The once-euphoric sentiment surrounding MicroStrategy (MSTR), a prominent Bitcoin (BTC) proxy, is waning as options traders show increasing caution. This shift is evident in the normalization of MSTR’s put-call skew, suggesting a less optimistic outlook for the company’s leveraged Bitcoin strategy.
According to Market Chameleon, a volatility tracking platform, MSTR’s 250-day put-call skew has recently reverted to zero after reaching a deeply negative -20% just three weeks prior. This significant change indicates a shift in market sentiment, with call options, typically used to capitalize on anticipated price increases, now trading on par with protective put options. This equilibrium suggests a neutral outlook, contrasting sharply with the prior intensely bullish sentiment.
This shift coincides with a substantial decline in MSTR’s share price, which has plummeted over 44% from its November 21st peak of $589, currently trading around $289. This corresponds to a 34% drop in valuation within the last two weeks alone, as per TradingView data.
Markus Thielen, founder of 10x Research, attributes this cooling sentiment to a combination of factors. He notes that MSTR’s significant price drop, coupled with other companies adopting more conservative Bitcoin treasury strategies, has diminished the narrative of MSTR as a leading Bitcoin investment vehicle.
MicroStrategy’s aggressive Bitcoin acquisition strategy, initiated in 2020, has resulted in a massive holding of 446,400 BTC, equivalent to approximately $42.6 billion. This accumulation, often financed through debt, positioned MSTR as a high-leverage bet on Bitcoin’s price appreciation. While this strategy yielded impressive returns in 2024, with MSTR surging 346% compared to Bitcoin’s 121% gain, recent performance has been less compelling.
December 2024 highlighted a growing divergence between MSTR and Bitcoin’s price movements. MSTR suffered a 25% decline while Bitcoin remained relatively stable, experiencing only a 3% drop. This decoupling suggests a weakening correlation between MSTR and Bitcoin, potentially signaling a reduced appetite for MSTR as a leveraged Bitcoin play.
Thielen further argues that investors are becoming increasingly reluctant to pay a premium for Bitcoin exposure through MSTR, especially when Bitcoin can be acquired directly at a significantly lower cost. He estimates that investing in MSTR implicitly values Bitcoin at $200,000 or more, a substantial markup compared to its current market price. This discrepancy further reinforces the notion that MSTR’s appeal as a leveraged Bitcoin investment is diminishing.
In conclusion, the recent shift in options trading activity and the declining correlation between MSTR and Bitcoin prices point towards a growing cautiousness among investors regarding MicroStrategy’s leveraged Bitcoin strategy. The company’s aggressive acquisition approach, while previously successful, now appears to be facing headwinds as market sentiment evolves. The coming months will be crucial in determining whether MicroStrategy can regain its allure as a premier Bitcoin investment vehicle or whether this cautious trend will persist.
