Strategy, Inc. (MSTR)’s Bitcoin (BTC) holdings serve as a thermometer to gauge trust in the institution. The company’s recent evolution largely reflects the institutional market’s trust (or fear) in digital currencies.
The company holds the largest Bitcoin reserves of all publicly traded companies. See how the stock price changes in near real-time depending on sentiment towards BTCespecially after the correction that digital assets have suffered in recent weeks.
Since its year-to-date high in July, MSTR stock has fallen 56%, dropping from $457 to about $199. This decline has been in conjunction with a correction in Bitcoin, which has fallen from an all-time high of around $126,000 in early October to around $95,000 today.
but, There is one piece of information that is causing particular concern and that is the modified net asset value (mNAV). Currently it is 0.93. When this metric falls below 1, the market values the company less than its Bitcoin holdings.
For some investors, this presents an opportunity to buy at a discount. For other companies, this is a sign of distrust in the company’s ability to maintain an aggressive accumulation strategy even in an unfavorable environment.
Infection risk for companies holding Bitcoin
The real fear in the market is that a prolonged MSTR crisis will ultimately impact the story of Bitcoin as a corporate reserve asset.
According to a report from CriptoNoticias, if a pioneering company starts to stall, other companies copying its model (but with weaker financial resources and lower risk tolerance) could halt or completely paralyze their BTC purchases.
However, several analysts argue that the risk of a forced sale is very low. For example, Miles Deutscher emphasized that: Even if the price of Bitcoin were to fall by 70%, Strategy would not have to sell its holdings..
“There are no margin calls and the average loan maturity is 4.8 years,” he said. “The only extreme risk is that the price of BTC remains low for years and the capital markets stop funding BTC. Even then, only a small amount could be sold and payments could be delayed,” the analyst added.
Strategic moves that caused alarm
Adding to all of this was the alert that occurred when Arkham Intelligence detected that Strategy had moved 43,415 BTC (approximately $4.26 billion) to over 100 different addresses. Many interpreted the move as a prelude to a fire sale to preserve liquidity.
The reality was more benign. These were simply internal transfers to a new custodian within Coinbase Custody.which is common in managing institutional portfolios of this size.
Meanwhile, Jeff Dorman, chief investment officer and co-founder of digital asset management firm Arca, cited the appeal and criticism of Arca’s president, Michael Saylor, and expressed that he will never understand “how people can so confidently spew out stupid, inaccurate opinions that are so easily refuted.”
“It only takes five minutes or less to talk to a debt/equity expert to understand that you don’t need to sell your Bitcoin stock until Bitcoin falls so far that it makes no sense to sell it later,” Dorman said.
Experts argued that There is no concern that MSTR will sell BTCThis is because Saylor owns 42% of the shares. “There are no provisions in the debt that require it to be sold. Interest expense is low and manageable. Don’t forget that the core technology business is still generating positive cash flow,” Dorman concludes, noting that in practice investors often refinance debt rather than meet maturing debt.
