Bitcoin Treasury Strategies Face Market Test as Crypto Equities Tumble and Texas Enters Reserve Game

Strategy Outlines 'Last Resort' Bitcoin Sale Framework

Strategy, formerly known as MicroStrategy, has clarified the conditions under which it might sell portions of its massive Bitcoin treasury, putting to rest speculation about the largest corporate Bitcoin holder's long-term commitment to the asset. The company currently holds approximately 650,000 BTC, representing more than 3% of Bitcoin's 21 million supply ^[1].

CEO Phong Le described any Bitcoin sale as a "last resort" option that would only be considered if two conditions are met simultaneously: the company's market-cap-to-net-asset-value (mNAV) falls below 1, and access to fresh capital "meaningfully deteriorates" ^[1]. The mNAV ratio measures Strategy's total market value against the market value of its Bitcoin holdings.

"Selling BTC in that scenario [would be] a 'last resort' toolkit option to meet obligations such as preferred dividends, not as a standing plan to sell the treasury," Le explained ^[1].

The company's business model relies on raising capital through common stock, perpetual preferred stock series, and convertible debt, then converting much of that capital into Bitcoin. This strategy works as long as Strategy can trade at a premium to its Bitcoin holdings, allowing it to raise new equity with minimal dilution ^[1].

Crypto-Linked Equities Face Severe Repricing

The recent Bitcoin downturn from its October all-time high near $126,000 to the mid-$80,000 range—a drop of roughly 30%—has triggered a widespread repricing of crypto-exposed equities ^[1]. Strategy's own shares have plunged more than 50% from earlier highs, briefly trading around or below the spot value of its Bitcoin holdings in mid-November ^[1][2].

American Bitcoin Corp has experienced similar pressure, with its stock tumbling 50% despite reporting a swing to profitability in the third quarter, when net income reached $3.47 million and revenue climbed to $64.2 million ^[2]. The company added 3,000 Bitcoin to its reserves during that period, lifting total holdings to more than 4,000 BTC ^[2].

Analysts note that Strategy faces sizeable annual commitments in preferred dividends and debt service, with obligations estimated in the hundreds of millions of dollars per year ^[1]. However, the company maintains that any potential sale would be "targeted and partial" rather than a full exit, entering a Bitcoin market with tens of billions in daily spot and derivatives volume ^[1].

Texas Pioneers State-Level Bitcoin Investment

While corporate Bitcoin strategies face market pressure, Texas has taken an unprecedented step by becoming the first US state to add Bitcoin exposure to a state-managed investment portfolio. The Texas Treasury Safekeeping Trust Company purchased approximately $5 million of BlackRock's iShares Bitcoin Trust ETF (IBIT) through the newly created Texas Strategic Bitcoin Reserve ^[3].

The purchase was authorized under SB 21, legislation passed in June 2025 that allows the state comptroller to buy, hold, and sell Bitcoin using a legislature-approved $10 million fund ^[3]. This marks a significant shift for Texas from simply hosting the Bitcoin mining industry to becoming an active digital asset investor.

The initial allocation remains small relative to Texas' overall investment portfolio, which holds more than $667 million in S&P 500 ETFs, signaling a "cautious and exploratory step" ^[3]. Unlike federal digital asset programs that focus on seized cryptocurrency, Texas' reserve represents a proactive, budgeted investment managed under the same fiduciary standards as other state holdings ^[3].

The Texas Blockchain Council confirmed the purchase, though official transaction records have not yet been publicly released ^[3]. The move establishes a template for how state governments might treat digital assets as part of long-term investment strategies rather than merely as regulatory concerns or grid management issues.