Bitcoin Is Surging, But Investors Are Still Worried About Bitcoin Treasury Companies. Here’s Why They’re Right.

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<a href="https://xpertsstudio.com/bitcoin-crypto-market-pumps-on-spot-demand/” title=”Bitcoin: Crypto Market Pumps on Spot Demand”>Bitcoin(CRYPTO: BTC) has had its best month since 2025, driven by a short squeeze and U.S. Treasury buybacks of long-term securities. It’s up 24% this month as of Aug. 28. This recent surge is welcome news for Bitcoin treasury companies, which carry significant amounts of Bitcoin on their balance sheets.

However, there’s still skepticism surrounding these companies. Case in point: Strategy(NASDAQ: MSTR), the company that holds the most Bitcoin, has an mNAV (market valuation relative to the Bitcoin it holds) of 1.06, down from 3.89 in late 2024. It used to trade at a hefty premium to its Bitcoin holdings. Now, you only pay $1.06 for every $1 of Bitcoin it owns.

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The low premium reflects less trust in the Bitcoin treasury model, and investors are right to be skeptical.

The Bitcoin treasury approach only works in one direction

First, let’s define what a Bitcoin treasury company is. Although many businesses own some Bitcoin, the term refers to companies whose primary purpose is to buy and hold the cryptocurrency. Tesla owns Bitcoin, but no one would call it a Bitcoin treasury company. Strategy, Twenty One Capital, and other companies that have adopted this approach focus entirely on Bitcoin accumulation.

These companies typically issue debt and equity to fund Bitcoin purchases. Strategy uses a flywheel method. When it trades at a premium to its underlying Bitcoin, it issues new shares and uses them to buy more Bitcoin. As a simple example, if Strategy has an mNAV of 2, it can buy $2 of Bitcoin for every $1 in shares that it issues.

This approach has worked well in previous bull markets. Ideally, the company’s premium and the price of Bitcoin both increase, leading to outsize returns that act similarly to a leveraged Bitcoin position.

It gets crushed in bear markets. The premium collapses as the price of Bitcoin falls, amplifying losses.

Buying Bitcoin isn’t a business model

The problem with Bitcoin treasury companies is that their business model doesn’t produce anything of value. They don’t sell any goods or services, or if they do, it’s a footnote compared to buying Bitcoin. For example, Strategy still has a software business, but it made just $247 million in revenue over the first six months of 2026.

Source: finance.yahoo.com