For years, Michael Saylor told the world he would never sell a single bitcoin.
Last week, his company sold 3,588 of them.
That's $216 million worth of bitcoin, gone, from a man who built his entire public persona on the idea that Strategy (the company formerly known as MicroStrategy) would hold its bitcoin forever, no matter what.
I've been saying for a long time that Strategy is one of the worst ways to get exposure to bitcoin.
Not because bitcoin itself is a bad asset… but because of what Saylor built on top of it.
Because what was initially a Bitcoinm treasury company is not a convoluted mess of financial engineering.
First Strategy raises money by selling stock and bonds… and uses that money to buy bitcoin. Meaning that as long as investors believe the stock is worth more than the bitcoin it holds, Strategy can keep selling new shares to buy even more bitcoin, and the whole cycle repeats.
Saylor even invented his own metric to track this, called mNAV. Think of it as a homemade ruler Strategy built to measure whether the market is willing to pay a premium for its stock over the value of the bitcoin sitting in its vault.
For a while this actually worked because that premium existed.
Investors paid up… Saylor bought more coins. The stock went higher.
It felt like magic, right up until the moment the market stopped playing along.
Because Strategy's stock is now down 75% over the past year.
More importantly the premium Saylor relied on has evaporated. At points recently, mNAV has actually dropped below 1, meaning the market values Strategy at a discount to its own bitcoin holdings.
By Saylor's own logic, that's the signal to start selling bitcoin and buying back the discounted stock instead. Which is exactly what the company has now started doing.
And here's where it gets worse. Even the mNAV ruler itself is bent.
When Strategy calculates its own value, it counts its debt and preferred stock at face value, the amount printed on the certificate, rather than what those securities are actually trading for in the market.
Right now, that debt trades at a real discount, and some of Strategy's preferred shares trade at nearly 30% below face value.
Plug in the real market prices instead of the printed ones, and Strategy's supposed premium mostly disappears.
On one recent day, the company's own website showed a small premium of 1.09. But Using real market prices for its debt and preferred stock, that number drops to roughly 1.04, and at other points it's dipped into an outright discount once you make the same adjustment.
This is a company measuring its own health with a ruler it built, calibrated in its own favor.
Strategy holds close to 4% of all the bitcoin that will ever exist. If it's forced to sell in size to cover its bills, that's not a rounding error for the bitcoin market. It's a genuine supply shock, and Saylor knows it, which is why the company just jacked up the dividend on its biggest preferred share class to 12% in a scramble to keep buyers interested.
None of this means bitcoin itself is broken.
It means Strategy was never really a clean way to own it. You were buying a leveraged, financially engineered wrapper around bitcoin, run by a man who insisted the wrapper would never need to unwind.
If you want bitcoin exposure, you can simply buy bitcoin. If you want some in a tax advantaged account, you can buy IBIT.
You don't need someone else's debt, preferred shares or homemade ruler standing between you and the asset.
Saylor built a machine that only worked in one direction. Now we're finding out what happens when it has to run the other way.
Oliver
P.S.