Bitcoin investor Strategy is facing a rough stretch this year, prompting speculation that its high-conviction Bitcoin play is coming undone. A look beyond the one-year chart tells a different story.
Google Finance data shows that Strategy (MSTR) stock is down almost 60% over the last year, and has declined by over 40% year-to-date (YTD). The stock traded near $300 in October, before dropping to about $170 at the time of writing.
While some interpret this as its Bitcoin model being “exposed,” Strategy is still sitting on double-digit profits on its Bitcoin purchases, and its long-term equity performance continues to outpace major tech stocks.
According to BitcoinTreasuries.NET data, Strategy acquired its Bitcoin (BTC) at an average price of $74,430. With Bitcoin trading at around $86,000, Strategy is still up nearly 16% on its BTC investments.
Over a five-year window, Strategy shares are up by more than 500%, according to Google Finance data. By comparison, Apple has recorded a 130% gain, while Microsoft has seen a 120% increase in the same time frame.
Even on a shorter two-year horizon, Strategy stock is up by 226%, surpassing Apple’s 43% gains and Microsoft’s 25% increase in the same time period.
Strategy stock is still up over 500% in the last five years. Source: Google Finance
Investors are shorting Strategy as a hedge for crypto longs
The slump might have less to do with Bitcoin’s fundamentals and more to do with how the biggest investors hedge their crypto exposure.
In a recent CNBC interview, BitMine chairman Tom Lee explained that Strategy has become the easiest way to hedge Bitcoin.
“Someone can use MicroStrategy’s options chain, which is so liquid, to hedge all of their crypto,” he said. “The only convenient way to hedge someone’s long is to short MicroStrategy or buy puts.”
This dynamic turned Strategy into an unintended pressure valve for the crypto market, absorbing hedges, shorts and volatility and market anxiety that may have little to do with its underlying Bitcoin strategy and the effectiveness of its long-term thesis.
Despite the slowdown in stock prices, Strategy…
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