MicroStrategy’s Bullish Momentum Fades as Bitcoin’s Tailwind Weakens
The once-record-breaking bullish sentiment surrounding MicroStrategy (MSTR), seen as a leveraged play on bitcoin (BTC), has diminished as the positive momentum driven by bitcoin’s role as a treasury asset begins to lose steam.
Traders are no longer as eager to chase upside potential in the Nasdaq-listed company, signaling a shift towards a more cautious outlook in the market.
MicroStrategy’s 250-day put-call skew, which tracks the difference in implied volatility between put options (bets on the price decline) and call options (bets on the price rise), has moved from a -20% tilt to zero in just three weeks, according to data from Market Chameleon. This shift means that call options, which once offered traders an opportunity for high-risk, high-reward upside in anticipation of a rally, are now priced similarly to puts, which protect against downside risk. This reversal signifies a swing from an extremely bullish to a more neutral market sentiment.
The change in sentiment coincides with a notable decline in MicroStrategy’s stock price, which has fallen by more than 44%, from a peak of $589 on November 21 to $289. The company’s valuation has dropped 34% in just the past two weeks, according to TradingView data.
Markus Thielen, founder of 10x Research, noted in a report that the loss of bitcoin’s tailwind—fueled by the growing number of companies adopting bitcoin as a treasury asset on a smaller scale—appears to be impacting MicroStrategy’s appeal. “With MicroStrategy shares now down 44% from their peak, and other companies adopting bitcoin as a treasury strategy at a much smaller scale, the momentum created by this narrative is losing its effectiveness,” he stated.
MicroStrategy’s bitcoin accumulation strategy began in 2020, and since then, the company has acquired 446,400 BTC, worth about $42.6 billion, often funding these purchases through debt. As a result, MSTR has been viewed as a leveraged bet on bitcoin’s performance, posting an outstanding 346% gain in 2024, far surpassing bitcoin’s 121% rise during the same period.
However, the end-of-year performance was lackluster. MicroStrategy dropped 25% in December, while bitcoin only saw a modest 3% decline, holding steady above $90,000.
This discrepancy signals a weakening of MSTR’s appeal as a leveraged play on bitcoin.
“The stock’s underperformance, despite significant bitcoin acquisitions, suggests that investors are no longer willing to pay an implied price of $200,000 or more per bitcoin through MicroStrategy when they can purchase it directly at a much lower price,” Thielen observed.
