Strategy’s Bitcoin mNAV Hits 2-Year Low at 1.174

Strategy’s market net asset value (mNAV) relative to its Bitcoin holdings plummeted to 1.174 on October 10, marking the lowest level in almost two years. This critical metric, which compares the company’s market capitalization to the value of its Bitcoin treasury, has narrowed significantly, creating alarm among investors and analysts. The 121st-largest US public company holds 640,031 BTC worth approximately $75.4 billion, yet its market capitalization stands at $88.4 billion, indicating a shrinking premium to its underlying assets.

The significance of this compression cannot be overstated. Geoffrey Kendrick, head of digital assets research at Standard Chartered, emphasized that maintaining a mNAV above 1.0 remains essential for digital asset treasury (DAT) companies to expand their holdings. Values below this threshold signal weaker balance sheets and potential industry consolidation. As Bitcoin traded at $117,824, down over 3% in the past 24 hours, the broader crypto market weakness contributed to Strategy’s 3% share price decline, exacerbating the mNAV compression.

Compounding Strategy’s challenges is the mounting pressure from PIPE financing structures that originally funded their Bitcoin purchases. According to a September 25 CryptoQuant report, Bitcoin treasury stocks consistently gravitate toward discounted PIPE issuance prices, resulting in losses of up to 55% for current investors. This pattern creates a dangerous feedback loop that threatens the entire digital asset treasury model.

The mechanics of this loop are particularly concerning. PIPE investors purchased shares at substantial discounts and hold registration rights, allowing public sales after filing resale statements. Once lockup periods expire, this creates sustained selling pressure that weighs on share prices, further compressing premiums to underlying Bitcoin holdings. The CryptoQuant analysis suggests that only sustained Bitcoin rallies could prevent further stock declines, highlighting the model’s dependency on maintaining premium valuations to justify dilutive capital raises.

The consequences of Strategy’s falling mNAV extend far beyond the company itself. As the pioneer that started the DAT movement, Strategy’s compressing premium to levels not seen since February 8, 2024, serves as a critical market signal. Companies trading below 1.0 mNAV face severe operational constraints, as they cannot issue equity at attractive prices to fund additional Bitcoin purchases.

This creates a precarious situation where extended periods below 1.0 mNAV could trigger what analysts describe as ‘death spirals.’ In such scenarios, companies become unable to raise capital to service debt or fund operations, forcing asset sales that would pressure Bitcoin prices and lead to further market corrections. While Strategy’s current position at 1.174 doesn’t immediately place the company in jeopardy, the trend direction raises fundamental questions about the long-term viability of corporate Bitcoin treasury strategies in their current form.