Key Highlights:
- Strive says its Bitcoin treasury model is designed to withstand market declines without relying on debt or pledged Bitcoin.
- The company’s amplification ratio increased from 30% on December 31, when Bitcoin was around $87,500, to 55% by September 30, when Bitcoin traded near $83,600.
- Strive’s amplification ratio has now moved above 70% following the launch of SATS and Bitcoin’s latest decline.
- The company believes its preferred equity structure and existing market demand could help it expand Bitcoin exposure during price dips while creating additional value for common shareholders.
Bitcoin’s latest decline has brought its price close to its 200-week moving average of approximately $68,000, a level that has historically been viewed as an attractive point for increasing exposure to the cryptocurrency. However, market downturns can affect Bitcoin treasury companies in different ways, depending on how they raise capital, manage their reserves and support their investment strategies.
Strive is making the case that its corporate structure gives it an advantage during these periods. The company argues that its combination of preferred equity, substantial cash reserves and the absence of debt secured against its Bitcoin holdings allows it to respond to falling prices without being forced to sell its assets. It also believes that its existing preferred equity markets provide an opportunity to increase its amplification ratio when Bitcoin becomes cheaper.
How Strive’s Capital Structure Could Help During Bitcoin Downturns
Strive’s argument focuses on how Bitcoin treasury companies manage their finances when the cryptocurrency market enters a prolonged decline. According to the company, there are three possible outcomes for businesses that use amplification to increase their Bitcoin exposure.
The first involves companies with unfavorable debt arrangements. When Bitcoin prices fall, these businesses may face pressure to sell their holdings to meet financial obligations. Such sales can permanently reduce shareholder value because the company may lose Bitcoin during a downturn and fail to benefit fully when prices recover.
The second situation involves companies that lack an effective capital-raising mechanism. Their share prices may decline alongside Bitcoin, but they may have limited ways to increase their holdings during the downturn. As a result, when Bitcoin recovers, the company could end up close to where it started without creating additional value.
Strive believes the third approach offers a different outcome. Companies with liquid preferred equity and established investor demand can potentially issue more preferred shares when Bitcoin prices are lower. This can allow them to increase their Bitcoin exposure and enter the recovery period with a higher amplification ratio. The company says this is the model it has been developing through its existing preferred equity securities and capital structure.
Amplification Ratio Rises Despite Bitcoin Price Movements
Strive has pointed to its historical figures to explain how its strategy has worked over the past year. On December 31, Bitcoin was trading at approximately $87,500, while the company’s amplification ratio stood at 30%.
By September 30, Bitcoin had returned close to that price level, trading at around $83,600. However, Strive’s amplification ratio had increased to 55%. This meant the company had achieved a significantly higher level of amplification despite Bitcoin trading at a broadly similar price.
The company also highlighted Bitcoin’s 43% recovery from its June low. Based on that increase alone, Strive estimated that its amplification ratio should have fallen from 67% to approximately 47%. Instead, it maintained the ratio at 55%.
Following the launch of SATS and Bitcoin’s latest decline, Strive says its amplification ratio has moved above 70%. The company also reported that ASST shares have gained approximately 51% year to date, while Bitcoin has declined around 19% over the same period.
These figures form the basis of Strive’s argument that its capital structure has helped it expand amplification even during periods of significant movement in Bitcoin’s market price.
No Debt or Pledged Bitcoin Remains Central to Its Strategy
Strive attributes much of its ability to manage market volatility to its decision to avoid debt and keep its Bitcoin holdings free from pledges. The company says this arrangement removes the pressure associated with margin calls and debt maturities, allowing management to take a longer-term approach. It also highlighted the importance of maintaining substantial cash reserves. Strive says it holds an 18-month dividend reserve and has additional cash beyond that requirement.
Despite having excess cash, the company has not issued common equity over the past couple of weeks. Management believes that issuing common shares at current market levels could dilute existing shareholders, even when the company’s market net asset value, or mNAV, is above 1x.
Strive considers common equity issuance appropriate only when it supports long-term business objectives, including the development of its Digital Credit business. This reflects its view that raising capital should not automatically take priority over protecting the interests of existing common shareholders.
The company has also removed mNAV calculations from its dashboard over the past week. It argues that mNAV provides only a snapshot of the company’s position at a particular moment and does not fully account for the operating business or its potential future returns under different Bitcoin market conditions.
Strive believes discounted forward-return modelling provides a more useful way to assess its common equity value. Based on what it describes as reasonable bullish Bitcoin scenarios, the company considers its common shares undervalued, despite conventional mNAV calculations often showing a value above 1x.
Its broader strategy is based on treating Bitcoin downturns as opportunities to strengthen its treasury position rather than periods that require a defensive retreat. Strive says its preferred equity markets, cash reserves and debt-free Bitcoin holdings are intended to support that approach as it looks towards 2027.
