Strategy stock experienced a slight reprieve in early trading today, rising 1.22 after a period of significant decline. The company, heavily invested in Bitcoin under the leadership of Michael Saylor, has seen its stock price plummet 66 since its peak last July. This volatility has brought the company's market-to-net asset value (mNAV) precariously close to a critical threshold.

The mNAV, a key indicator of whether Strategy is valued more or less than its Bitcoin holdings, currently stands at 1.02. A drop below 1 would signal that the company's stock is worth less than its Bitcoin reserves, potentially triggering a sell-off as investors question the rationale for holding the stock. The mNAV is calculated by adding the company's total market capitalization and debt, subtracting its cash, and then dividing by its total Bitcoin reserve.

The market capitalization of Strategy already sits below the value of its Bitcoin holdings. As of today, the company's market cap was 47 billion, while its Bitcoin reserves were valued at just under 60 billion. This situation creates a precarious position for the company, as investors may perceive the stock as overvalued relative to its underlying assets.

Strategy's business model is predicated on accumulating and holding Bitcoin. Michael Saylor has positioned the company as a vehicle for investors seeking exposure to Bitcoin without directly owning the cryptocurrency. However, the company's performance is now inextricably linked to the volatile Bitcoin market, making it susceptible to sharp price swings and investor sentiment.

The future outlook for Strategy hinges on the performance of Bitcoin and the company's ability to maintain investor confidence. If Bitcoin prices decline further or the company's mNAV falls below 1, Strategy could face increased pressure from shareholders and a potential restructuring of its business strategy. The company has been navigating this danger zone since November, and its ability to stay above the critical threshold will determine its long-term viability.