Strategy stock is bleeding, but Saylor ‘won’t back down’ from Bitcoin bet
Update Nov. 24, 1:20 pm UTC: This article has been updated to add comments from Kyle Rodda, senior market analyst at Capital.com.
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 
BTCUSD 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.
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.
Kyle Rodda, a senior market analyst at Capital.com, said that a big risk is a drop in BTC prices that would force Strategy to liquidate its holdings. This could add downward pressure on both Strategy stock and BTC prices.
“We are probably a long way from this. But the risk makes abundantly clear that in the long run, buying MSTR stock is potentially inferior to owning actual Bitcoin,” Rodda said.
He added that while MSTR stock can effectively disappear, one Bitcoin will always be worth one Bitcoin.
Despite the slowdown in stock prices, Strategy chairman Michael Saylor showed his resolve on X, saying he “won’t back down.”
On Nov. 17, Strategy announced that it acquired 8,178 BTC for $835.6 million. The purchase was a major boost over previous investments, which ranged between 400 and 500 coins per week. The buy increased its total holdings to 649,870 BTC, worth nearly $56 billion.
Related: Metaplanet eyes $135M raise via new Class B shares to fuel more Bitcoin buys
Digital asset treasuries face broader inflow slump
On Nov. 6, crypto market-maker Wintermute pointed to stablecoins, exchange-traded funds (ETFs) and digital asset treasuries (DATs) as the key sources of crypto liquidity, saying that a liquidity slowdown had caused the recent market slump.
The company also said that liquidity inflow in all three areas has reached a plateau.
Data aggregator DefiLlama showed that the DAT inflow began to slow down in October, following the liquidation of $20 billion in crypto positions. DAT inflows decreased from nearly $11 billion in September to about $2 billion in October, representing an 80% decline.
The inflows declined further in November. As of Monday, DAT inflows had only reached about $500 million this month, marking a 75% decrease compared to October.
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