Is Michael Saylor's Bitcoin bet backfiring? Strategy stock takes a hit

Strategy Stock Falls 15% Amid Bitcoin Market Concerns Live Events Strategy’s Bitcoin Model Under Pressure FAQs as a Reliable and Trusted News Source Addas a Reliable and Trusted News Source Add Now! (You can now subscribe to our (You can now subscribe to our Economic Times WhatsApp channel : Billionaire Michael Saylor, once hailed as the bold architect of a new financial playbook, is now grappling with the risks that come from betting big on Bitcoin and was on the his firm's corporate balance sheet, as per a report.Shares of his company, Strategy Inc, formerly MicroStrategy, have fallen 15% this month alone, erasing much of the premium it long enjoyed over its Bitcoin holdings, as per Bloomberg. What was once a Wall Street darling, seen as the clearest bet on crypto through public markets, is now stirring fresh doubt and scrutiny.At the center of the concern is how Strategy is funding its continued Bitcoin purchases. Earlier this year, Saylor introduced a new form of preferred stock, designed to fuel the company’s ongoing crypto accumulation without diluting common shareholders. But appetite for the new offering has been underwhelming. A recent round raised just $47 million, far below expectations.ALSO READ: After birthday parade by US forces, now Trump may get a giant Navy boat parade to cheer him up Faced with the shortfall, Strategy turned back to issuing common shares, despite previously pledging not to dilute the stock at low valuations. On August 25, the company sold nearly 900,000 new shares, a move that has rattled investors and led to accusations of walking back promises.While some investors online saw this move as a breach of trust and issuing equity below mNAV now risks a negative flywheel: "falling stock weakens the ability to buy Bitcoin, eroding confidence, further driving down the premium," reported Bloomberg.However, Saylor dismissed the criticism online by posting an AI-generated image of himself walking past a giant bear, as reported by Bloomberg. Meanwhile, His supporters argued that maintaining flexibility may benefit the company should it gain inclusion in the S&P 500 or if Bitcoin booms, according to the report.ALSO READ: Explainer: US GDP data is now on blockchain - breaking down the Trump administration’s crypto shift Strategy was never just another tech stock. Since Saylor pivoted the company toward Bitcoin in 2020, it became a bold experiment: Could a corporate balance sheet be transformed into a permanent engine of demand for crypto? The company stopped trading based on earnings and instead became a leveraged bet on Bitcoin’s price, a model tracked closely by both fans and skeptics.For a time, it worked. Strategy’s market value often soared well above the value of its Bitcoin holdings, a phenomenon tracked via its market-value-to-net-asset-value ratio, or mNAV. At its peak, the mNAV multiple reached 3.4. Today, it sits at just 1.57. And worryingly for bulls, this compression comes not during a crypto downturn, but amid a broader boom.The stakes extend far beyond one company as Saylor’s playbook to raise debt and equity, buy Bitcoin, watch the market assign a premium, repeat, have inspired a wave of treasury firms that collectively hold more than $108 billion, or 4.7% of Bitcoin’s supply, Bloomberg reported, citing BitcoinTreasuries.net. If Strategy’s premium collapses, confidence in the model itself could unravel, reported Bloomberg.ALSO READ: Top AI Tools of 2025: Is ChatGPT still leading or is Gemini, Grok, DeepSeek taking over? Jake Ostrovskis, principal analyst on Wintermute’s OTC Desk, said that “The decreasing premium is a natural reaction to competition and alternative ways for traders to gain exposure to digital assets,” adding, “Additionally, walking back guidance around no share issuance under 2.5x mNAV has forced short-term reassessments of the corporate strategy,” as quoted by Bloomberg.The competition has certainly grown. New crypto vehicles, many launched by influencers or politically connected figures through SPACs and reverse mergers, are crowding into the space. But they often lack the scale or trading liquidity of Strategy, and could prove less durable in a downturn, as reported by Bloomberg.Jack Mallers, CEO of Twenty One Capital Inc, said that, “Is this market frothy? I think it is,” adding, “What we learned is, creating a Bitcoin treasury company is not a scarcity within itself. Anyone can register a business, attempt to go public and try to raise money to buy Bitcoin,” as quoted in the report.ALSO READ: How AI agents are taking control of your company — sharing secrets, making costly decisions, and deleting data His firm, Strategy Inc, is struggling after its stock dropped 15% this month, partly due to concerns about how it funds its Bitcoin buying spree.Yes. Many have copied the model of using corporate funds or capital markets to buy Bitcoin. Collectively, these firms now hold over $100 billion worth of BTC.