Bitcoin Holds Steady, But Bitcoin-Linked Stocks Get Crushed – Is This a Warning Sign?
Bitcoin (BTC) saw a modest 2% pullback from its record highs on Friday, but the damage in Bitcoin-related stocks was far worse. Michael Saylor’s MicroStrategy (MSTR) fell 6%, while other Bitcoin treasury plays like Semler Scientific (SMLR) and Japan’s Metaplanet (down 24%) suffered even steeper declines.
### Why the Disconnect?
While Bitcoin itself remains near all-time highs, companies that have aggressively leveraged their balance sheets to accumulate BTC are underperforming. MicroStrategy, for example, is trading 30% below its 2024 peak—even as Bitcoin sets new records.
This divergence has sparked debate: Are Bitcoin treasury companies becoming a hidden risk in the crypto market?
### The Problem with mNAV and Leveraged Bitcoin Plays
Many of these firms rely on mNAV (market price to net asset value), a metric that compares their stock price to the value of their Bitcoin holdings. As long as mNAV stays above 1.0, they can keep raising capital (via stock offerings or debt) to buy more BTC.
But if mNAV drops below 1.0—meaning the company’s market cap is worth less than its Bitcoin treasury—it could trigger a liquidity crisis. These firms might struggle to raise funds, service debt, or pay dividends on convertible notes.
### Echoes of GBTC’s Downfall
This dynamic mirrors what happened with Grayscale’s Bitcoin Trust (GBTC) before its ETF conversion. During the 2021 bull run, GBTC traded at a massive premium to NAV, but when the market turned, it flipped to a steep discount, contributing to the collapse of firms like Three Arrows Capital and FTX. The resulting sell-off helped push Bitcoin from $69K to $15K in a year.