Strategy's mNAV Cracks Below 1 as Analysts Warn of Liquidity Crisis

Strategy's Market-to-Net Asset Value (mNAV) dropped below 1 for the first time in its history, breaking the premium that powered its Bitcoin-buying model. A reading below 1 means the market is not willing to pay more for Strategy's shares than the value of the BTC held on its balance sheet.

Strategy holds 847,363 BTC worth around $50.7 billion, but only has $1.4 billion in cash and faces annual dividend obligations of $1.71 billion. This leaves the company with an estimated 9.8 months of coverage in cash, versus nearly 30 years if measured against its BTC holdings.

Analyst Axel Adler Jr. noted that Strategy's debt stands at $6.75 billion with a net leverage of 11%, and preferred securities total $15.5 billion. If Michael Saylor sells the Bitcoin he has pledged to hold, there are less than 10 months of runway for the company.

Grayscale Head of Research Zach Pandl expects Strategy to increase its STRC dividend by around 50 basis points, but would like to see it sell at least $3 billion in BTC to cover nearly all of its cash obligations over the next two years.