Btc Price Rises While Mstr Shares Lag

The Divergence Between Bitcoin and MSTR

Since the beginning of this month, a notable divergent trend has emerged between the price of bitcoin and shares of bitcoin HODLer Strategy (MSTR). While the price of bitcoin has risen by about 13%, nearly hitting $110,000, MSTR’s share price has fallen by 3% to around $372. This gap in performance has become increasingly apparent since mid-May, raising questions about market sentiment toward the firm considered a pioneer in corporate bitcoin treasury strategies. Despite Strategy’s prominent role in this development, its stock has failed to track bitcoin’s recent rally.

The Rise of Competition

A key factor in this discrepancy is the rapid increase in the number of public companies embracing similar bitcoin strategies. Data from BitcoinTreasuries.net shows that over 113 public companies worldwide now hold bitcoin on their balance sheets, representing an increase of 11 new participants in the past 30 days. Many of these companies appear to be following MSTR’s strategies, but the company’s market premium appears to be shrinking, suggesting that the competitive advantage of their early participation may be fading.

Changes in Market Value

Strategy’s well-known mNAV multiple, which indicates how the market values ​​the company relative to its bitcoin holdings, has fallen to 1.80, one of the lowest levels in the past year. This value is calculated by dividing the company’s enterprise value (EV) by the market value of its bitcoin holdings. EV includes the current market value of MSTR, converted debt and preferred stock (such as STRK and STRF), minus the company’s most recently reported cash position.

A lower mNAV limits Strategy's ability to issue new equity without significantly diluting existing shareholders, although it still remains above 1x, which provides some headroom.

Strategic Adjustment of Financing

The recent purchase of 4,020 BTC by Strategy, the smallest since May 5, also reveals a significant change in the financing structure. This acquisition was financed not only through common stock, but also through preferred securities: 81.7% from common stock, 15.9% through STRK and 2.4% through STRF, according to analyst Ben Werkman. This diversification demonstrates the company’s strategic use of alternative instruments through its at-the-market (ATM) offering, potentially to limit shareholder dilution and maximize capital raising in a compressed mNAV environment.

Frequently Asked Questions

What does the drop in mNAV mean for MSTR?
The decline in mNAV indicates a decreased valuation of MSTR by the market relative to its bitcoin holdings, which may limit its ability to issue new shares without diluting existing investors.

How does the increase in competitors affect Strategy's position?
The rise in the number of firms pursuing bitcoin strategies has led to increased competition, potentially eroding Strategy's early advantage and squeezing its market premium.

What can Strategy do to improve its position?
Strategy may consider innovating in its financing structure and implementing improvements in their strategies to respond to this competitive market, for example by entering into strategic partnerships or optimising their asset management.