Strategy’s Bitcoin Gameplan Faces Dark Outlook As Expert Warns Of ‘Spiral Of Doom’

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On the fateful day of August 17, Strategy, in a move reminiscent of a gambler doubling down at a roulette table, acquired 430 Bitcoin, parting with a staggering $51 million, each coin costing an average of $119,666. This audacious act swelled their total to a jaw-dropping 629,376 BTC, a treasure trove now valued at approximately $46.15 billion-if one dares to believe the current prices hold.

With an average purchase price of $73,320 per Bitcoin, the company boasts a 25% increase in its crypto holdings this year. Ah, the sweet scent of profit! But let us not be deceived by mere numbers; they are colossal, yes, but they also serve as a reminder that every minor adjustment in policy now carries the weight of a thousand expectations from both investors and critics alike.

Equity Guidance And mNAV Rules

In a twist of fate, Strategy has decided to employ a measure known as mNAV-market net asset value-to navigate the treacherous waters of stock issuance and Bitcoin acquisition. If MSTR trades above four times mNAV, the firm will unleash a torrent of new shares, all in the name of buying more Bitcoin. A veritable fire sale!

Should the stock hover between two-and-a-half and four times mNAV, shares will still be issued, but only when the stars align favorably. And if the multiple plummets below two-and-a-half, Strategy might resort to selling shares to cover debts, pay dividends, and fulfill other obligations. A delightful game of financial musical chairs!

Reports suggest that if shares ever dip below 1x mNAV, the company could resort to borrowing money to buy back its own stock. A true testament to the adage: when in doubt, just dig deeper into the hole!

For context, at 4x mNAV, the implied price would be around $1,000, at 2.5x roughly $600, and at 1.0x about $210. Today, the stock flounders near $344, with an mNAV of approximately 1.58x. A precarious balance, indeed!

Potential spiral of doom looming for @MicroStrategy:

– sell $MSTR shares to service debt

– dilute shareholders further each time

– shares become worth less

– interest payments mount

– $MSTR sell its bitcoin to pay interest

How do you think this ends? 🤔

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

Experts Warn Of A Downward Spiral

According to the ever-astute Dom Kwok, co-founder of EasyA, this grand plan teeters on the edge of a “spiral of doom.” He cautions that the incessant issuance of shares dilutes the value for existing holders, a fate worse than death for any investor.

As the share price tumbles, the company finds itself compelled to sell even more stock to raise cash. A vicious cycle, indeed! Over time, this mathematical conundrum can spiral out of control, much like a runaway train on a downhill track.

It is a simple arithmetic problem that transforms into a nightmare when the markets begin to tremble. Reports indicate that this fear looms large in the minds of many independent analysts, a specter haunting the corridors of finance.

How Share Dilution Could Escalate

Strategy’s balance sheet maneuvers are intertwined with a core belief: to keep accumulating Bitcoin and hold it tight. Their 629,376 BTC stands as the largest corporate reserve known to man, bestowing upon the company a semblance of credibility when prices soar.

Yet, the act of buying more Bitcoin through stock issuance shackles the treasury to the whims of the share market. The company’s average buy price of $73,320 still leaves room for gains, but the connection between stock issuance and Bitcoin acquisition raises a structural dilemma. A precarious dance on the edge of a cliff!

If earnings, interest costs, or investor sentiment take a turn for the worse, the math could flip faster than a pancake on a Sunday morning. 🍳

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2025-08-21 01:16