollar fourth quarter loss and technical weakness cast doubt on the sustainability of MSTR’s Bitcoin-heavy model.
- With BTC down 25% from pre-October highs and market caution still intact, another flash crash in early 2026 remains a possibility.