Bitcoin traded below Strategy’s average purchase price on Sunday, Nov. 8, reducing the market value of the company’s bitcoin holdings to less than their acquisition cost.

A trade on Coinbase’s BTC-USD market printed at $74,862.89 at 4:54 p.m. ET, approximately 0.78% below Strategy’s average purchase price of $75,451 per bitcoin. That average represents the blended acquisition cost of every coin held, making it the level at which the holdings’ market value would equal their purchase cost.

Strategy’s latest update, filed Nov. 2, reported that the company held 849,327 BTC as of Nov. 1. The bitcoin was acquired for $64.08 billion, including fees and expenses. At Sunday’s Coinbase price, the holdings were worth approximately $63.58 billion, according to a calculation by The Defiant. That created a gap of about $500 million between the holdings’ market value and their purchase cost.

Strategy, which operates as a bitcoin treasury company, reports its holdings in regular filings. Its latest quarterly filing is available here.

The decline in the value of the bitcoin holdings primarily affects common shareholders. Debt holders and preferred stockholders have claims that rank ahead of common equity, meaning a lower bitcoin value reduces the assets backing common shares.

What the $500 Million Difference Means

Bitcoin trading below Strategy’s cost basis does not itself establish a debt repayment deadline. The amount the company paid for its bitcoin is separate from the amount it owes to creditors and preferred stockholders.

Strategy’s debt dashboard lists $6.71 billion in convertible notes, while its main dashboard lists $13.14 billion in preferred stock. Convertible notes are debt securities that can be exchanged for equity under specified conditions. Those claims total $19.85 billion and are distinct from the $64.08 billion that Strategy spent acquiring its bitcoin position.

In its latest quarterly filing, Strategy said all of its bitcoin was unencumbered as of Sept. 30. None of the coins had been pledged as collateral for loans. As a result, a bitcoin price below the company’s purchase cost does not, by itself, create a collateral shortfall or trigger an immediate requirement to repay debt.

Strategy also reported a $4.79 billion U.S. dollar reserve as of Nov. 1. The company set aside the reserve to support preferred dividend and interest payments. Separately, it held $132.7 million in cash for broader treasury needs. Both figures were included in the Nov. 2 filing.

Strategy’s Next Scheduled Debt Date

The earliest scheduled date on which noteholders can demand cash repayment is Sept. 15, 2027. According to the quarterly filing, holders of Strategy’s $1.01 billion in 2028 convertible notes can require repayment on that date. All of Strategy’s other outstanding convertible notes have later put dates. Updated readings on the holdings, reserves, and outstanding claims will come through Strategy’s dashboards and its regular filing cadence.

Strategy’s stock, which trades under the ticker MSTR, closed Friday’s regular session at $128.93, down 0.29%, according to the company’s dashboard. That closing price was recorded before bitcoin’s Sunday move below Strategy’s average cost and therefore did not reflect the weekend decline.

U.S. stock markets were closed when the Coinbase trade occurred. Bitcoin markets operate around the clock, including weekends, while U.S. equity trading runs on weekday sessions. U.S. equity index futures were scheduled to reopen at 6 p.m. ET on Sunday, approximately one hour after bitcoin traded below Strategy’s $75,451 average purchase price.

Blockonomi originally reported the development.