Public pension funds sit on steep losses in Strategy bets as Bitcoin slides

The Bitcoin treasury trade was built for up-only markets. Companies issue equity or debt, buy Bitcoin, then rely on a rising share price to keep the flywheel spinning. When the cycle flips, that same structure can turn into a magnifier on the way down.

That is the backdrop for a growing list of US public pension plans that bought shares of Strategy, the company led by Michael Saylor that has amassed Bitcoin through repeated fundraising rounds. A recent review of holdings shows 11 state pension schemes collectively hold close to 1.8 million shares. At current prices, the stake is worth about $240 million, down from $577 million when the positions were first disclosed, according to figures compiled by the research platform Fintel. 

On that math, the group is sitting on roughly $337 million in paper losses. Ten of the 11 funds are close to 60% underwater on their purchases, while Strategy shares are down about 67% over the past six months, the report said.

The largest disclosed positions include the New York State Common Retirement Fund, Floridas retirement system, and the State of Wisconsin Investment Board. The report also listed North Carolina, New Jerseys Police and Firemen’s Retirement System, Utah Retirement Systems, Kentucky Retirement Systems, Maryland’s state system, and Michigan’s retirement system. Michigan was the outlier, with a much smaller position that was down only around 8%.

The drawdown matters because many pension plans did not buy Bitcoin directly. Strategy has functioned as a high-beta proxy: it tends to move more than Bitcoin during rallies, and it can fall faster when sentiment turns and leverage comes out of the market.

For pension managers, the uncomfortable part is timing. They bought into the idea of Bitcoin exposure through public equities. Now they are stuck explaining why a trade that looked like a liquid, regulated wrapper can still behave like a leveraged risk asset when the market is stressed.