Arthur Hayes backs Bitcoin ETFs as Strategy premium hits 0.74x

Strategy's stock has lost the edge it once gave Bitcoin bulls, and Arthur Hayes says the premium that powered its buying cycle is gone.

Bitcoin traded at $79,402 on Aug. 27 as Arthur Hayes said Strategy's premium has faded, making spot Bitcoin ETFs a more rational buy. The BitMEX co-founder argues that buying a fund like BlackRock's IBIT offers direct exposure without the corporate risks tied to Strategy's structure.

"Anyone who wants plain bitcoin exposure through a brokerage account can simply buy a spot exchange-traded fund instead, without paying for Strategy's leverage or carrying its dividend overhang," Hayes said on Laura Shin's Unchained Podcast.

Hayes argued Strategy's model of issuing shares or debt to buy Bitcoin no longer works as the price grinds sideways. The company's market value to net asset value (mNAV) premium sat near 0.74x on Aug. 27, down from the double-to-triple multiples it once commanded. Strategy holds 840,447 BTC but owes about $1.5 billion a year in dividends on its STRK, paying 8%, and STRC, paying between 10% and 11.5%, preferred shares.

Hayes said Saylor faces three choices — issue new shares, sell Bitcoin, or trim dividends — each carrying a cost. With spot Bitcoin ETFs approved in January 2024 offering direct exposure at lower cost, the rationale for paying a premium for a Bitcoin-holding company has diminished.

The Premium Problem

For years, Strategy (Nasdaq: MSTR) traded like a leveraged bet on Bitcoin's price, often commanding double or triple the value of the coins on its balance sheet. That gap let the company sell new shares, buy more Bitcoin, and repeat the cycle. Hayes argued the cycle is running out of road now that Bitcoin's price growth has slowed rather than reversed. Bitcoin does not need to fall for the model to break — it just has to stop accelerating.

Bitcoin briefly topped $81,000 on Aug. 25 before easing back toward the high $70,000s. With the stock's enterprise mNAV compressed to roughly 1.01x and its basic and diluted measures near 0.73x and 0.74x as of Aug. 27, Strategy now trades close to the raw value of the 840,447 BTC on its books. That leaves almost no premium left to fund another buying cycle.

Three Choices, No Good Ones

Hayes says the shrinking premium leaves Saylor with three levers, each carrying a cost. Strategy can issue new shares, but doing so without a healthy premium dilutes existing holders instead of rewarding them. It can sell Bitcoin outright, cutting against the "never sell" identity that built the stock's following. Or it can trim dividends on its preferred shares, risking the confidence of income-focused investors who bought in for the yield rather than the Bitcoin exposure.

Saylor said in May the company would "probably sell some bitcoin to pay a dividend just to inoculate the market," a line Hayes has since mocked, accusing Saylor of playing "Jedi mind tricks" with investors over how far those sales could eventually go.

Hayes's broader argument is not that Strategy collapses overnight but that the stock's original reason for existing — letting investors pay extra for equity-funded Bitcoin exposure — stops making sense once Bitcoin's price grinds sideways instead of compounding higher. For investors, the choice between an ETF like IBIT and a corporate proxy now requires weighing fees, governance, and dilution risk against the potential for outsized gains if the premium persists. Hayes, who holds a portfolio ten times heavier in Bitcoin than gold, has predicted Bitcoin reaches $250,000 on global money printing, a scenario that would still favor direct ETF exposure over a leveraged corporate structure.

This article is for informational purposes only and does not constitute investment advice.