US Pension Funds and Hundreds of Millions in Losses

A total of 11 US state pension funds placed a bet on shares of Strategy (MSTR), the company led by Michael Saylor – and now nearly all of them are facing serious losses. According to the latest data, 10 out of 11 funds are down roughly 60% on their investments. Combined unrealized losses have exceeded $337 million. Strategy’s stock has fallen 67% over the past six months, largely driven by a sharp decline in Bitcoin – the company’s key balance-sheet asset.

These losses highlight just how risky Strategy’s chosen approach has become, and how sensitive institutional investors – including government pension funds – remain to crypto market volatility. Collectively, the funds hold nearly 1.8 million shares of Strategy, now valued at around $240 million, down from approximately $577 million when they first reported their allocations. That translates into $337 million in paper losses.

It is important to note that Strategy pioneered the so-called “Bitcoin treasury” model – a strategy in which a company issues debt and equity to purchase Bitcoin, effectively creating leveraged exposure. During bull markets, this approach amplifies gains, but during downturns, losses multiply just as quickly.

In 2024 and 2025, many companies rushed to follow Strategy’s example, adopting similar debt-and-equity-driven Bitcoin accumulation strategies. Institutional investors, including pension funds, also began piling into this model.

However, once Bitcoin’s price started to decline, the consequences became painful. Strategy’s shares entered a deep drawdown, and investments that looked attractive during the bull market have now lost nearly two-thirds of their value.

This situation serves as a clear example of the double-edged risk facing institutional investors: on one hand, the potential for high returns during crypto rallies, and on the other, massive losses during market corrections. The drop in Bitcoin, the collapse in Strategy’s stock price, and the extreme volatility of the crypto market have turned these bets into highly dangerous exposures.

Now pension fund managers face a difficult question: was the strategy fundamentally flawed, or were the funds simply unlucky with timing? Regardless of the answer, this case demonstrates how cautious investors must be when allocating capital to companies with direct crypto exposure – especially when those investments involve retirees’ savings and long-term public obligations.

The market is watching with concern: a strategy that appeared nearly flawless in bull markets has revealed its weaknesses under volatility, and pension fund losses have become yet another reminder that high returns always come with high risk.