Strategy loses billions, Gemini retreats behind US borders

Strategy (NASDAQ: MSTR) is over $9 billion in the red on its BTC buys, while the Winklevii twins are painting the closure of Gemini’s (NASDAQ: GEMI) international operations and a 25% staff cull as a major win.

As the world’s largest “digital asset treasury” (DAT) firm, Michael Saylor’s Strategy found itself in the unenviable position of delivering its Q4/FY25 financial results on the same day the BTC token slipped below $63,000 for the first time in 16 months. Stifel Financial analysts are now suggesting the token could sink as low as $38,000 before a bottom is reached. To quote a famous philosopher, d’oh.

We’ll get to Strategy’s earnings in a second, but first, the math portion of this exam. As of February 1, Strategy owns 713,502 BTC tokens—over 3% of all the BTC that will ever exist—purchased at an average price of $76,052. At its ~$63,000 value as of midday of February 5, Strategy’s BTC is worth around $9.3 billion less than the company paid for it.

This dilemma isn’t Saylor’s alone: Tom Lee’s BitMine Immersion Technologies (NASDAQ: BMNR), which hoards Ethereum’s ETH token, is currently down over $8 billion on its ETH stack after the token shed 60% of its value since August. The BTC DAT Nakamoto Inc (NASDAQ: NAKA) closed Thursday at $0.25, a seemingly impossible 0.007% of its nearly $35 peak last summer.

Longtime critics of the DAT gambit are practically drowning in schadenfreude, but Strategy investors are singing a much sadder tune. And with MSTR now included in some major stock market indexes, indirect ownership via mutual funds is hurting those who didn’t even know they’d signed up for this boondoggle.

On January 13, index provider MSCI cut Strategy a break by deferring a decision on whether to purge DAT companies from MSCI Global Investable Market Indexes. Prior to that decision, MSCI suggested that DATs holding digital assets totaling more than half their total assets were basically investment funds, which aren’t allowed in its indexes, so the DATs needed to go.

The potential fallout from Strategy being delisted from MSCI and other indexes was estimated at anywhere from $8-$12 billion being erased from the company’s market cap, so Strategy and other DATs mounted a furious lobbying campaign to preserve their spot in these indexes.

They won a reprieve, but MSCI warned that it was still considering its options, and the catastrophic fall in DAT share prices since that deferral may yet convince MSCI that its initial instincts were correct. Too late to save mutual fund investors, but better late than never.

It’s also too late for the dozen or so U.S. states whose pension funds purchased Strategy shares and are now down 50-60% on those investments. Recall the Ontario Teachers’ Pension Plan’s ill-fated decision to invest $75 million in Sam Bankman-Fried’s FTX exchange one year before the massive fraud propping it up was exposed. Truly, those who forget history are doomed to repeat it.

A billion here, a billion there, pretty soon you’re talking real money

Back when it was known as MicroStrategy, Saylor’s company focused on providing data analytics software services. It still offers those services, although they’ve become an ugly stepchild legacy appendage to the glitzier buying and mothballing of BTC. Meanwhile, Saylor goes on tweeting cloying memes about BTC’s alleged ability to cure cancer and leap tall buildings in a single bound.

So we’ll briefly note that this formerly core operation generated revenue of $123 million during the last three months of 2025, up 1.9% from the same period last year. For the year as a whole, the software unit was up 3% to $477.2 million. This is a viable business, and those are respectable figures, but they’re rounding errors for a company with a market cap of $31 billion (as of Thursday) that no longer cares to do anything but borrow, buy, and badger others to do likewise.

Last month, Strategy offered a preview of its Q4/FY25 bottom line, warning investors that it lost nearly $17.5 billion in the final three months of 2025. The company now says it lost only $12.6 billion, thanks to a $5 billion income tax benefit. So relax, everybody. This is fine.

Bear in mind that as of December 31, BTC’s price was still in the $89,000 range, which was considered a shocking comedown at the time but looks positively radiant under the current circumstances.

There was no real way for Thursday’s report to polish this turd, leaving only Saylor’s usual repertoire of Baghdad Bob bafflegab and increasingly convoluted metrics that attempt to paint Strategy’s numbers in the most favorable light possible.

Despite these hamfisted PR efforts, Strategy’s share price has cratered over the past 12 months. Strategy closed Thursday at $106.99, a 17.1% decline on the day, and more than three-quarters off its ~$457 peak last July.

Saylor has been financing his BTC buys almost entirely by diluting existing Strategy shareholders. Strategy’s most recent purchase, a comparatively modest 855 tokens for $75.3 million—at an average purchase price of just under $88,000, mind—was fueled entirely by dilution.

Saylor has tried to raise funds through a number of yield-bearing “preferred” vehicles, but they’ve proven a hard sell. Saylor recently boosted the dividend rate on one of these vehicles (STRC) by another 25 basis points to 11.25%, the sixth increase since the vehicle’s debut last summer. Will it matter? Probably not.

On February 3, as the BTC price rout was just revving up, Saylor tweeted that “volatility is Satoshi’s gift to the faithful.” On Thursday, Strategy’s earnings report contained the not-at-all-hyperbolic claim that Strategy “has built a digital fortress” anchored by its devalued BTC.

It’s that level of Monty Python ‘it’s just a flesh wound’ denial that has turned off so many investors who might prefer to see Saylor finally acknowledge, if only briefly, that maybe, just maybe, there are some flaws in his ‘number go up’ theory.

What’s next? Echoing Spinal Tap manager Ian Faith’s insistence that the reason the band is playing smaller venues isn’t because fans no longer care, it’s that their appeal has become more selective?

Who knows, maybe Jeffrey Epstein was on to something when he wrote that “Saylor is a complete creep” who was “so weird that even I ran away from him.”

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Bullish adjusts itself into profits

Shifting to more practical enterprises, the Bullish Global (NASDAQ: BLSH) digital asset exchange also released its Q4/FY25 earnings report on Thursday, its first annual report card since the company listed on the Nasdaq last August.

In the three months ending December 31, Bullish reported a net loss of $565 million, a significant reversal from its $159 million profit in Q424. Worse, Q425’s loss rises to $686 million once declines in the value of Bullish-owned tokens held as investments are factored into the equation.

Adjusted revenue (a complex formula that includes not only fees from exchange transactions but also contributions from the CoinDesk media outlet and the CCData crypto data service) totaled $92.5 million, up from $55.2 million in the final three months of 2024. Adjusted net income came in at $28.9 million, up significantly from just $4 million in Q424.

Thursday also saw Bullish release its monthly metrics report for January, showing total trading volume of $52.2 billion, down from $61.1 billion in December. BTC (-13.1%), ETH (-12.5%), and stablecoin (-18.8%) volume were all down month-on-month. Bucking this trend, the “other” token category saw volume rise more than one-fifth, although December’s “other” volume was an outlier, posting the lowest volume since last June.

Farley appeared on CNBC’s Squawk Box on Thursday where he was quizzed on the impact of BTC’s seemingly unstoppable plunge. Farley noted that Bullish holds “about 24-25,000” BTC, “so that impacts us directly.” But Farley argued that bear markets are “where you make the really smart, impactful, long-term decisions,” you know, so this is a good thing.

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Kraken enjoyed 2025, plots stock market moves in 2026

The Kraken exchange released a snapshot of its 2025 ‘financial highlights’ last week, in which its adjusted revenue was up one-third from 2024 to $2.2 billion, while its adjusted earnings improved by one-quarter to $530.6 million. (We’ll pause here to remember the late, great Charlie Munger and his view that every time you see the word ‘adjusted’ in an earnings report, use ‘bullshit’ instead.)

Kraken’s revenue was neatly split between trading (47%) and asset-based/other (53%). Transaction volume hit $2 trillion last year, up one-third from 2024 and more than twice 2023’s total. The number of funded accounts hit 5.7 million, up 50% year-on-year.

Kraken’s year-on-year growth is even more impressive when you consider its 2023 revenue was just $671 million (and its earnings were a negative $76.5 million), although at that time the sector still hadn’t fully recovered from the “crypto winter” of the year before. Given the current state of the overall sector, it’s unclear if 2026’s results might reverse Kraken’s upward trajectory.

All the more reason, then, to push for an initial public offering (IPO) now before the situation deteriorates further. Kraken filed its (confidential) IPO paperwork last November, not long after it raised $800 million in a funding round that valued the company at $20 billion. The company has yet to update the market on the specifics of its IPO, including the timing of its proposed Nasdaq debut.

In the meantime, Kraken filed paperwork last month with the Securities and Exchange Commission (SEC) detailing its plans for a special purpose acquisition company (SPAC) called KrakAcquisition.

The SPAC has the backing of Kraken, Tribe Capital, and Natural Capital, and was originally looking to raise up to $250 million. By the end of January, KrakAcquisition had upsized its IPO to $345 million—34.5 million shares at $10 apiece—and had begun trading on the Nasdaq under the ticker KRAQU.

KRAQU is playing coy regarding what exactly it intends to acquire to flesh out its bones, but is focusing on firms “developing the core infrastructure of the digital asset economy—payment networks, tokenization platforms, blockchain infrastructure, compliance solutions, and other essential services … we believe the most transformative opportunities lie in the convergence of DeFi and TradFi.”

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Gemini cuts off UK, EU, and Australian customers

The Gemini digital asset platform hasn’t yet released its Q4/FY25 report, but the company announced Thursday that it’s cutting its workforce by “roughly 25%” as it makes greater use of artificial intelligence (AI) for both coding and “non-engineering work.” The company claimed that “doing more with less has never been more true or possible and we believe this trend line is only just beginning.”

Gemini’s Q3 report showed a $160 million loss on soaring operating expenses, sales & marketing costs, and salaries & compensation. Some of those costs were related to Gemini’s listing on the Nasdaq last September, but the company’s pre-IPO stats showed it was paying out more in salaries/compensation than it was generating in revenue.

The staff cuts are part of what the company is calling “Gemini 2.0,” which will also see the company retreat from most markets outside the U.S. Gemini is “exiting the UK, EU, and Australian markets” to “help reduce our total expenses in line with our headcount reduction.” Gemini sums up this strategy as: “Simplify, consolidate, then accelerate.”

The company claims that “foreign markets have proven hard to win in for various reasons and we find ourselves stretched thin with a level of organizational and operational complexity that drives our cost structure up and slows us down. And we don’t have the demand in these regions to justify them.”

For the time being, Gemini customers in affected markets can transact as normal. But their accounts will be placed in ‘withdrawal only’ mode on March 5, and the accounts will be closed permanently on April 6. Gemini is encouraging users in these markets to transfer their balances to the eToro trading platform, which is offering Gemini users “special signup bonuses” for shifting their allegiance.

In an accompanying SEC filing, Gemini said it expects to turf “up to 200 global employees” by mid-2026, with associated costs of ~$11 million. Gemini intends to continue operating in Singapore, but made no references to its plans for any other international markets outside the U.K., EU, and Australia.

Gemini is run by Cameron and Tyler Winklevoss, who appear to have spent more time buttering up Donald Trump than focusing on their business (and these layoffs won’t help Trump’s falling job numbers). On Thursday, the Gemini exchange’s 24-hour trading volume was a mere $253 million, a fraction of the $5 billion-plus stats of U.S. rivals Coinbase (NASDAQ: COIN) and Bullish.

Having failed to attract enough interest to its core business, Gemini is pivoting to the newest hot chick at the fintech bar: prediction markets. Gemini launched its Gemini Predictions offering in mid-December and says “10,000+ users” have traded (read: wagered) over $24 million in that short span.

Gemini cites its “thesis” that prediction markets “will be as big or bigger than today’s capital markets.” Mimicking Coinbase’s plan to be an ‘everything app’ for its customers, Gemini claims it’s building a “super app” within which predictions/bets “will be the machine … to see the future. A truth machine.”

Investors spoke their truth following Gemini’s announcement, pushing the stock down 8.7% to $6.70. While the entire crypto sector is currently in full-on retreat, Gemini’s share price is down 82% in the five months since its Nasdaq debut.

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Galaxy Q4: wha hoppen?

Finally, digital asset custodian/lender/infrastructure provider Galaxy Digital (NASDAQ: GLXY) booked a net loss of $482 million in the final three months of 2025, reflecting the digital asset plunge that started in early October. The loss was a whipsaw from Q3’s $505 million profit and resulted in Galaxy posting a full-year net loss of $241 million.

The losses were largely due to the rapid decline in the value of the tokens under Galaxy’s control, as digital asset gross profit fell 84% to $51 million while ‘treasury and corporate’ gross profit swung to a $454 million loss from a $408 million profit in Q3. All in all, it’s a dramatic reversal of fortune from Q3, which had been Galaxy’s best-performing quarter to date.

The company isn’t ready to slash its wrists just yet, as it recently boosted its balance sheet by $1.625 billion through a mix of new debt and equity raise. Galaxy finished 2025 with $2.6 billion in cash and stablecoins on hand, up from $1.9 billion at the end of Q3.

Speaking on the ensuing analyst call, Galaxy boss Mike Novogratz expressed confusion over how 2025 concluded and 2026 has begun, stating that if you’d asked him to foresee such a downturn despite the insanely favorable regulatory climate in the U.S., “I’d have said ‘no way.’” On Tuesday, Novogratz suggested BTC would hit its floor price at $70,000, but sagely observed that “when the tide turns, it turns quick.”

Galaxy listed on the Nasdaq last May, and its shares hit an all-time high of $64 in October, just before the crypto bubble burst. Galaxy’s shares fell hard following its sobering earnings and continued to fall in lockstep with token prices, closing Thursday down 16.5% to $23.04.

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