6.71 million Bitcoin stress test: The mNAV trap behind institutional leverage strategies

【Crypto World】A software company, Strategy Shares, is now feeling a bit uneasy. Holding over 670,000 Bitcoins, its stock price is plunging along with the coin’s price—essentially turning into a Bitcoin leverage instrument disguised as a corporate entity.

Recently, Michael Saylor made his move again, purchasing 10,645 Bitcoins for $1 billion, continuing to add to his position. The more holdings, the bigger the gamble. This approach may seem like a wise decision in a bull market, but once the trend reverses, problems arise.

Where is the real danger? It’s the net asset value indicator, also called mNAV. If this number drops below 1, the company’s financing could stall, leading to two options: either be forced to dilute shares or sell Bitcoin to stop the bleeding. At that point, not only shareholders will suffer, but the market could also be impacted.

So the key now is how long this mNAV can hold up. The more volatile Bitcoin is, the easier this red line is to cross.