Michael Saylor Confronts Market Repercussions as Bitcoin Premium Drops Sharply

Michael Saylor’s once-celebrated Bitcoin initiative is now facing considerable market resistance, raising questions about the sustainability of the corporate treasury model he created.

Shares of Strategy, formerly known as MicroStrategy, have plummeted 15% this month, erasing much of the premium the company had previously gained from its Bitcoin holdings. Once viewed as a significant barometer of crypto sentiment, the company is now facing renewed distrust.

At the heart of these concerns lie the firm’s financing strategies. Strategy’s new preferred stock—designed as its main avenue for future Bitcoin acquisitions—has met with tepid interest. A recent issuance pulled in only $47 million, falling far short of Saylor’s lofty ambitions for a major capital raise. To bridge this shortfall, the company has resorted to issuing common shares, contradicting earlier vows to limit dilution. This pivot has unsettled investors.

The ramifications extend beyond a single company. Saylor’s model—raising both debt and equity, acquiring Bitcoin, and profiting from market premiums—has inspired numerous treasury firms, collectively managing over $108 billion, or 4.7% of Bitcoin’s total supply, according to BitcoinTreasuries.net. A decline in Strategy’s premium could undermine trust in the model overall.

“The diminishing premium is a natural response to growing competition and alternative avenues for traders to access digital assets,” commented Jake Ostrovskis, principal analyst at Wintermute’s OTC Desk. “Additionally, revising guidance on share issuance below 2.5x mNAV has triggered short-term reappraisals of the corporate strategy.”

Strategy was more than just a stock; it became a proof of concept that a corporate balance sheet could function as a speculative engine—a consistent source of demand for Bitcoin. This gamble transformed market perceptions of corporate finance and initiated a wave of imitators.

Previously a modest enterprise software firm, Strategy—formerly MicroStrategy—underwent a radical shift in 2020 when Saylor astounded Wall Street with his Bitcoin investment. The stock transitioned from being evaluated on earnings potential to trading at a multiple of its Bitcoin holdings, known as mNAV.

This multiple has varied in the past. It decreased during the Terra-Luna crisis, rebounded to 3.4 after Donald Trump’s re-election, and now stands at 1.57. However, this time is different: the decline is occurring not during a crypto winter, but in the midst of a boom. Treasury-style companies are proliferating, yet the originator, Strategy, is currently issuing shares at a declining multiple, and the market is beginning to push back.

In late July, the company pledged to avoid issuing shares at a multiple below 2.5, with limited exceptions. Just two weeks later, this guidance was relaxed, and on August 25, the company sold nearly 900,000 new shares.

This action was perceived by some investors online as a breach of trust. Issuing equity below mNAV now risks creating a negative cycle: a falling stock price impacts the ability to acquire Bitcoin, eroding confidence and further diminishing the premium.

Addressing the criticism online, Saylor shared an AI-generated image of himself walking past a large bear. The company did not provide comments when requested. Supporters argue that maintaining flexibility could benefit the company in its pursuit of inclusion in the S&P 500 or in the event of another Bitcoin surge.

The broader industry is also feeling the strain. Capriole Investments reports that nearly a third of publicly traded companies with Bitcoin are now trading below the value of their reserves. Smaller firms are particularly vulnerable: limited liquidity complicates equity issuance, and reliance on convertible notes results in interest expenses and maturity risks.

Strategy has stated intentions to eliminate all convertible notes over the next four years and shift to preferred stock—securities that do not have a principal repayment date. Most smaller competitors, lacking both scale and creditworthiness, cannot replicate this strategy.

“What happens when Bitcoin drops 50%?” posed Charles Edwards, founder of Capriole. “Enthusiasm for treasury companies will wane, mNAVs will compress, and hundreds of companies will likely reassess their treasury strategies altogether.”

The market has also become increasingly saturated. In the past year, influencers and politically connected individuals have rapidly established crypto vehicles through SPACs and reverse mergers. Many lack the scale or trading liquidity of Strategy and may prove less resilient in a downturn.

“Is this market inflated? I believe it is,” stated Jack Mallers, co-founder and CEO of Twenty One Capital Inc., in a Bloomberg TV interview. “What we learned is that establishing a Bitcoin treasury company is not a unique opportunity. Anyone can set up a business, try to go public, and raise funds to buy Bitcoin.”

A further complication has emerged with the introduction of spot Bitcoin ETFs. Initially, both Strategy and these funds benefited from a post-election rally. However, the comparison has become less favorable. Funds provide investors exposure to Bitcoin without the governance risks, leverage, or dilution found in corporate structures.

“Investors are momentum-driven,” explained Campbell Harvey, a professor at Duke University. “When the price rises, they buy. When it falls or remains stable, enthusiasm wanes.”

At the same time, attention is shifting toward other digital assets like Ether and Solana, which some believe are better suited for decentralized finance. Ether-focused treasuries alone have committed over $19 billion.

Bitcoin may have retreated from its recent highs, but institutional investments continue to provide support. Many newer treasury firms bought in at prices above $100,000 and lack the foundational businesses to sustain them if the market turns.

“There is nothing behind Bitcoin but sentiment,” stated Hilary Allen, a law professor at American University.

© 2025 Bloomberg

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