Crypto Funds Add $858M as Clarity Act Drives Market Optimism
Digital asset investment products attracted $858M last week, led by Bitcoin and Ethereum.
Decrypt1 min read
Michael Saylor’s latest tax strategy echoes Strategy’s 2022 bitcoin sale
TL;DR
Michael Saylor announced that Strategy (MSTR) is prepared to sell bitcoin, reflecting a strategy similar to its December 2022 sale for tax-loss harvesting. The company aims to utilize capital losses to generate tax benefits amid significant losses in Q1 2026.
Key points
- Michael Saylor confirmed Strategy's intent to sell bitcoin
- Strategy previously sold bitcoin in December 2022 for tax-loss harvesting
- The December sale involved 704 bitcoin for $11.8 million
- Bitcoin's price fell 23% in Q1 2026, leading to significant losses
- Strategy generated a $2.2 billion deferred tax asset from unrealized losses
Mentioned in this story
StrategyMichael Saylor
Disclosure: The author of this story owns shares in Strategy (MSTR).
When executive chairman Michael Saylor confirmed on Strategy’s (MSTR) Q1 2026 earnings call on May 6 that the company was prepared to sell bitcoin, it appeared to mark a shift for the world’s largest publicly traded corporate holder of the cryptocurrency. But the move would not be unprecedented. In December 2022, Strategy sold bitcoin for tax-loss harvesting purposes — the same rationale the company now appears to be signaling to the market once again.
On Dec. 22, 2022, Strategy sold 704 bitcoin for approximately $11.8 million at $16,776 per coin, but immediately repurchased 810 bitcoin two days later.
The sale was designed to carry back capital losses against previous gains and generate a tax benefit. A tax loss harvesting event.
"MicroStrategy plans to carry back the capital losses resulting from this transaction against previous capital gains, to the extent such carrybacks are available under the federal income tax laws currently in effect, which may generate a tax benefit".
Bitcoin fell 23% in Q1 2026, from $87,500 to $67,700. Under FASB fair value accounting rules adopted Jan 1, 2025, Strategy marks its entire bitcoin holdings to market every quarter, in Q1 posted a $12.54 billion loss which pushed unrealized losses directly through the income statement and generating a $2.2 billion deferred tax asset across its higher cost basis holdings.
According to the MSTR earnings call, assuming an $80,000 bitcoin price, Strategy has purchased over 434,000 BTC above $80,000 generating a $7.6 billion unrealized loss and a $2.2 billion deferred tax asset at a 29% tax rate.
BTC Holdings by Cost Basis Tier (Strategy)
If bitcoin recovers and Strategy sells appreciated bitcoins, that $2.2 billion tax can offsets future gains.
The primary goal for the company is to increase "bitcoin per share" which is the ratio of Strategy's total bitcoin holdings divided by its total diluted shares outstanding.
Q&A
What was the reason for Strategy's bitcoin sale in December 2022?
Strategy sold bitcoin for tax-loss harvesting purposes, allowing them to carry back capital losses against previous gains.
How much bitcoin did Strategy sell in December 2022 and for what amount?
In December 2022, Strategy sold 704 bitcoin for approximately $11.8 million at a price of $16,776 per coin.
What impact did bitcoin's price drop have on Strategy's financials in Q1 2026?
Bitcoin's price drop of 23% in Q1 2026 resulted in a $12.54 billion loss for Strategy, generating a $2.2 billion deferred tax asset.
