The crypto-hoarding strategy is unraveling

Subscribe to enjoy similar stories. The strategy that rewarded companies for hoarding cryptocurrencies is now punishing them. Bitcoin, ether and other digital tokens are in a slump, and the shares of companies that followed Michael Saylor’s company, now known as Strategy, in stockpiling crypto are sliding, too.

The selloff has investors on edge, and on the lookout for signs it will force big firms to unload their holdings—triggering further declines in digital-coin prices. The risks of reorienting a corporate strategy around relatively new, and notoriously volatile, assets like cryptocurrencies were always present. But bitcoin and other popular tokens kept climbing last year, fueled in part by signs from Washington that the Trump administration would clear the regulatory hurdles necessary to bring crypto fully into mainstream finance.

More companies followed Strategy’s lead, convinced of crypto’s long-term prospects, and their token purchases helped lift prices even higher. Now, that trade is reversing. Late last year, investors began to rotate out of riskier holdings like tech stocks and crypto.

The selloff punished the shares of crypto-treasury companies, limiting their ability to raise fresh funds needed to buy additional tokens. Delays in passing a key crypto-regulatory measure have further darkened the market’s outlook. This past weekend, bitcoin fell below $76,000, about the average price Strategy paid for its tokens, meaning the company formerly known as MicroStrategy was sitting on some paper losses.

Shares of Strategy, which owns more than 700,000 bitcoins, fell 7% Monday and are down 61% since bitcoin touched its record high on Oct. 6. Ether, the second-largest cryptocurrency, has plummeted to around $2,300,