Is Wall Street crazy for choosing to buy MSTR stock at a 75% premium instead of buying 100,000 Bitcoin?

Written by: Will Owens, Galaxy

Compiled by: AididiaoJP, Foresight News

Companies that incorporate Bitcoin into their balance sheets have become one of the most talked-about narratives in the public market for 2025. Despite the fact that investors already have various direct ways to gain exposure to Bitcoin (such as ETFs, spot Bitcoin, wrapped Bitcoin, futures contracts, etc.), many still choose to gain exposure to Bitcoin risk by purchasing stocks of Bitcoin reserve companies that trade at a significant premium to Bitcoin's net asset value (NAV).

This premium refers to the difference between the company's stock price and the value of its Bitcoin holdings per share. For example, if a company holds Bitcoin worth $100 million and has 10 million shares outstanding, its Bitcoin NAV per share would be $10. If the stock price is $17.5, then the premium rate would be 75%. In this context, mNAV (i.e., the multiple of net asset value) reflects how many times the stock price is compared to the Bitcoin NAV, while the premium rate is the percentage after subtracting 1 from mNAV.

Ordinary investors may wonder: why can the valuations of such companies far exceed the value of their Bitcoin assets themselves?

Leverage effect and capital acquisition ability

The most important reason for the premium of Bitcoin reserve companies' stock prices over their Bitcoin assets may be that they can leverage through public capital markets. These companies can raise funds by issuing bonds and stocks to increase their Bitcoin holdings. Essentially, they act as high-β proxy instruments for Bitcoin, amplifying Bitcoin's sensitivity to market fluctuations.

The most commonly used and effective means in this strategy is the "At Market Issuance" ( ATM) stock issuance plan. This mechanism allows companies to gradually issue shares at the current stock price, causing minimal market impact. When the stock price is at a premium compared to the Bitcoin NAV, the amount of Bitcoin that can be purchased with each dollar raised through the ATM plan will exceed the dilution of Bitcoin holdings per share caused by the issuance. This creates a "per share Bitcoin holding appreciation cycle," continuously amplifying Bitcoin exposure.

Strategy (formerly MicroStrategy) is the best example of this strategy. Since 2020, the company has raised billions of dollars through convertible bond offerings and secondary equity fundraising. As of June 30, Strategy holds 597,325 bitcoins (approximately 2.84% of the circulating supply).

These types of financing instruments are only applicable to publicly listed companies, allowing them to continuously increase their Bitcoin holdings. This not only amplifies Bitcoin exposure but also creates a compound narrative effect, where each successful fundraising and increase in Bitcoin holdings reinforces investors' confidence in this model. Therefore, investors buying MSTR stock are not only purchasing Bitcoin but are also buying the "ability to continuously increase Bitcoin holdings in the future."

How big is the premium range?

The table below compares the premium situation of some Bitcoin reserve companies. Strategy is the publicly traded company that holds the most Bitcoin globally and is the most well-known representative in this field. Metaplanet is the most aggressive Bitcoin accumulator (its transparency advantages will be detailed later). Semler Scientific entered this trend relatively early and began purchasing Bitcoin last year. Meanwhile, France's The Blockchain Group indicates that this trend is spreading from the United States to the global stage.

The NAV premium rates of some Bitcoin reserve companies (as of June 30; assuming a Bitcoin price of $107,000):

Although the premium rate of Strategy is relatively moderate (about 75%), the premium rates of smaller companies like The Blockchain Group (217%) and Metaplanet (384%) are significantly higher. These valuations indicate that market pricing not only reflects the growth potential of Bitcoin itself but also incorporates considerations of capital market access, speculative space, and narrative value.

Bitcoin Yield: Key Indicators Behind the Premium

One of the key indicators driving the stock premiums of these companies is the "Bitcoin Yield." This metric measures the growth of each company's Bitcoin holdings per share over a specific period, reflecting the efficiency of their ability to increase Bitcoin holdings through fundraising without causing excessive equity dilution. Among them, Metaplanet is known for its transparency, and its official website provides a [real-time Bitcoin data dashboard] that dynamically updates Bitcoin holdings, Bitcoin per share, and Bitcoin yield.

Source: Metaplanet Analytics ()

Metaplanet has made public its proof of reserves, while other companies in the industry have yet to adopt this practice. For example, Strategy has not implemented any on-chain verification mechanisms to prove its Bitcoin holdings. At the "Bitcoin 2025" conference in Las Vegas, [Executive Chairman Michael Saylor explicitly opposed] public proof of reserves, stating that this move would become a "bad idea" due to security risks: "This would undermine the safety of issuers, custodians, exchanges, and investors." This viewpoint is controversial, as on-chain proof of reserves only requires the public key or address, rather than private keys or signature data. Since Bitcoin's security model is based on the principle of "public keys can be shared securely," publicly sharing wallet addresses does not jeopardize asset security (this is inherent to the Bitcoin network). On-chain proof of reserves provides investors with a direct way to verify the authenticity of a company's Bitcoin holdings.

What will happen if the premium disappears?

The high valuation of Bitcoin reserve companies still exists in a bull market environment characterized by rising Bitcoin prices and strong retail enthusiasm. There has yet to be any Bitcoin reserve company whose stock price has long been below NAV. The premise of this business model is the continuous existence of a premium. As [VanEck analyst Matthew Sigel pointed out]: "When the stock price drops to NAV, equity dilution will no longer be strategically meaningful and will turn into value extraction." This statement directly points to the core vulnerability of the model, where ATM stock issuance plans (the capital engines of these companies) essentially rely on stock price premiums. When the stock price is above the per-share Bitcoin value, equity fundraising can realize an appreciation of the per-share Bitcoin holdings; however, when the stock price drops near NAV, equity dilution will weaken rather than enhance shareholders' Bitcoin exposure.

This model relies on a self-reinforcing loop:

Stock price premium supports fundraising capability

Funds raised to increase Bitcoin holdings

Bitcoin accumulation strengthens the company's narrative

Narrative value maintains stock price premium

If the premium disappears, the cycle will be broken: financing costs will rise, Bitcoin accumulation will slow down, and narrative value will weaken. Currently, Bitcoin reserve companies still enjoy advantages in capital market access and investor enthusiasm, but their future development will depend on financial discipline, transparency, and the ability to "increase the per-share Bitcoin holding" (rather than simply accumulating total Bitcoin volume). The "option value" that gives these stocks attractiveness during a bull market may quickly turn into a burden in a bear market.