Michael Saylor’s Bitcoin-fueled business model is cracking under pressure. The 15% drop in Strategy’s stock this month has wiped out the premium the company once enjoyed over its Bitcoin holdings, pulling the rug from under a plan that shaped a whole new class of corporate crypto buyers. The firm’s approach, using its balance sheet as a vehicle to buy Bitcoin, is now being tested harder than ever as investors grow impatient, and competitors multiply. The damage started with Strategy’s new financing plan. Saylor introduced preferred stock as the company’s go-to method for buying more Bitcoin. The problem? Barely anyone wanted it. A recent sale pulled in only $47 million, far below what Saylor had aimed for. To cover the gap, the company flipped back to selling regular shares, even though it previously said it wouldn’t do that. Strategy backpedals as premium shrinks and critics speak out Saylor’s entire playbook inspired a long list of treasury copycats. Today, firms that followed that same model hold over $108 billion worth of Bitcoin, which is 4.7% of the total supply tracked by BitcoinTreasuries.net. If Strategy’s premium collapses, the whole framework behind treasury-style Bitcoin buying could fall apart. Jake Ostrovskis, principal analyst at Wintermute’s OTC Desk, said the shrinking premium “is a natural reaction to competition and alternative ways for traders to gain exposure to crypto.” But the deeper issue, according to Jake, is the company’s decision to walk back its pledge not to issue shares when the stock trades below 2.5 times its net asset value. That sudden change is now forcing investors to rethink everything. From that point, the stock stopped trading on earnings and instead started following the company’s crypto holdings, with a metric called mNAV guiding valuations. That multiple has never been stable. It tanked during the Terra-Luna collapse, then jumped to 3.4 after Donald Trump won reelection. Now, in 2025, it sits at 1.57. The twist is that this crash didn’t happen during a downturn. In late July, the company said it wouldn’t issue shares if the mNAV multiple dropped under 2.5, except in rare cases. Two weeks later, that guidance was rolled back, and on August 25, nearly 900,000 new shares were sold. Online, some investors called it a breach of trust. Issuing shares at that level could create a loop: falling stock hurts Bitcoin-buying power, confidence drops, and the cycle repeats. Saylor didn’t explain the change. Instead, he posted an AI photo of himself walking past a giant bear. The company didn’t respond to questions. His backers say the flexibility could help if Strategy joins the S&P 500 or if Bitcoin jumps again. Other firms struggle as ETFs rise and Bitcoin sentiment shifts But Strategy’s problems aren’t unique. Capriole Investments says almost a third of public companies with Bitcoin on their balance sheets now trade below the value of those holdings. Small firms are at higher risk. They don’t have much room to raise cash, and many use convertible notes, which come with maturity deadlines and interest costs. Strategy plans to eliminate all convertible notes within four years. It wants to use only preferred stock instead, a type of security that doesn’t require repayment. Most smaller firms can’t follow that path. They don’t have the same scale or reputation to pull it off. There’s also more competition now. Over the past year, influencers and politically connected individuals have rushed into the market by forming crypto businesses through SPACs and reverse mergers. These outfits don’t have the same liquidity or staying power as Strategy, and many could get wiped out in a downturn. On top of that, spot Bitcoin ETFs are gaining traction. When they first launched, both ETFs and Strategy rode a wave of optimism after Trump’s win. But now, ETFs look cleaner. They give investors Bitcoin exposure without corporate risk, debt, or surprise dilution. Meanwhile, Ether-backed treasury companies have already committed more than $19 billion. Bitcoin has pulled back from its recent high but still holds institutional interest. The issue is that many new treasury firms bought Bitcoin above $100,000 and don’t have any real business to fall back on if the market flips. Get up to $30,050 in trading rewards when you join Bybit today
