Bitcoin Surges Ahead as Strategy Lags: Analyzing the Growing Divergence

By: Aditi

Published on: May 28, 2025

Introduction

The cryptocurrency market has witnessed a significant divergence between Bitcoin (BTC) and Strategy (MSTR), a prominent corporate holder of Bitcoin. While Bitcoin has surged nearly 13% this month, approaching the $110,000 mark, Strategy’s stock has declined by 3%, trading around $372. This growing gap raises critical questions about market sentiment, corporate Bitcoin adoption, and Strategy’s evolving funding approach.

Understanding the Divergence: Bitcoin vs. Strategy

Bitcoin’s Bullish Momentum

Bitcoin’s upward trajectory continues to defy expectations, fueled by:

• Institutional adoption – Increasing corporate and ETF investments.


• Macroeconomic factors – Inflation hedging and global liquidity trends.


• Market sentiment – Renewed optimism following regulatory clarity.

Strategy’s Underperformance

Despite being a pioneer in corporate Bitcoin holdings, Strategy’s stock has lagged. Key reasons include:

1. 
   

   Compressed Market Premium (mNAV)

   
   
   
   
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     Strategy’s multiple to net asset value (mNAV) has dropped to 1.80, one of its lowest levels in a year.

     
     
   
   
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     mNAV Calculation: Enterprise Value (EV) / Market Value of Bitcoin Holdings.

     
     
   
   
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     A lower mNAV reduces the company’s ability to issue new equity without diluting shareholders.

     
     
   
   
   
   


2. 
   

   Increased Competition in Corporate Bitcoin Holdings

   
   
   
   
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     Over 113 public companies now hold Bitcoin (per BitcoinTreasuries.net), up by 11 in the last 30 days.

     
     
   
   
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     Strategy’s first-mover advantage is diminishing as more firms replicate its strategy.

     
     
   
   
   
   


3. 
   

   Shift in Funding Strategy

   
   
   
   
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     Strategy’s latest 4,020 BTC purchase was financed through:

     
     
     
     
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       81.7% common stock

       
       
     
     
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       15.9% STRK (convertible preferred shares)

       
       
     
     
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       2.4% STRF (Series B preferred shares)

       
       
     
     
     
     
   
   
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     This suggests a move toward alternative financing to minimize dilution amid a compressed mNAV.

     
     
   
   
   
   

Why Is Strategy’s mNAV Compression Significant?

Impact on Shareholder Value

• A lower mNAV means reduced market premium over Bitcoin holdings.


• Limits equity issuance capacity, forcing reliance on convertible debt and preferred shares.


• Could signal waning investor confidence in Strategy’s unique Bitcoin leverage strategy.

Historical Context

• At its peak, Strategy’s mNAV exceeded 2.5x, reflecting strong market optimism.


• The current 1.80x mNAV suggests market recalibration as Bitcoin adoption becomes mainstream.

Strategy’s Evolving Bitcoin Accumulation Approach

Recent Bitcoin Purchases

• May 2025 Purchase: 4,020 BTC (smallest since May 5).


• Funding Mix:


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    Primarily common stock (81.7%).

    
    
  
  
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    Increasing use of preferred securities (STRK & STRF).

    
    
  
  
  
  

Strategic Implications

• Reduced Dilution: Using preferred shares helps avoid excessive equity dilution.


• Flexible Capital Raising: Allows continued Bitcoin accumulation even with a compressed mNAV.


• Market Adaptation: Reflects a shift from aggressive equity-based funding to a balanced financing approach.

Market Sentiment: Is Strategy Losing Its Edge?

Bullish Indicators

• Still holds a substantial Bitcoin treasury.


• Maintains mNAV above 1x, preserving some premium.


• Continues to innovate in corporate Bitcoin strategy.

Bearish Concerns

• Rising competition from other Bitcoin-holding firms.


• Declining mNAV suggests reduced market enthusiasm.


• Dependence on Bitcoin’s price—any downturn could further pressure Strategy’s stock.

Conclusion: What’s Next for Bitcoin and Strategy?

Bitcoin’s Outlook

• Continued growth likely amid institutional adoption and macroeconomic trends.


• Potential new all-time highs if bullish momentum sustains.

Strategy’s Future

• Needs to reinvent its value proposition beyond just holding Bitcoin.


• May explore new revenue streams, such as Bitcoin-related financial services.


• Investor confidence will hinge on mNAV stability and funding efficiency.

Final Thoughts

While Bitcoin surges ahead, Strategy faces structural challenges in maintaining its premium. The shift toward alternative financing is a smart adaptation, but long-term success will depend on innovation beyond mere Bitcoin accumulation.