Strategy’s aggressive Bitcoin strategy is inflicting significant paper losses on U.S. pension funds. | Credit: Joe Raedle/Getty Images.
By Financial Desk | February 2026
U.S. public pension funds are facing renewed scrutiny after disclosures revealed roughly $337 million in unrealized losses tied to investments in Strategy Inc., the Bitcoin-focused company formerly known as MicroStrategy. The losses highlight the growing risks that crypto-linked investments can pose to retirement systems designed to provide stable, long-term income for millions of public workers.
At least 11 state pension funds collectively hold close to 1.8 million shares of Strategy stock. Those shares were once valued at about $577 million, but recent declines in both Bitcoin prices and Strategy’s stock have slashed their market value to roughly $240 million, according to public filings and market data .
Why pension funds owned Strategy stock
Strategy transformed itself over the past several years from a software company into one of the largest corporate holders of Bitcoin. The company has financed massive Bitcoin purchases through a combination of equity offerings and debt, effectively turning its stock into a leveraged proxy for Bitcoin exposure.
For pension funds, Strategy offered an appealing workaround:
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Direct Bitcoin ownership raises custody, regulatory, and governance concerns for public institutions.
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Strategy stock trades on a major U.S. exchange and fits within existing equity investment frameworks.
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During Bitcoin rallies, Strategy shares often outperform Bitcoin itself, amplifying gains.
That leverage, however, works both ways.
How Bitcoin’s downturn magnified losses
Bitcoin fell sharply in late 2025 and early 2026, slipping below key psychological levels near $70,000 and triggering broad sell-offs in crypto-linked equities .
Because Strategy’s balance sheet is heavily tied to Bitcoin:
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A drop in Bitcoin prices directly reduces the value of its holdings
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Debt used to finance Bitcoin purchases increases downside risk
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Strategy shares tend to fall faster than Bitcoin during downturns
As a result, many pension funds are now sitting on losses approaching 60% on their Strategy positions .
Which pension funds are affected
Public disclosures show exposure across some of the nation’s largest retirement systems, including funds serving teachers, police officers, firefighters, and other state employees.
Estimated Pension Fund Exposure to Strategy Stock
| Pension system (examples) | Approx. shares held | Peak value | Current value | Unrealized loss |
|---|---|---|---|---|
| California public funds (incl. CalPERS) | 400,000+ | ~$130M | ~$55M | ~$75M |
| New York State Common Retirement Fund | 300,000+ | ~$95M | ~$40M | ~$55M |
| Florida State Board of Administration | 250,000+ | ~$80M | ~$32M | ~$48M |
| Other state funds (8 combined) | ~800,000 | ~$272M | ~$113M | ~$159M |
| Total (11 funds) | ~1.8M | ~$577M | ~$240M | ~$337M |
Figures are rounded estimates based on public filings and recent market prices.
Why the losses matter — even if they’re “paper losses”
So far, the losses are unrealized, meaning the funds have not necessarily sold their shares. But financial experts say the situation still raises important concerns:
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Fiduciary responsibility: Pension managers are legally required to prioritize capital preservation and long-term stability.
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Volatility risk: Crypto-linked equities can introduce sharp swings into portfolios meant to fund retiree benefits decades into the future.
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Public trust: Taxpayers ultimately back many public pension systems if investment returns fall short.
While the losses represent a small fraction of total pension assets — many of which exceed hundreds of billions of dollars — critics argue that even limited exposure to highly volatile assets can undermine confidence in pension oversight.
What supporters say
Proponents of the Strategy investment argue that:
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Bitcoin remains a long-term hedge against inflation and currency debasement
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Strategy’s approach could outperform traditional assets if Bitcoin rebounds
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Pension funds routinely invest in volatile assets, including equities and private markets
Some analysts also note that Strategy’s stock could recover quickly if Bitcoin prices rebound sharply, reversing paper losses just as fast as they appeared.
What comes next
With Bitcoin markets still volatile, pension boards may face pressure to:
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Re-evaluate exposure to crypto-linked equities
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Tighten investment policy limits on leveraged assets
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Increase transparency around alternative investment risks
For now, the episode stands as one of the clearest examples yet of how Bitcoin’s price swings are increasingly spilling into traditional retirement systems, tying the financial futures of public workers more closely to the ups and downs of the crypto market .
Bottom line
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$337 million in unrealized losses are tied to Strategy stock held by U.S. pension funds
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The losses stem from Bitcoin’s downturn and Strategy’s leveraged structure
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The situation reignites debate over whether crypto-linked investments belong in public retirement portfolios
