The ongoing volatility in the cryptocurrency market has led to a significant decline in Strategy’s market-to-net-asset value (mNAV), which recently plummeted to 0.879. This development indicates that the company’s valuation has now dipped below the total worth of the Bitcoin it holds. The crucial mNAV metric illustrates to investors that they are effectively paying around 80 cents for every dollar of Bitcoin under Strategy’s control, prompting a disconcerting dilemma—if the stock is trading at a discount to Bitcoin itself, why not directly invest in Bitcoin?
Historically, Strategy has traded at a premium against its Bitcoin assets, serving as a leveraged wager on Bitcoin’s performance. This premium, which soared to as high as 1.8 times in May, has deteriorated following a sharp 30% decrease in Bitcoin prices over the past month. This marks the first instance where Strategy has recorded an mNAV below 1.0 since it began its investment in Bitcoin back in August 2020.
Analysts suggest that this shift reflects a decline in expectations for Bitcoin rather than any fundamental issues with Strategy’s business model. André Dragosch, the European head of research at Bitwise, emphasized that the drop below one is largely symptomatic of reduced performance expectations for Bitcoin that are now embedded in the mNAV. He further noted that there is a strong correlation between Strategy’s mNAV and trends in Bitcoin futures. The flattening of futures pricing, which signals traders scaling back bullish forecasts, has contributed to the compression of Strategy’s previous premium.
Alexandre Schmidt, head of research at CoinShares, echoed these sentiments, describing the current situation as consistent with Strategy’s historical behavior as a leveraged play on Bitcoin. The company, along with several digital asset treasury firms, had been experiencing high mNAV levels during the summer, where some firms even hit 3x to 7x mNAV. However, as Bitcoin’s upward momentum stalled, the heightened premiums could not be maintained and eventually began to reverse.
The declining trend has raised additional concerns, particularly as some companies are teetering on the brink of delisting from major exchanges like the New York Stock Exchange. October reportedly saw the lowest volume of acquisitions by Bitcoin treasuries since 2025. Notably, Strategy has managed to maintain a relatively stable mNAV trajectory compared to its counterparts.
Veteran short seller Jim Chanos warned of the potential pitfalls within the Bitcoin treasury sector back in July, likening current trends to the SPAC craze of 2021, which saw dramatic valuation inflations followed by substantial collapses. Chanos has been skeptical about the sustainability of the treasury model, which he believes is more reliant on financial engineering than robust business practices. Recently, he began to unwind his short position against Strategy as its stock continued to lag behind Bitcoin’s performance.
Currently, Strategy’s diluted mNAV is slightly higher at 0.980, while its enterprise value mNAV—which factors in debt—stands at 1.143, signifying a marginal premium when adjusting for leverage. Both Dragosch and Schmidt appear optimistic about potential recovery in Strategy’s mNAV should Bitcoin prices rally in the future, although they anticipate that the extraordinary premium levels witnessed during the summer may not return.
As of now, Strategy holds approximately 649,870 Bitcoin, amounting to around $56 billion, with an average purchase price of $74,430 per coin. Despite recent downturns in Bitcoin’s valuation, the company remains up 16.3% on its holdings. However, its stock has experienced more pronounced declines, reflecting broader market skepticism towards the treasury model amid increasing risk aversion.
