Everyone has an opinion on Strategy Inc.

The stock has fallen 40.4% year-to-date while Bitcoin itself is down just 1.5%. Wall Street trimmed $5.38 billion in holdings during Q3 alone. Jim Chanos, the short seller who anticipated Enron’s collapse, closed his Strategy short with 100% returns and declared his thesis “largely played out.” JPMorgan raised margin requirements to 95%. MSCI is consulting on whether to remove Strategy from major equity benchmarks entirely, a decision that could trigger $8.8 billion in forced selling.

The market-implied net asset value, the premium investors once paid to access Bitcoin through Strategy’s corporate wrapper, has collapsed from 3.4x in November 2024 to approximately 0.91x today. For the first time since the 2022 bear market, Strategy’s market capitalization has fallen below the value of its Bitcoin holdings.

Death spiral fears have entered mainstream financial discourse. Critics see vindication.

But in our opinion, here’s what the consensus might be missing: the criticism is simultaneously correct and overstated. The structural thesis for Strategy has weakened materially. And the company is nowhere near collapse.

BOTH of these things are true. The inability to hold this nuance is where most analyses break down.

Strategy by the Numbers

Before examining the arguments, it’s worth grounding ourselves in Strategy’s present circumstances:

Sources: Strategy SEC filings, company announcements, BitcoinTreasuries.net (December 2025)

What the Critics Get Right

Let’s be clear about what critics get right, because they do get quite a bit right.

The ETF Threat Is Structural, Not Cyclical

The most fundamental challenge to Strategy’s thesis isn’t something temporal. It’s actually structural.

For nearly four years, Strategy served as Wall Street’s Bitcoin proxy. Institutional investors who wanted exposure but couldn’t hold the asset directly bought Strategy instead, accepting the corporate wrapper as the cost of access. The January 2024 launch of spot Bitcoin ETFs ended that monopoly.

BlackRock’s iShares Bitcoin Trust now holds more Bitcoin than Strategy: over 800,000 BTC compared to Strategy’s 660,624. With $71 billion in assets under management and 70% of all spot Bitcoin ETF inflows year-to-date, IBIT has become the default institutional vehicle. It offers what Strategy cannot: regulated exposure without corporate governance, leverage risk, or dilution concerns.

The institutional response has been swift. During Q3 2025, Capital International, Vanguard, BlackRock, and Fidelity each reduced Strategy positions by over $1 billion. JPMorgan divested $500 million. Total institutional holdings declined from $36.32 billion to $30.94 billion in a single quarter.

This occurred during relatively stable Bitcoin prices, ruling out forced deleveraging as an explanation. The competitive landscape has permanently changed, and Strategy’s historical role as the only institutional-grade Bitcoin vehicle no longer exists. This doesn’t mean Strategy has no value proposition, but it does mean the value proposition has narrowed considerably.

Dilution at 0.91x mNAV Transfers Value to New Shareholders

Strategy’s growth engine has always been capital raising: buy Bitcoin, issue equity at a premium, use proceeds to buy more Bitcoin. When mNAV exceeds 1.0x, this creates value for existing shareholders. When mNAV falls below 1.0x, the math reverses.

On July 31, 2025, Strategy published explicit guidance: “We will not issue MSTR below 2.5x mNAV except to pay interest and dividends.” By August 18, Saylor had added a clause permitting dilution “when otherwise deemed advantageous.” Since then, 94% of Bitcoin purchases have been funded by diluting shareholders at compressed valuations.

At 0.91x mNAV, every share issued sells for less than its pro-rata Bitcoin value. New investors get a discount. Existing shareholders subsidize it. The broken commitment damaged credibility, and the ongoing issuance represents genuine value transfer from existing to new shareholders. Whether this is prudent capital management or shareholder-unfriendly behavior depends on one’s view of Strategy’s long-term trajectory, but the mechanical reality is not in dispute.

When “Never Sell” Becomes “Last Resort”

In an interview on the “What Bitcoin Did” podcast, CEO Phong Le acknowledged what Saylor has long denied: Strategy could sell Bitcoin. Le outlined two conditions: stock trading below 1x mNAV, and inability to raise capital through other means.

“Mathematically we would have to sell some Bitcoin. It would be the last resort.”

Le framed potential sales as “several years out,” pointing to the $1.44 billion cash reserve as a buffer. Forced Bitcoin sales remain unlikely in the near term given Strategy’s liquidity position. But the shift from Saylor’s absolutist “never sell” to Le’s conditional “last resort” represents a meaningful evolution in narrative. The thesis has become more nuanced, and perhaps more honest.

Chanos Made 100% and Called the Premium Compression

Jim Chanos entered his position in November 2024 near 2.5x mNAV, betting the premium would compress. He exited November 7, 2025 at 1.23x with approximately 100% returns. “MSTR inevitably marches toward a 1.0x mNAV,” he told clients.

He was conservative. The mNAV has since fallen to 0.91x.

Chanos’s success validates the thesis that Strategy’s premium was unsustainable. But it also suggests the easy compression trade has largely played out. The question now isn’t whether the premium will compress. It already has. The question is what Strategy is worth at current levels, without that premium.

Where the Consensus Overshoots

Here’s where the analysis gets more interesting, and where consensus may be pricing in more risk than warranted.

The MSCI Exclusion Risk May Already Be Priced In

Perhaps no single event looms larger than the January 15, 2026 MSCI decision. The consultation period ends December 31, 2025, with any index adjustments implemented in February 2026.

MSCI is consulting on whether companies with more than 50% of their balance sheet in digital assets belong in major equity benchmarks. Strategy, with over 90% of assets in Bitcoin, sits at the extreme end. Thirty-eight companies are under review, but Strategy’s size makes it the primary focus.

The mechanical impact could be severe. JPMorgan estimates $2.8 billion in forced selling from MSCI exclusion alone, rising to $8.8 billion if other index providers follow. Nearly $9 billion of Strategy’s float is held by passive funds that must mechanically sell when benchmarks change.

However, Strategy has already fallen 24.69% since the October 10 consultation announcement. Bitwise CIO Matt Hougan estimates a 75% probability of exclusion but notes the impact may be reflected in current prices. When Strategy was added to the Nasdaq-100 in December 2024, requiring $2.1 billion in index buying, “the price barely moved.” Markets often price binary events efficiently. The risk is real, and exclusion appears more likely than not. But some portion of the selling pressure has likely already occurred as active managers front-run the decision. The January 15 announcement will be significant, but it may not be the catastrophe critics predict.

$1.44 Billion Raised in 9 Days Suggests Capital Markets Remain Open

On December 1, 2025, Strategy announced a $1.44 billion USD reserve for dividend and interest payments, raised in “less than 9 trading days.” This reserve covers 21 months of obligations. More importantly, the speed of the raise demonstrates continued capital markets access during a Bitcoin correction.

“We did it to address the FUD,” Le acknowledged, “and to show people we’re still able to raise money when Bitcoin is under pressure.”

Death spiral scenarios require Strategy to lose market access. This raise suggests that hasn’t happened. When critics argue Strategy might lose the ability to issue equity, management can point to $1.44 billion raised in under two weeks.

The Convertible Debt Structure Prevents Forced Liquidation

Strategy’s debt obligations present less risk than critics often imply.

The first major debt maturity of approximately $1 billion arrives in February 2027, with the remaining $6 billion not due until 2028-2030.

Critically, these are convertible bonds. Holders cannot force liquidation; they can only convert to equity at prices ranging from $183 to $672, all above current levels.

Strategy faces no debt-driven existential pressure until 2028 at the earliest. Critics who cite $8.2 billion in debt without acknowledging the convertible structure and distant maturities are presenting an incomplete picture.

The 24% Cost Basis Cushion Provides a Buffer, Not a Guarantee

Strategy’s average Bitcoin cost of $74,696 provides a 24% cushion at current prices. Bitcoin would need to fall 19% to reach the cost basis and substantially further before threatening solvency. This cushion protects against moderate declines but wouldn’t prevent distress in a severe bear market. It’s a buffer, not a guarantee.

Forced Bitcoin Sales Require Three Conditions to Align

Bitwise CIO Matt Hougan has argued that forced Bitcoin sales require three simultaneous conditions:

Saylor claims the structure can “survive an 80-90% drawdown lasting 4-5 years.” All three conditions occurring simultaneously appears unlikely in the near term.

But the fact that one condition is already met, and a second could emerge if market sentiment deteriorates further, suggests the margin of safety is thinner than it was a year ago.

Direct Bitcoin vs ETF vs MSTR: What Investors are Actually Choosing

The debate over Strategy ultimately comes down to trade-offs. Different vehicles for Bitcoin exposure carry different risk and return characteristics:

The five-year comparison illustrates Strategy’s historical advantage during the period when premiums were expanding. The 2025 comparison illustrates what happens when they compress. Neither period alone tells the complete story.

Direct Bitcoin and ETFs offer straightforward exposure. Strategy offers something more complex: potential for premium expansion and implicit leverage, but with corporate risks, dilution, and governance considerations attached.

Neither Death Spiral Nor Safe Haven

Strategy in December 2025 is a different instrument than Strategy in December 2024. The premium is gone. The leverage effect has diminished. The competitive moat has narrowed.

But the company is not on the verge of collapse.

The $1.44 billion cash reserve, distant debt maturities, convertible debt structure, and demonstrated capital markets access make forced Bitcoin liquidation unlikely in the foreseeable future. The MSCI exclusion risk, while real, may already be substantially priced in after a 25% decline since the consultation announcement.

What remains genuinely uncertain is whether the premium can recover as the market digests ETF competition, whether MSCI exclusion triggers a second wave of selling or proves to be a non-event, whether Strategy’s continued ability to raise capital persists through a prolonged Bitcoin bear market, and whether the convertible debt holders eventually create pressure through conversion or refinancing.

The company holds 660,624 Bitcoin with meaningful structural protections. It also faces legitimate headwinds that didn’t exist two years ago. Both of these things are true simultaneously.

The January 15, 2026 MSCI decision will provide the next significant data point. Until then, the debate continues, but it should continue with more nuance than either side typically brings.