Key Takeaways
- As Bitcoin climbs, stocks tied to BTC holdings are rallying, but dilution risk is rising.
- VanEck’s Matthew Sigel warns that companies trading near NAV may harm investors by issuing more shares.
- Sigel’s proposed safeguards include pausing share issuance, launching buybacks, and aligning executive pay with NAV growth.
Bitcoin is climbing again — and so are stocks of companies holding it on their balance sheets.
For retail investors, buying shares like MSTR or MARA is a smart way to amplify Bitcoin exposure, like riding the wave with built-in leverage.
But there’s a growing risk that could catch many off guard, even if BTC keeps ripping higher.
Which is why Matthew Sigel, Head of Digital Assets Research at VanEck, is sounding the alarm.
When these stocks trade too close to their net asset value (NAV), companies may continue issuing new shares, not to create value, but to buy more Bitcoin.
And that, he warns, can erode shareholder value fast.
What Is the Bitcoin NAV Trap?
NAV is the value of a company’s Bitcoin holdings divided by its total number of shares.
When a company trades well above NAV, it can issue new shares at a premium and use the proceeds to buy more BTC, often creating value for existing shareholders.
But once that gap closes — and the stock starts trading at or near NAV — issuing more stock becomes a dilution trap.
At that point, says Sigel, “That is not capital formation. It’s erosion.”
He points out that Semler Scientific is already brushing up against this threshold. And yet, companies may still be tempted to issue shares.
Why? Because in many cases, executive compensation is tied to the amount of Bitcoin the company holds, not the share price or NAV per share.
That creates a powerful incentive to keep growing the BTC stack, no matter the impact on investors.
Why This Could Get Ugly
Retail investors love stocks like Metaplanet and Strategy because they act like “Bitcoin on steroids.”
They give upside exposure to BTC without the complexity of futures or crypto wallets.
But when stocks are trading near their NAV and still issuing new shares, that upside starts to slip away. There’s no new value being created, just more dilution.
And with execs rewarded for piling on more Bitcoin, there’s little reason to stop.
In this case, it’s not performance that’s being incentivized — it’s accumulation.
And that can turn toxic when stock issuance keeps going, even if it no longer benefits shareholders.
A Lesson from the Bitcoin Miners
This scenario isn’t new. During past cycles, Bitcoin mining companies over-issued stock, often rewarding executives handsomely.
Shareholders suffered the consequences through underperformance and dilution.
“We’ve seen this movie before,” Sigel warns. “No need for a sequel.”
Yet without safeguards, BTC treasury firms risk following the same path, with retail investors once again holding the bag.
Sigel’s Safeguards: How BTC Treasury Firms Can Avoid Disaster
The good news is there’s still time for these companies to act — if they move quickly and responsibly.
Sigel outlines three safeguards BTC treasury firms should implement now while their stocks still trade above NAV:
- Automatic Pause on Share Issuance: ATM (at-the-market) equity programs will be suspended if the stock trades below 0.95x NAV for ten consecutive trading days.
- Use Buybacks Strategically: When Bitcoin rises, but the stock doesn’t reflect that gain, consider share buybacks to boost shareholder value.
- Initiate a Strategic Review: If the stock remains below NAV, explore options like mergers, spin-offs, or even winding down the Bitcoin strategy.
Sigel also emphasizes reforming executive incentives. Compensation should be based on NAV per share growth, not just the size of the BTC stash.
As long as a premium exists, BTC treasury firms have optionality.
However, once they hit NAV or below, every share issued directly hurts investors. Boards and shareholders must act now to protect long-term value.
According to Sigel, the message is clear: leveraged Bitcoin exposure is not a free lunch, and without discipline, the risks could outweigh the rewards.
Strategy’s Premium — and Its Risk
Sigel points to MSTR to illustrate how volatile the premium can be.
MSTR currently trades at a 112% premium over the value of its Bitcoin holdings and core software business, and that premium is what’s really driving returns.
From January to March 2025, 96.5% of MSTR’s gains came not from Bitcoin or software but from the premium alone.
What’s behind it? Sigel outlines four forces:
- BTC Expectations – Markets expect the company to keep buying Bitcoin.
- Lack of Alternatives – Many investors can’t buy BTC directly.
- Strategic Leverage – CEO Michael Saylor’s use of low-cost debt is attractive.
- Speculation – MSTR has become the de facto high-beta Bitcoin trade.
But that premium can disappear quickly.
Sigel notes that a widening credit spread for Strategy’s preferred equity (STRK) could cause major losses. If the spread jumps by 500 basis points and MSTR falls 50%, STRK could drop by 30%.
That’s not just a hypothetical. “STRK’s implied credit spread is closer to Saylor’s BTC-based calculation than Strategy’s converts,” Sigel explains.
“This implies there is less upside from STRK’s credit spread converging to Saylor’s calculations,” Sigel added.
Optionality Is Running Out
Bitcoin treasury stocks offer a compelling on-ramp to BTC for traditional investors, but only when used responsibly.
If companies let NAV premiums slip away and keep issuing shares, retail investors will end up holding diluted assets with little value left.
Sigel’s message is clear: the premium won’t last forever. Boards and shareholders need to act now, or risk repeating the same costly mistakes miners made in cycles past.
Because once dilution starts, there’s no real leverage left, just losses.
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