What to know:
- Ah, the illustrious Michael Saylor and his grand Strategy, down 6% on this fine Friday, while Bitcoin merely stumbles a modest 2%. Who’s the real loser here? 🤔
- But wait! Other Bitcoin Treasury Strategy names are taking an even bigger hit. It’s like a game of musical chairs, and guess what? No one wants to sit down! 🎶
- As the market participants engage in a heated debate, one wonders if these corporate stocks, leveraging their way to Bitcoin glory, might just be the next big risk to the market. Spoiler alert: they probably are! 😬
On this fateful Friday, crypto stocks painted the town red, particularly the Bitcoin treasury companies like Strategy (MSTR) and Semler Scientific (SMLR), each down about 6%. Meanwhile, Japan’s Metaplanet decided to take a nosedive of 24%. Talk about a dramatic exit! 🎭
Looking at the bigger picture, MSTR shares are now trading at $376, a staggering 30% below their all-time high from late 2024. Meanwhile, Bitcoin is flexing its muscles with a new record this week. Isn’t that just poetic? 📉
The price action has sparked a lively debate on social media about the sustainability of Michael Saylor’s Bitcoin vacuuming strategy. Is it a genius move or just a desperate grasp at straws? 🤷♂️
“Bitcoin treasury companies are all the rage this week. MSTR, Metaplanet, Twenty One, Nakamoto,” quipped the ever-so-modest Twitter user lowstrife. “I think their toxic leverage is the worst thing that has ever happened to Bitcoin and what it stands for.” Ouch! 🔥
According to lowstrife, the financial engineering behind Strategy and its BTC treasury pals hinges on mNAV — a fancy term for comparing a company’s valuation to its net asset value (in this case, their Bitcoin hoard). Sounds simple enough, right? 😅
As long as their mNAV stays above 1.0, they can keep raising capital and buying more Bitcoin. Investors are clearly eager to pay a premium for a slice of this Bitcoin pie. But if mNAV dips below 1.0, well, that’s when the fun really begins! 🎢
When that happens, the company’s value could plummet below its holdings, making it tough to raise capital or pay dividends. It’s like trying to sell ice to an Eskimo in winter! ❄️
Shades of GBTC
Remember Grayscale’s Bitcoin Trust, GBTC? Before its transformation into an ETF, it was a closed-end fund that traded at a premium during the bull market of 2020 and 2021. But when the tide turned, that premium became a discount, leading to a chain reaction of disasters, starting with the infamous Three Arrows Capital and culminating in the FTX fiasco. Bitcoin went from a glorious $69,000 to a pitiful $15,000 in just a year. Talk about a rollercoaster! 🎢
“Just like GBTC back in the day, the entire game now is figuring out how much more BTC these access vehicles will scoop up, and when they will blow up and spit it all back out again,” Nic Carter, partner at Castle Island Ventures, remarked in response to lowstrife’s thread. Sounds like a fun game, right? 🎮
The thread also ignited responses from MSTR bulls, including Adam Back, Bitcoin OG and CEO of Blockstream. “If mNAV < 1.0, they can sell BTC and buy back MSTR to increase BTC/share, which is in shareholders’ interests,” he posted. “Or people see that coming and don’t let it go there. Either way, this is fine.” Ah, the optimism! 🌈
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2025-05-23 20:37