Michael Saylor’s once-celebrated Bitcoin experiment is mired in a market backlash, raising questions about the sustainability of the corporate-treasury model he pioneered.
Shares of Strategy Inc., formerly MicroStrategy, have fallen 15% this month, erasing much of the premium the firm long enjoyed over its Bitcoin holdings. The company, long a bellwether for crypto sentiment, is now drawing fresh skepticism.
At the center of the concern is the firm’s financing tactics. Strategy’s new preferred stock—billed as its main vehicle for future Bitcoin purchases—has drawn tepid demand. A recent sale raised just $47 million, well short of Saylor’s ambition for blockbuster capital raising. To make up the shortfall, the company has returned to common-share issuance, despite earlier pledges to limit dilution. That reversal has rattled investors.
The stakes extend far beyond one company. Saylor’s playbook—raise debt and equity, buy Bitcoin, watch the market assign a premium, repeat—inspired a wave of treasury firms that collectively hold more than $108 billion, or 4.7% of Bitcoin’s supply, according to BitcoinTreasuries.net. If Strategy’s premium collapses, confidence in the model itself could unravel.
“The decreasing premium is a natural reaction to competition and alternative ways for traders to gain exposure to digital assets,” said Jake Ostrovskis, principal analyst on Wintermute’s OTC Desk. “Additionally, walking back guidance around no share issuance under 2.5x mNAV has forced short-term reassessments of the corporate strategy.”
Strategy was never just a stock. It became a proof of concept: that a corporate balance sheet could be weaponized as a speculative engine — a permanent source of demand for Bitcoin. The wager rewired how markets imagined corporate finance and inspired a boom in imitators.
Strategy, previously known as MicroStrategy, was a modest enterprise software firm until 2020, when Saylor jolted Wall Street by shifting money into Bitcoin. The stock ceased trading on earnings potential and began trading on a multiple of its Bitcoin—known as mNAV.
That multiple has swung before. It collapsed during the Terra-Luna crisis, rebounded to 3.4 after Donald Trump’s re-election, and now sits at 1.57. But this time is different: the decline comes not during a crypto winter, but amid a boom. Treasury-style companies are proliferating. Yet Strategy—the originator—is now issuing shares into a falling multiple, and the market is starting to resist.
In late July, the company pledged not to issue shares at a multiple below 2.5, with narrow exceptions. Two weeks later, the guidance was loosened, and on Aug. 25, the company sold nearly 900,000 new shares.
Some investors online viewed the move as a breach of trust. And issuing equity below mNAV now risks a negative flywheel: falling stock weakens the ability to buy Bitcoin, eroding confidence, further driving down the premium.
Online, Saylor dismissed the criticism, posting an AI-generated image of himself walking past a giant bear. The company didn’t respond to requests for comment. His supporters argue that maintaining flexibility may benefit the company should it gain inclusion in the S&P 500 or if Bitcoin booms anew.
The broader cohort is under pressure. According to Capriole Investments, nearly a third of publicly traded companies with Bitcoin on their balance sheets now trade below the value of those reserves. Smaller firms are particularly vulnerable: limited liquidity makes equity issuance more painful, and reliance on convertible notes brings interest burdens and maturity risk.
Strategy has previously said it plans to retire all of its convertible notes over the next four years and shift to preferred stock: securities whose principal will never come due. Most of its smaller peers, lacking both scale and creditworthiness, are unable to replicate that engineering.
“What happens when Bitcoin drops 50%?” said Charles Edwards, the founder of Capriole. “Enthusiasm for treasury companies will wane, mNAVs will compress and you will have 100s of companies start to question their treasury strategy altogether.”
The field has also grown more crowded. Over the past year, influencers and politically connected figures have rushed to launch crypto vehicles through SPACs and reverse mergers. Many lack the scale or trading liquidity of Strategy, and could prove less durable in a downturn.
“Is this market frothy? I think it is,” Jack Mallers, co-founder and chief executive officer of Twenty One Capital Inc., said during a Bloomberg TV interview Wednesday. “What we learned is, creating a Bitcoin treasury company is not a scarcity within itself. Anyone can register a business, attempt to go public and try to raise money to buy Bitcoin.”
A further challenge has emerged from the rise of spot Bitcoin ETFs. Initially, Strategy and the exchange-traded funds both benefited from a post-election rally. But the comparison has grown less favorable. Funds offer exposure to Bitcoin without the risks tied to corporate governance, leverage or dilution.
“Investors are momentum investors,” said Campbell Harvey, a professor at Duke University. “When the price is going up, they are buyers. When the price goes down or remains flat, there is less enthusiasm.”
At the same time, attention is shifting toward other digital assets like Ether and Solana, seen by some as better suited to decentralized finance. Ether-focused treasuries alone have committed more than $19 billion.
Bitcoin itself has eased back from highs reached earlier this month, but remains buoyed by institutional allocations. Many newer treasury firms bought in above $100,000 and lack underlying businesses to sustain them if the market turns.
“There is nothing behind Bitcoin other than sentiment,” said Hilary Allen, a law professor at American University.
