The market net asset value (mNAV) of the Strategy compared to the amount of Bitcoin (BTC) held has at one point fallen to 1.174 on October 10 — the lowest level in nearly two years. It has now recovered to 1.43.
The company's stock fell 4.84% to 304.79 USD amid a weakening cryptocurrency market, corresponding to a market capitalization of 87.508 billion USD. Currently, Strategy is the 121st largest public company in the US, holding 640,031 BTC, worth approximately 71.302 billion USD.
As of the time of this article, the price of Bitcoin is trading at 111,000 USD, falling over 8% in the past 24 hours. The narrowing gap between market capitalization and the value of underlying assets is threatening the sustainability of Bitcoin treasury strategies in enterprises.
mNAV fall may create a “feedback loop”
Geoffrey Kendrick, Head of Digital Asset Research at Standard Chartered, warned that maintaining mNAV above the threshold of 1.0 is essential for digital asset treasury companies (Digital Asset Treasury – DAT) to expand their holdings. When mNAV falls below this threshold, the balance sheet becomes weaker and may lead to a wave of mergers or downsizing operations.
In addition, Strategy and similar companies are under significant pressure from PIPE structures (Private Investment in Public Equity) – which is a source of funding to buy Bitcoin.
According to a report by CryptoQuant on September 25, shares of Bitcoin treasury companies often tend to revert to the discounted PIPE issuance price, causing current investors to incur losses of up to 55%.
This phenomenon creates a dangerous “feedback loop”: PIPE investors buy shares at a deep discount and have the right to register for a public sale after submitting a resale application. When the lock-up periods end, the selling pressure causes the stock price to fall, narrowing the (premium) compared to the actual value of Bitcoin held by the company.
Why is this important?
When mNAV falls below 1, DAT companies face severe restrictions: they cannot issue new shares at a high valuation to continue purchasing more Bitcoin. This model relies on maintaining a sufficiently attractive premium to justify the dilution of shares, and according to CryptoQuant, only sustainable Bitcoin price increases can prevent the stock from continuing to decline.
Currently, the premium level of the Strategy has fallen to its lowest point since February 8, 2024 — a concerning signal. The fact that the pioneering company in the DAT model is witnessing a sharp decline in mNAV is not a positive sign for the market.
Although it hasn't reached a warning level yet, if mNAV remains below 1.0 for an extended period, companies may fall into a “death spiral”: unable to raise capital, unable to repay debts, and forced to sell assets, putting downward pressure on Bitcoin and leading to further corrections.
Vương Tiễn
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