In a thread on August 19th, analyst Miles Deutcher argued that the market for micro-tactics has been proven, the Net Asset Value (MNAV) premium (Michael Saylor’s Bitcoin Acquisition Flywheel core gear) has been rapidly compressed, weakening the feedback loop that surpasses Bitcoin through most of the company. “Michael Saylor has built the craziest BTC flywheel in history, but his purchasing power is beginning to fade. The market is now asking, “Is the BTC Treasury bubble finally flying out?” ”
MicroStrategy’s Bitcoin Premium is declining
Deutscher is based on a discussion of how investors currently value MicroStrategy. “Micro Strategy has a legacy software business, and people are overlooking that this continues to generate revenue. But Micro Strategy has basically become a company whose valuation is primarily affected by BTC holdings.
In fact, MNAV multiples are paid by premium investors over the company’s look-through Bitcoin value to access leveraged BTC exposure via MSTR. “A ~1.58x MNAV means the market is paying a 58% premium to BTC.” According to Deutscher, that premium was “a 3.4x MNAV” when Bitcoin was on a surge, but “now it’s down 1.58x. Demand is slowing.” In other words, what was a strong flywheel is a high premium that allows for cheaper equity issuances that fund more Bitcoin purchases, continuing to rise in NAV and rise in premiums, spinning with much less torque.
That shift intersects with controversial corporate behavior. “Recently, Saylor has sparked controversy by modifying the MSTR equity ATM guidance to reveal that it provides ‘flexibility’ when implementing capital market strategies. “The meaning of this claims that increasing the flexibility of issuance “may dilute shareholder value and increase financial risks associated with Bitcoin volatility.”
He points out that “the market is very divided.” On the constructive side, he cites @Thedefivillain’s take, “slow supply in Saylor’s hands”, “larger leverage to justify MNAV”, and “lower BTC purchase pressure”, and the reason could ultimately be benign.
However, critics are concerned about the possibility of a ‘death spiral’. By removing 2.5x MNAV Safeguard for share issuance, MicroStratea can sell stocks with a low rating. “Reflexivity in Deutscher’s narrative is a risk factor for surgery. “Reflectiveness is a brutal force that operates in both directions.”
Hypothetical scenario
Next, Deutscher sets up a stress test to explain how its reflexivity chews when Bitcoin becomes weaker and when premiums are compressed to parity. “If BTC prices fall 20% and MicroStrategy’s MNAV falls to 1.0 times, the stock could plummet by 46.5%.”
He wanders arithmetic from a conceptual baseline of $115,000 per BTC, dropping to $92,000 with a 20% decrease. MicroStrategy’s 226,331 BTC calculates the look-through NAV to $20.82 billion.
To adjust the MNAV exactly 1.0 times, he returns to enterprise value and market capitalization in that scenario. “Starting with an enterprise value of $208.2 billion, we will subtract MicroStrategy’s $2.2 billion debt and add cash.
The conclusion he draws from the modelled path (BTC -20% to 92,000, MNAV → 1.0X, MSTR market capitalization -46.5%) is that MicroStrategy’s equity remains a leveraged device with far worse outcome pathways than Bitcoin itself when premiums are squeezed.
Beyond scenario mathematics, Deutscher links recent spot price actions to changes in marginal demand. “I think the recent weakness of BTC is due to the market price of the revised ATM guidance, which is attributable to the market.”
In parallel, he highlights how the proliferation of spot ETFs erodes the original rationale for paying the massive premium listed to own BTC “beta”.
With his framing, the MNAV premium itself “had the market view that MST outweighs BTC.” As that view faded, premiums do not appear to be permanent structural features, but rather as belief-sensitive variables. “In my opinion, MSTR Premium is essentially gambling. I bet on three vulnerable things: unwavering market trust, open capital markets and sailor leadership. If any of those pillars start to wobble, the premium will collapse.”
At the time of pressing, BTC was traded for $113,624.
Featured images created with dall.e, charts on tradingview.com
