MicroStrategy's situation worsens as its mNAV drops to new lows

Source: CritpoTendencia Original Title: The Strategy situation worsens as its mNAV drops to new lows Original Link: On Monday, Bitcoin’s price experienced a new plunge to $85,000 per coin amid fears of an imminent rate hike in Japan. As a result, MicroStrategy’s situation significantly worsened. This is reflected in the retreat to historic lows in its enterprise value (EV) compared to its Bitcoin asset value (NAV).

The drop in Michael Saylor’s company’s mNAV constitutes a formidable negative blow that again puts the company at risk. In this regard, this metric measuring company value reached historic lows of 1.10.

Curiously, this decline occurred a few hours after the company announced a new massive Bitcoin purchase. The purchase was nearly $1.000 million and was the second of such size in a short period. With this, Saylor’s firm aims to project a positive image regarding its ability to access capital amid a bear market.

However, the collapse of Bitcoin’s price on Monday became a sudden cold shower for the company’s recovery aspirations. With the new decline in mNAV worsening MicroStrategy’s situation, fears of a possible sale of part of its bitcoins again become the center of discussions.

Will MicroStrategy’s situation worsen in the short term?

Treasury companies with enormous exposure to cryptocurrencies are exposed to token price fluctuations. This suggests that it is very likely that MicroStrategy’s situation will worsen in the coming days. The expected rate hike by the BoJ becomes the main bearish element on the horizon.

In the three previous rate hikes in Japan, Bitcoin reacted downward with ranges between -20% and -30%. This raises fears that the current measure by that central bank could lead to a collapse in the coin’s price to the $70,000 range per unit.

This would become a greater pressure element on Michael Saylor’s company. The company’s total treasury in BTC has an investment value of just over $74,000, meaning that a potential drop in BTC to those levels would leave unrealized losses for MicroStrategy.

As can be seen, MicroStrategy’s situation is not entirely optimistic, which is reflected in investor abandonment. On Monday, the company’s stock on the stock exchange fell by -8.14%, leaving it at $162 per unit.

Phong Le defends the company’s Bitcoin strategy

Despite this discouraging outlook, MicroStrategy CEO Phong Le maintained his optimism about the Bitcoin strategy. During an interview, the executive emphasized that the company’s vision is focused on the long term. In this regard, the company may even outperform Bitcoin’s returns over longer periods.

In his words, Le highlighted Bitcoin as a generational, macroeconomic, and capital markets asset. Essentially, this vision can be interpreted as the company’s leadership viewing the 5.9% drop in mNAV within 24 hours as something ephemeral compared to the long-term vision based on BTC.