Cryptocurrency asset book losses of $1.5 billion! Bitcoin drops to $78,000, refuses to sell

Bitcoin fell to $78,500 on February 1st, and crypto asset reserves face a stress test. MicroStrategy’s average cost of $76,037 still yields a profit of $17.6 billion, while Metaplanet’s cost of $107,716 results in a loss of $10.3 billion. These companies remain steadfast because the real risk lies in the financing structure rather than on-paper losses.

Full Disclosure of On-Book Gains and Losses in Crypto Asset Reserves

On February 1st, Bitcoin’s price was approximately $78,500, turning the discussion about unrealized losses into a stress test for all crypto asset reserve companies that bought near cycle highs. It also serves as a reminder that even if headlines look bleak, early adopters still have significant buffers.

Major Crypto Asset Reserve Holdings and Gains/Losses

MicroStrategy: Holds 712,647 BTC, with an average cost of $76,037, on-paper profit of about $17.6 billion

Metaplanet: Holds 35,102 BTC, with an average cost of $107,716, on-paper loss of about $10.3 billion

Trump Media: Holds 11,542 BTC, with an average cost of $118,529, on-paper loss of about $4.62 billion

Tesla: Holds 11,509 BTC, with an average cost of $33,539, on-paper profit of about $517 million

Coinbase: Holds 14,548 BTC, with an average cost of $71,465, on-paper profit of about $102 million

This huge disparity in gains and losses reveals the core characteristic of crypto reserve strategies: timing of entry is everything. Tesla and Coinbase’s average costs are well below current market prices, so even if Bitcoin drops sharply, they still have ample buffers. This difference in entry points is often attributed to luck, but it also reflects a structural gap: early adopters had time to accumulate, while later entrants need financing as a buffer.

MicroStrategy sits between the two. Its overall average cost is below the current spot price, so its core position remains positive. However, its recent purchases are at prices much higher than the average, which explains why the company can maintain long-term profitability while continuously adding new positions that quickly fall below spot prices. This “average cost method” is praised as disciplined in a bull market but criticized as stubborn in a bear market.

For companies like BitcoinTreasuries that show balances but not average costs, any calculation of “unrealized losses” becomes an estimate. For example, Bullish’s valuation of 24,300 BTC has no cost basis. If we roughly take the closing price on August 31, 2025, of $108,248 as a reference for the end of the cycle, then at current prices, the on-paper loss would be about $723 million. But this is a very rough and pessimistic assumption.

On-Book Losses Are a Product Feature, Not a Strategy Failure

Crypto asset reserves (DAT) are designed to perform poorly when prices fall because their trading strategy is simple: include a highly volatile asset on the company’s balance sheet and increase holdings through capital market financing. When Bitcoin’s price drops, what truly matters is the impact on market value, not the final profit and loss figures.

On-paper losses are normal because volatility is a product feature. If a company wants to benefit from Bitcoin’s appreciation, it must openly accept the risk of Bitcoin’s decline. This is the price paid for holding an asset that can fluctuate tens of thousands of dollars within a year. During market downturns, on-paper losses can quickly expand, and late entrants may see larger losses.

Metaplanet is a good example: its disclosed average cost remains above current prices. Currently, Metaplanet holds 35,102 BTC at an average of $107,716, compared to Bitcoin’s near $78,500 market value, resulting in about a $29,000 per BTC paper loss, totaling over $1 billion.

Trump Media shows a similar pattern, with an even higher average cost of $118,529 for 11,542 BTC. In both cases, when the market is weak, these figures look like failures, even though crypto reserve strategies have never promised smooth sailing over multiple quarters.

It is precisely this unease that causes the repeated appearance of “unrealized losses.” It forcibly incorporates a highly volatile asset into quarterly assessments. But when these companies decided to treat Bitcoin as an asset on their balance sheet rather than a trading instrument, they also chose this evaluation system. The logic of crypto reserves is: ignore short-term volatility as long as the long-term trend is positive.

Financing Structure Is the True Life or Death Line

Unrealized losses are not the core risk. The real risk is whether the company can continue to fund acquisitions and debt repayments during an economic downturn without being forced to sell assets. The true danger lies in the capital structure, not in the red numbers.

Bitcoin treasury management strategies are essentially financing strategies disguised as Bitcoin holdings. Once you accept this, market fluctuations are no longer an incentive but become a balance sheet issue. The survival of crypto reserves depends not on Bitcoin’s price rising but on their ability to continue financing during downturns.

MicroStrategy’s case is the clearest, as it maintains a steady buying rhythm. The company reported purchasing 22,305 BTC from January 12 to January 19, and an additional 2,932 BTC from January 20 to January 25, bringing its total holdings to 712,647 BTC.

These purchases reinforce market confidence that the machine is still running. When prices rise, this confidence is especially important because it supports the view: issuing stock to acquire Bitcoin is viable as long as the stock’s premium is high enough. But when prices weaken, this confidence becomes fragile, as it indicates the cost of this bridge is rising.

If the stock price declines faster than Bitcoin, the dilution effect per Bitcoin increases. Tighter capital markets mean higher financing costs. If the stock trades below Bitcoin’s underlying value, issuing new shares can feel punitive and may create a vicious cycle, where each issuance further dilutes per-share equity.

This is the real reason crypto reserve companies sell assets, not the losses themselves. Theoretically, if a company has enough time, liquidity, and no maturing debt requiring action in adverse conditions, it can endure enormous on-paper losses indefinitely. But if a company has maturing debt that cannot be refinanced or relies on vanishing market premiums, its on-paper losses may become trapped.

Stick to the End or Protect Liquidity?

The best way to understand a crypto reserve company’s strategy is to observe what happens when Bitcoin prices fall and it has opportunities to buy. Metaplanet purchased 4,279 BTC on December 30, 2025, at an average cost higher than the spot price on January 30. If it continues to buy on dips, it indicates a strategy of expanding holdings during poor market conditions, betting that long-term gains outweigh short-term market performance.

If growth slows, it suggests the market is choosing to protect liquidity, reducing capital needs and the risk of price downturns. Neither approach is inherently better; they simply reflect different risk tolerances. According to BitcoinTreasuries data, Trump Media also falls into the later-entry category, with a higher average cost and larger unrealized losses at current prices.

The real question is whether they treat Bitcoin as a long-term store of value ignoring volatility or as a market-facing strategy requiring ongoing capital market support. This is almost the opposite of MicroStrategy, which continues to buy even during market spiral declines because stopping purchases might be seen as a machine failure. This hidden contract between crypto reserve companies and their investors is: volatility is acceptable, but inconsistent costs are costly.

Miner situations are more complex because they can increase Bitcoin through production rather than purchase, but they face the same funding issues, just through different channels: operational costs. For example, Mara’s listed price is 53,250 BTC, and the company disclosed buying 400 BTC directly from the market last October. If October’s price trend is taken as representative of end-cycle purchases, high-cost batches could also have significant on-paper losses.

On-paper losses matter because they test whether the development of crypto reserve strategies is for survival or superficial display. Bitcoin reserve strategies only fail when a company loses the ability to wait. Everything else, including red numbers, is just the cost of playing the game.