MSTR One of the major headwinds that MSTR faces is the "Strategy" Saylor is using is old and outdated. Back in 2020 — when Saylor declared the "Bitcoin Standard Era" — there were no ETFs available that gave exposure to BTC. Retail investors looking for BTC exposure without owning it directly flocked to the stock, driving the price up to the point that the NAV expanded to well above the value of MSTR's Bitcoin holdings.
Saylor saw an opportunity to exploit this pricing gap and pounced, creating a self-reinforcing feedback loop of selling shares and buying more bitcoin.
The problem is that MSTR does not operate in a vacuum. The market has caught on to Saylor's sleight of hand and now offers a host of products that are available to replicate Saylor's "Strategy", except with far less risk exposure.
For example, BITX provides 2x exposure to the daily price movements of BTC, with far less risk and overhead as compared to MSTR. Saylor is a loose cannon with a shady past while BITX is a highly regulated ETF with strict oversight rules.
If you read the prospectus for MSTR or their SEC filings — where lawyers are required to sign off on risk exposure disclosures — MSTR has identified Bitcoin-centric ETFs as a major threat to their business model. Management is relying on less sophisticated investors buying their stock at a premium to BTC holdings as opposed to buying safer ETFs that offer comparable exposure. That's not exactly a complimentary way to describe your shareholders.
The more that investors are lured to safer and non-dilutive Bitcoin ETF products, and the more that Saylor continues to dilute the shares, the more the NAV will continue to contract.
It's a new feedback loop, except it's working in the opposite direction this time. Common sense says life is normally symmetrical that way when things get too far out of balance one way or the other.
