MicroStrategy (MSTR), the world’s largest corporate holder of Bitcoin, is facing a critical test as its market capitalization has fallen below the total value of its Bitcoin holdings.
On Friday, as Bitcoin dropped below $95,000 to a six-month low, MicroStrategy’s stock plunged 32% over the past month. The company’s market cap declined to $59 billion, while its Bitcoin holdings are valued at $62.3 billion.
This marks the first time in the company’s history that its market cap has dipped below its Bitcoin reserves, with its market-to-net-asset-value (mNAV) ratio falling to approximately 0.95x.
Co-founder and Executive Chairman Michael Saylor dismissed speculation about a sell-off triggered by on-chain data, stating:
*"We are buying Bitcoin and will announce our next purchase on Monday morning. I think people will be pleasantly surprised. In fact, we’ve been accelerating our purchases."*
MicroStrategy’s business model relies on issuing equity and convertible debt at a premium to fund Bitcoin acquisitions. However, the current market cap discount suggests this financing mechanism has lost effectiveness.
**On-Chain Activity Sparks Sell-Off Rumors**
Market concerns about a potential Bitcoin sell-off by MicroStrategy were not unfounded. According to crypto intelligence platform Arkham Analytics, unusual on-chain movements raised suspicions among some observers. However, Arkham noted that these transactions could simply indicate MicroStrategy shifting custody to Coinbase rather than liquidating holdings. Additionally, on prediction market Myriad, traders briefly priced the odds of MicroStrategy selling Bitcoin by 2025 at 14%.
Saylor clarified in an interview that the only selling he observed came from early Bitcoin holders ("OGs") taking profits after the $100,000 milestone—unrelated to corporate actions. He emphasized that MicroStrategy’s strategy remains *"always buying,"* pausing only at quarter-end for disclosure purposes.
TD Cowen analyst Lance Vitanza noted that while the company might theoretically need to sell Bitcoin to repay debt, its convertible bonds mature only in 2028, making an immediate sell-off *"highly unlikely."*
**Financing Model Under Pressure**
The inversion of MicroStrategy’s stock price relative to its Bitcoin reserves is now a key market focus. The company traditionally funds Bitcoin purchases by issuing shares at a premium to its Bitcoin-backed valuation. Yet, the 0.95x mNAV ratio indicates this model is broken.
MicroStrategy employs diverse financing tools, including convertible bonds and dividend-paying preferred stock. As of Friday, the firm had raised $8.2 billion via convertibles and $7.6 billion through preferred shares. Last week, it announced its first euro-denominated preferred stock issuance in Luxembourg, expected to yield $715 million in dividends.
Addressing skepticism, Saylor expressed confidence: *"Even if Bitcoin fell 80%, MicroStrategy’s balance sheet would remain solid, with ample collateral to cover debt."*
He called Bitcoin’s current price *"quite satisfying"* and suggested recent declines set the stage for a rebound—though he admitted year-end price movements remain hard to predict.