Bitcoin Treasury Companies Face Skepticism Amid Market Volatility
Bitcoin has experienced its best month since 2025, driven by a short squeeze and U.S. Treasury buybacks of long-term securities.
The cryptocurrency is up 24% this month as of August 28, which is welcome news for Bitcoin treasury companies that hold significant amounts of Bitcoin on their balance sheets.
However, investors remain skeptical about these companies, citing the example of Strategy (MSTR), the company that holds the most Bitcoin. Its market valuation relative to its Bitcoin holdings (mNAV) has dropped from 3.89 in late 2024 to 1.06, indicating a loss of trust in the Bitcoin treasury model.
The problem with Bitcoin treasury companies is that their business model doesn't produce anything of value. They issue debt and equity to fund Bitcoin purchases, which can be profitable during bull markets but amplifies losses in bear markets. For instance, Strategy's premium collapsed as the price of Bitcoin fell, leading to significant losses.
Investors who want exposure to Bitcoin may find it safer to buy the coin directly or invest through Bitcoin ETFs rather than relying on companies that focus solely on accumulating Bitcoin.