Bitcoin Funds Lose 6%: What to Do Now?

Bitcoin Funds Deliver Losses Of 6%!

23 May 2025 at 20: 28

Reading time: 3 minutes

Crypto stocks took a big hit on Friday, with companies focused on bitcoin estimations like Strategy (MSTR) and Semler Scientific (SMLR) in particular. Both stocks fell around 6%, while bitcoin itself fell by just over 2% in value. Japan's Metaplanet also saw its value shrink by 24%.

Zooming out further, the picture gets even bleaker. MSTR shares were trading at $376 early in the afternoon, down more than 30% from their all-time high set in late 2024, despite Bitcoin surging to a new record high this week.

Meanwhile, a lively debate is raging on social media about the sustainability of Michael Saylor’s approach to bitcoin. As one popular bitcoin poster with the username lowstrife noted: “Bitcoin treasury companies are the trend this week. MSTR, Metaplanet, Twenty One, Nakamoto. I believe their toxic leverage is the worst thing that ever happened to bitcoin, and what bitcoin actually represents.”

According to lowstrife, the problem is that the financial strategies that companies like Strategy and other BTC treasury firms are using to accumulate more bitcoin essentially rely on mNAV – a metric that compares a company’s valuation to its net asset value (in this case, their bitcoin portfolio).

As long as the mNAV remains above 1.0, a company can continue to raise capital and purchase more bitcoin, because investors are willing to pay for the extra exposure to the stock relative to the bitcoin the company owns. But if the mNAV falls below that level, it means the company is worth less than its assets. This can cause major problems in raising new capital and, for example, paying dividends on the convertible bonds or preferred stock it has issued.

Shadows of GBTC

A similar situation unfolded with Grayscale’s bitcoin trust, GBTC, before it converted into an ETF. Throughout the 2020 and 2021 bull market, GBTC traded at an ever-increasing premium to its net asset value as institutional investors rushed to gain exposure to bitcoin.

However, when prices turned, that premium turned into a massive discount. This contributed to a chain of bankruptcies starting with the highly leveraged Three Arrows Capital and eventually spreading to FTX. The resulting selling pressure took Bitcoin from an all-time high of $69.000 to $15.000 in less than a year.

“Just like GBTC back then, it's all about how much more BTC “these access assets will suck in, and when they do they will implode and spit it all back out,” said Nic Carter, partner at Castle Island Ventures, in response to lowstrife's thread.

The discussion also inspired MSTR advocates, including Adam Back, Bitcoin pioneer and CEO of Blockstream. He noted, “If the mNAV is < 1.0, they can sell BTC and buy back MSTR and increase the BTC/share that way, which is in the best interest of shareholders.” He added, “Or people see that coming and don’t let it happen. Either way, that’s OK.”

“Who would have thought we would ever say that stocks are a gift to bitcoin?”

Be inspired by these dynamic developments in the crypto world. The future of Bitcoin and its related companies remains a fascinating topic full of possibilities. Stay tuned and discover where this exciting journey will take us!

Frequently Asked Questions

What Impact Does the mNAV Have on Bitcoin Treasuries?
The mNAV is crucial to their ability to raise capital and buy bitcoin. If it drops below 1.0, it could have dire consequences for their financial health.

Why did MSTR and other stock prices fall so much?
Share prices reflect concerns about the sustainability of their strategies coupled with the decline in bitcoin price.

What can we learn from the situation surrounding GBTC?
The situations of GBTC and current bitcoin treasuries highlight the importance of market valuation and the risks of excessive leverage in volatile markets.

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