MicroStrategy’s Optimistic Call Diminishes in the Face of Market Caution.

MicroStrategy’s Bitcoin Play Loses Luster as Market Sentiment Turns Cautious

MicroStrategy’s (MSTR) record bullish sentiment, previously fueled by its role as a bitcoin (BTC) proxy, has cooled as the momentum behind bitcoin’s treasury asset narrative fades. Traders are no longer pursuing the upside potential of MSTR, signaling a shift toward more cautious market sentiment.

The company’s 250-day put-call skew, a measure of the implied volatility difference between put options (which predict a price drop) and call options (which predict a price rise), has surged to zero from a -20% differential over the past three weeks, according to Market Chameleon. This shift indicates that call options, which traders typically buy to profit from anticipated price increases, are now priced similarly to puts, a sign of waning optimism.

This change follows a steep 44% drop in MSTR’s share price, falling from a high of $589 on November 21 to $289, with its valuation plummeting 34% in the last two weeks alone, according to TradingView.

Markus Thielen, founder of 10x Research, noted in a report that the appeal of MicroStrategy as a leveraged play on bitcoin is fading. “With MicroStrategy now down 44% from its peak and other companies adopting bitcoin as a treasury asset strategy on a smaller scale, the tailwind from this narrative appears to be losing strength,” Thielen said.

MicroStrategy’s bitcoin acquisition strategy began in 2020, and the company has accumulated 446,400 BTC, worth about $42.6 billion, often using debt to finance the purchases. As a result, MSTR has been seen as a high-leverage bet on bitcoin, outperforming BTC with a 346% gain in 2024, compared to bitcoin’s 121% rise.

However, the performance toward the end of the year was underwhelming. While MSTR fell by 25% in December, bitcoin only dropped by 3%, holding steady above $90,000.

This underperformance suggests that investors are less interested in paying a premium for bitcoin exposure through MicroStrategy. “The stock’s decline, despite its substantial bitcoin holdings, indicates that investors no longer want to pay an implied price of $200,000 or more per bitcoin through MSTR, when they can buy the asset directly at a much lower price,” Thielen explained.