TL;DR:
- Strategy (MSTR) has accumulated seven consecutive months of losses and begins February with an additional 7% drop.
- The performance gap between the stock and the price of Bitcoin has reached critical levels not seen since 2021.
- The multiple to net asset value (mNAV) remains just above 1, allowing for limited BTC purchases.
Strategy, the world’s largest institutional Bitcoin holder, is at a critical juncture in the stock market. As February begins, the decline of Strategy shares and Bitcoin intensifies, putting the firm on track for its eighth consecutive month in freefall.
Currently, shares are trading near $141, representing a plunge of at least 75% from their November 2024 all-time highs. Strategy continues its accumulation policy, but the market has severely punished its valuation relative to its digital reserves.
This 8-month streak is the longest since the 2022 bear market, when the firm recorded its worst annual performance. However, the speed of the current descent has created a worrying disconnection between the price of the underlying asset and the company’s market capitalization.
Market Disconnection and the NAV Multiple Challenge
The 35% performance gap separating MSTR’s decline from that of Bitcoin—which has only shed 40% from its highs—is an alarming figure for analysts. Consequently, investors are showing less willingness to pay high premiums for the indirect exposure the company offers.
Nevertheless, the multiple to net asset value (mNAV) still stands at 1.09, which technically allows the firm to continue issuing shares to buy more BTC. However, if this indicator falls below unity, Strategy would be forced to pause its acquisition strategy indefinitely.
In summary, Strategy’s immediate future depends on a sustained recovery in the price of the digital asset. As long as volatility persists, pressure on the shares will continue, limiting the board’s ability to execute massive purchases as in previous cycles.
