Recently, Strategy made headlines by acquiring a substantial amount of Bitcoin. The firm purchased 430 BTC on August 17, investing upwards of $51 million at an average price of approximately $119,666 per coin. This strategic move brought their total Bitcoin holdings to 629,376 BTC, valued at an impressive $46.15 billion at current market rates.

The company averages a buy price of $73,320 per Bitcoin and reports a remarkable 25% increase in the value of their crypto holdings so far this year.

Simply put, these figures are monumental. When examined more closely, they highlight the significant implications of policy changes for both investors and critics alike.

Understanding Equity Strategy and mNAV Metrics

Reports indicate that Strategy plans to utilize a metric called mNAV—or market net asset value—to guide their decisions regarding stock issuance and Bitcoin purchases.

If the stock trades at more than four times the mNAV, the company intends to aggressively sell new shares to acquire additional Bitcoin.

In situations where the stock price falls between two-and-a-half and four times mNAV, the firm will still issue shares, but only under favorable circumstances.

Once the multiple drops below two-and-a-half, Strategy could potentially sell shares to manage debt, pay dividends on preferred equity, and fulfill other obligations.

Notably, should shares fall below the 1x mNAV threshold, the firm may opt to borrow funds to buy back its stock.

To provide context, at 4x mNAV, the estimated stock price would hover around $1,000, while at 2.5x it could be about $600, and at 1.0x approximately $210. Presently, shares trade around $344, with an mNAV around 1.58x.

Concerns arise regarding a possible negative feedback loop for @MicroStrategy:

– Selling $MSTR shares to pay off debt
– Further dilution for shareholders
– Declining share value
– Increasing interest payments
– Potential need for $MSTR to liquidate Bitcoin to cover costs

What are your thoughts on this scenario?

— Dom | EasyA (@dom_kwok) August 19, 2025

Expert Insights on Potential Downward Trends

Dom Kwok, co-founder of EasyA, raises alarms regarding a potential “downward spiral” for the firm. According to him, the company risks entrapment through consistent share issuance that dilutes current holders’ stakes.

This dilution can, in turn, exert downward pressure on the share price. A plummeting stock price necessitates further sales of shares to generate cash, initiating a cycle that could escalate rapidly.

Such a scenario illustrates a straightforward mathematical problem that becomes increasingly complex and painful in a volatile market. Independent analysts have echoed these concerns, indicating a shared trepidation among many.

The Implications of Share Dilution

Strategy’s approach to balancing its books hinges on one core belief: continuously acquiring Bitcoin. With over 629,376 BTC, the company boasts the largest corporate Bitcoin reserve globally, lending it significant authority when market prices surge.

However, the need to issue stock in order to finance further Bitcoin purchases raises critical structural concerns for the treasury. The firm’s average acquisition price of $73,320 indicates that there is still potential for profit, but the direct connection between share dilution and Bitcoin acquisition means risks abound.

Should conditions such as earnings, interest expenditures, or investor sentiment shift negatively, the mathematics could quickly turn unfavorable.

Featured image sourcing from BestHDWallpaper.com, chart by TradingView.