When Does Strategy Sell Bitcoin? Understanding the mNAV Threshold

If you’re a Bitcoin investor, the chances are pretty high that you know who Michael Saylor is. The general consensus is that he is Bitcoin’s biggest bull. Some may also be familiar with his company, Strategy (formerly MicroStrategy), which has been one of the largest corporate accumulators of Bitcoin, adding it directly to its balance sheet. While Strategy was one of the first companies to adopt this approach, many investors still don’t fully understand how it actually goes about acquiring Bitcoin.

Here’s a quick breakdown of how Strategy accumulates its Bitcoin. The company has built much of its position by issuing convertible bonds and notes. These instruments allow Strategy to borrow capital at relatively low interest rates by giving investors the option to convert their debt into equity at a later date. Rather than using this capital for traditional operating purposes, Strategy deploys the proceeds almost entirely into Bitcoin, effectively transforming cheap corporate debt into long-duration Bitcoin exposure on its balance sheet. If Bitcoin appreciates and Strategy’s share price rises, bondholders may choose to convert into equity, reducing the company’s debt burden. If they don’t, the debt remains outstanding but was typically issued at interest rates well below what unsecured borrowing would otherwise cost. This structure has allowed Strategy to accumulate a substantial Bitcoin position without issuing common equity upfront, while shifting risk and upside asymmetrically between equity holders and debt investors.

With that framework in mind, it’s not surprising that Strategy and Michael Saylor have attracted their fair share of critics. Some have gone as far as likening Strategy to the “FTX of this cycle”, a comparison that, while extreme, reflects broader concerns around leverage, concentration, and reflexivity rather than any suggestion of fraud.

So why bring this up now? Bitcoin has recently sustained a move below Strategy’s reported average acquisition price of approximately $76,000 across its 713,502 Bitcoin, meaning the company is currently underwater on its Bitcoin holdings on a mark-to-market basis. This brings us back to comments made by CEO Phong Le a couple of months ago, where he noted that selling Bitcoin would only ever be considered as a last resort (mNAV falling below 1).

We covered this in our November Rake Review, where Le explained that any such decision would be heavily influenced by Strategy’s stock valuation relative to its Bitcoin Net Asset Value. Specifically, he pointed to the mNAV metric, the multiple at which Strategy’s market capitalisation trades relative to its net Bitcoin-backed assets. At the time, mNAV was sitting around 1.19x. It has since fallen to approximately 1.11x, bringing it closer to the critical level of 1x.

This matters because an mNAV approaching 1 suggests the equity is no longer trading at a meaningful premium to its underlying Bitcoin backing. While this does not represent a hard trigger or formal policy, it does frame management’s thinking around capital structure and balance sheet flexibility, particularly in stressed market conditions.

A major headline overnight was that Strategy’s share price has fallen to its lowest level since September 2024 and is now down roughly 78% from its November 2024 all-time high. There are two primary ways for mNAV to compress: either Bitcoin falls materially, or MSTR underperforms relative to Bitcoin. Over the past few months, both have occurred, which explains why the mNAV has continued to decline since we last covered it.

If Bitcoin continues to fall, it is likely that MSTR will continue to underperform, increasing the risk of mNAV moving closer to or potentially below 1. That level is important, as it represents the point where Strategy’s equity is trading roughly in line with its net Bitcoin backing. Should that occur, pressure would build on management to consider balance-sheet actions to support the stock, including the possibility of selling Bitcoin to buy back MSTR shares.

This is a key metric that we will continue to monitor closely. If Strategy were to follow through on this last-resort option and begin selling some of its Bitcoin, it would almost certainly create fear, uncertainty, and doubt across the broader Bitcoin market, particularly among retail investors. Selling pressure would follow. However, it’s important to understand the opportunity that can emerge in these moments. Historically, periods of maximum pessimism and forced selling have coincided with some of the best long-term opportunities to accumulate Bitcoin, the environments where the largest gains and wealth creation tend to occur.