Bitcoin remained relatively resilient on Friday, dipping just over 2% from recent record highs. However, the same couldn’t be said for crypto-linked equities, which saw heavy losses as investor confidence in bitcoin treasury strategies appeared to waver.
Leading the selloff were firms with large bitcoin holdings, including Strategy (MSTR) and Semler Scientific (SMLR), each down about 6% on the day. Japan-listed Metaplanet was hit even harder, tumbling 24%.
Zooming out paints an even grimmer picture: MSTR was trading at $376 by early afternoon—over 30% below its all-time high from late 2024—despite bitcoin itself setting new records this week.
Much of the pressure seems tied to growing skepticism around the leveraged strategies some companies are using to acquire bitcoin. On social media, a renewed debate is raging over the sustainability of Michael Saylor’s aggressive bitcoin treasury model, which other firms like Metaplanet and Twenty One have sought to replicate.
“Bitcoin treasury companies are all the rage this week,” noted pseudonymous bitcoin commentator lowstrife on X. “I think their toxic leverage is the worst thing that’s ever happened to bitcoin—and what it stands for.”
At the heart of the debate is a financial engineering tactic based on mNAV, or “market value relative to net asset value.” For these companies, that value largely reflects their bitcoin holdings.
As long as mNAV remains above 1.0, firms can continue issuing equity at a premium and using the proceeds to buy more bitcoin. But if mNAV falls below 1.0, the company’s market valuation slips beneath the value of its BTC assets—effectively signaling investor doubt and constraining future capital raises. It could also jeopardize the firm’s ability to service obligations tied to convertible notes or preferred equity.
Shades of the GBTC Discount
Critics have drawn parallels to Grayscale’s GBTC, which, before converting to a spot ETF, saw its premium to NAV flip into a massive discount during the 2021–2022 bear market. That dislocation led to a cascade of collapses—beginning with Three Arrows Capital and eventually contributing to the downfall of FTX. The fallout helped drive bitcoin from $69,000 to $15,000 in just a year.
“Just like GBTC back in the day, the whole game now is about figuring out how much more BTC these vehicles will vacuum up—and when they’ll implode and disgorge it back into the market,” said Nic Carter, partner at Castle Island Ventures, in response to the discussion thread.
Not all reactions were bearish. Strategy bulls, including Blockstream CEO Adam Back, pushed back on the criticism. “If mNAV drops below 1.0, they can sell BTC and repurchase MSTR shares—boosting BTC per share, which benefits shareholders,” he argued. “Or the market anticipates that and doesn’t let it happen. Either way, it works.”
