Bitcoin had a little slump from its all-time high on Friday, but the real drama was in the crypto-related stocks market. Companies like Strategy (MSTR) and Semler Scientific (SMLR) took a hit of around 6%, even though bitcoin only slipped a little over 2%. Metaplanet from Japan really felt the burn, dropping by a whopping 24%. It’s not a pretty picture when you look at the bigger picture: MSTR shares were trading at $376 on Friday afternoon, which is more than 30% below their peak in late 2024, despite bitcoin reaching a new high this week.
The drop in prices comes at a time when there’s a lot of chatter on social media about the sustainability of bitcoin treasury strategies, particularly those employed by Michael Saylor and other companies following his lead. A Twitter user going by the handle lowstrife expressed concerns about the financial engineering being used by these BTC treasury firms. According to lowstrife, these companies are essentially playing a risky game based on mNAV, a metric that compares a company’s valuation to its net asset value, in this case, their bitcoin holdings. If the mNAV drops below 1.0, it could spell trouble for these companies in terms of raising capital and meeting financial obligations.
The situation is reminiscent of what happened with Grayscale’s bitcoin trust, GBTC, before it was converted into an ETF. During the bull market of 2020 and 2021, GBTC traded at a premium to its net asset value as institutional investors rushed to get exposure to bitcoin. But when the market turned, that premium turned into a discount, leading to a series of financial disasters for companies like Three Arrows Capital and FTX. This selling pressure contributed to bitcoin’s price plummeting from $69,000 to $15,000 in just a year. It seems like the game now is all about predicting how much more bitcoin these treasury companies will accumulate and when they will have to offload it all, per Nic Carter, a partner at Castle Island Ventures.
