Once a cash-burning enterprise software firm, Strategy Inc. (NASDAQ:MSTR) – previously known as MicroStrategy Inc. – became the most extreme expression of the Bitcoin age.

Under the vision of Michael Saylor, the company reinvented itself as a publicly listed Bitcoin accumulation vehicle — part software, part crypto treasury, part financial engineering experiment.

For a while, it worked brilliantly.

Between February and November 2024, Strategy shares — still trading under the MicroStrategy name at the time — surged more than 1,000%, marking a 10x increase.

The playbook was simple: issue equity and convertibles, buy Bitcoin (CRYPTO: BTC), let rising prices do the rest.

Investors didn't just buy software. They bought leverage to a narrative, and Strategy became the world’s biggest Bitcoin holder.

Fast-forward to late 2025, and the honeymoon is turning into a nightmare.

Between October 2025 and early February 2026, Strategy has already lost roughly 70% of its market value.

Over the same period, Bitcoin is down about 50%.

What's different this time is how the selloff is unfolding — and who Bitcoin is falling with.

Strategy Inc. Price Chart – From Earth To The Moon And Back

Software And Crypto: Breaking Down Together

The crypto selloff is no longer an isolated event. It is accelerating in lockstep with a brutal unwind in software equities.

Over the eight trading sessions through Feb. 5, the iShares Expanded Tech Software ETF (NYSE:IGV) fell every single day, marking its worst streak since March 2020.

Software stocks are now down roughly 30% from their October highs, with several constituents plunging more than 50% in just three months.

Strikingly, the hardest-hit names over the past three months are those tied directly to crypto exposure:

Bitcoin and software stocks have traded in near-perfect sync for years. Now they are breaking down together — and that might be no coincidence.

Both are long-duration bets on cheap capital. Both monetize code. Both are now struggling as AI turns software into a commodity.

If code is becoming cheap, are crypto and software effectively the same business model?

Chart: Bitcoin And Software Stocks Have Moved In Lockstep

The ‘Original Sin’ Of This Crypto Cycle

"There is no doubt that markets currently categorize crypto in the software basket, for better or worse," said Andreas Steno Larsen in a note this week.

That categorization, he argues, is the “original sin” of the current crypto cycle.

For crypto to survive — let alone thrive — in 2026, it must decouple from the high-multiple, "infinite supply" logic of software and re-anchor itself to the finite world of hardware, energy, and real assets.

Whether it can pull off that transition remains the million-dollar question.

Steno Larsen remains convinced that the market's trajectory is fundamentally right.

The software economy is facing a slow but inevitable demise. As AI commoditizes high-level services and autonomous systems migrate from screens into the physical world, the premium once paid for "human-wrapped" software is evaporating.

In that world, margins shift away from code and toward infrastructure — the physical systems that actually build, move, and power things.

The Doom Loop: Strategy And Bitcoin

That shift has uncomfortable implications for Strategy.

Bitcoin is now trading below Strategy's average purchase price.

With equity collapsing, capital markets tightening, and software valuations imploding, investors are starting to ask an unthinkable question:

Could Strategy be forced to sell Bitcoin?

Saylor has long argued that the risk of forced liquidation is minimal. Yet traders on betting markets aren’t so sure anymore.

According to Polymarket, there is currently a 26% chance that Strategy will be forced to sell any Bitcoin by the end of the year.

On Thursday, veteran economist Ed Yardeni issued a bearish view on Bitcoin.

"We aren't feeling as opportunistic about bitcoin's plunge," Yardeni said, noting that his firm turned negative on crypto after the GENIUS Act legitimized Treasury-backed stablecoins.

In his view, that move undercut Bitcoin's transactional use case and exposed its weakness as a store of value.

Meanwhile, Michael Burry – who predicted the burst of the subprime bubble – has warned that Bitcoin's latest freefall below $70,000 could mark the beginning — not the end — of a deeper unwind.

The fear now gripping Strategy and Bitcoin is not cyclical. It's existential.

Photo: PJ McDonnell on Shutterstock.com