With bitcoin mired in a months-long downturn, Strategy’s sharp sell-off is the clearest signal yet of how the bitcoin treasury model could fare under sustained pressure. Notably, it comes at a time when Strategy’s stock is increasingly reflecting not only bitcoin’s price, but the company’s ability to maintain its valuation premium and attract fresh capital. Strategy just posted its worst week since November 2022, plunging 24% amid a crypto sell-off partly triggered by its own small but symbolic bitcoin sale , which undermined its “never sell” narrative that has helped its stock trade at premium to the cryptocurrency. Bitcoin, meanwhile, is down 50% from its October peak and could fall as low as $40,000 before recovering, according to Wolfe Research. Levers to pull Investors often cite Strategy’s ability to survive the 2022 bear market without liquidating bitcoin as a key part of its bull case. Since 2024, however, a new cohort of bitcoin treasury companies has emerged, with dozens of firms mimicking Strategy’s model. As a result, Strategy isn’t just the largest bitcoin treasury holder, it’s also the template for an industry of imitators whose business models depend on shares trading above the value of the bitcoin they hold. Investors are watching the current sell-off as a referendum on the bitcoin treasury trade beyond Strategy. “When Strategy comes under fire, bitcoin itself comes under fire,” Benchmark analyst Mark Palmer. “But under those circumstances, Strategy has the ability to make strategic decisions that will allow it to continue to create value for its shareholders. Others that are simply following Strategy’s lead don’t necessarily have those sorts of levers to pull, and so they’re dependent upon the broader market for their price path, and that’s a huge difference.” MSTR YTD mountain Strategy stock performance year to date Over the years, Strategy has repeatedly raised capital through equity sales, convertible debt and other financing structures to expand its bitcoin holdings. Its $900 million USD reserve provides additional flexibility. The company has also indicated that it could eventually generate income from its bitcoin through derivative strategies, though it hasn’t pursued that approach so far. There are 198 public companies that hold bitcoin, according to BitcoinTreasuries.net . Some simply hold bitcoin on their balance sheet but are still focused on their core business. Tesla and Block are in this camp. Others are treasury companies whose sole purpose is to accumulate bitcoin, and among that cohort, strategies differ. This latest swoon will root out which of the bitcoin-focused digital asset treasury, or DAT, companies can weather a prolonged downturn. “There’s not a lot of room to maneuver when a DAT is trading at a steep discount to market-to-net asset value,” Palmer said. While Strategy has continued to trade at a premium to the value of its bitcoin holdings, many DATs are already trading below the value of their underlying assets and struggling to differentiate themselves. Strategy sits alongside a small group of larger bitcoin treasury companies, such as Twenty One and Strive , that continue to trade with a sustained premium to their bitcoin holdings. A second cohort of newer entrants including ProCap Financial and Nakamoto Holdings are trading at a discount or have yet to establish durable premiums. Spotlight on financing The downturn could also expose differences in how aggressively companies financed their bitcoin purchases. “You’re really going to see differentiation,” said Sam Callahan, director of bitcoin strategy and research at OranjeBTC, a Latin American bitcoin treasury firm. “… It’s going to separate those that were managing their treasury with discipline and prudence in terms of the leverage that they used.” “Some companies are going to be selling from points of stress and others are going to be selling for strategic reasons,” he said. Others could have enough financial flexibility to continue buying, Callahan added, especially at low prices. For example, on Strategy’s first-quarter earnings call last month management announced that it “will sell bitcoin when it’s advantageous to the company,” a move that highlighted its evolution from a stockpiler to more of an active manager of its bitcoin holdings. “People really underestimate the optionality that [Strategy] has to serve as dividends,” Callahan said. “It’s actually more resilient than it was in 2022 in many ways.” In that last bear market, bitcoin ETFs had not yet launched and Strategy, then called MicroStrategy, was widely used as a proxy for bitcoin exposure — which made the “never sell” mantra it recently broke with more important to investors. Strategy has since changed its business model to focus more on issuing “digital credit,” essentially borrowing against their bitcoin holdings and packaging it into debt-like instruments that give investors indirect bitcoin exposure with interest and repayment terms instead of direct ownership. “Strategy was engineered to operate through volatility and benefit from market dislocations,” Saylor told CNBC. “Our capital structure, liquidity and long-term orientation allow us to stay focused on disciplined bitcoin accumulation and Bitcoin-per-share accretion over time. We believe bitcoin treasury companies represent an important new category in the capital markets. As the market develops, the strongest companies will be those designed to manage volatility, access capital responsibly, and create long-term value for shareholders.”