Strategy's Valuation Drops Below Its Bitcoin Holdings, Shaking Investor Confidence
Strategy's Bitcoin Bet and Investor Sentiment
By Shashwat Chauhan
June 29 (Reuters) - Strategy's valuation has fallen below the value of its bitcoin holdings for the first time, a milestone that weakened investor confidence in the Michael Saylor-founded company's long-running cryptocurrency bet.
Focus on mNAV Metric and Bitcoin Sales
Investor focus has been on the company's "mNAV" metric, which is its enterprise value relative to its bitcoin holdings, ever since CEO Phong Le's remarks late last year that the company may consider selling bitcoins if the ratio drops below 1.
First Bitcoin Sale Since 2022
Strategy reported its first bitcoin sale since 2022 in a filing earlier this month, marking a notable shift for the largest corporate holder of bitcoin in the world.
Financial Performance and Market Impact
It reported a bigger first-quarter loss, hammered by a slump in bitcoin prices that weighed on the value of its sizeable crypto holdings.
Current mNAV Ratio and Market Capitalization
As of last close, the ratio stands at 0.99 -- implying that the company's enterprise value is lower than the value of the bitcoin it holds on its balance sheet, according to the company's website.
Analyst Commentary on Investor Sentiment
"It's bad news for overall investor sentiment toward crypto and bitcoin, which is already close to rock bottom," said Nic Puckrin, cross-asset analyst and founder of Coin Bureau.
"MSTR was the one digital treasury company that investors continued to have faith in, but that faith is now eroding. We're already seeing this reflected in the bitcoin price."
Share Price Decline and Bitcoin Holdings
Its market capitalization as of last close was $29.54 billion, less than half of its all-time high valuation of over $71 billion clocked in 2024. Its shares have slumped more than 45% so far this year.
Strategy last held 847,363 bitcoin per its website, which would be worth around $50.4 billion based on bitcoin's Sunday closing value of $59,577.82.
Broader Crypto Market Trends
Bitcoin was last trading near its 20-month lows at $59,897.5, having halved in value from its all-time high of $126,223.18 in October last year.
Crypto markets have been in doldrums this year amid heightened market volatility, investor hype around expected big IPOs and persistent outflows from exchange traded funds (ETF) that track the assets.
(Reporting by Shashwat Chauhan in Bengaluru; Editing by Devika Syamnath)
