Strategy’s massive 650,000-BTC holdings have made the company a critical “pressure valve” for the crypto market, according to Tom Lee, chairman and CEO of Bitmine Immersion.
Lee said that Strategy (MSTR) has become the go-to tool for crypto investors looking to manage risk, a factor he believes contributed to the stock’s 43% drop over the past month. “Strategy is arguably the most important stock to watch right now,” Lee told CNBC. “It’s effectively a bitcoin proxy and the most liquid name in the space.”
With limited options to hedge directly in crypto markets, institutional traders have increasingly turned to shorting Strategy shares. The company’s enormous bitcoin treasury ties its stock price closely to BTC$90,892.05, making it one of the cleanest indirect hedges available.
“In crypto, when investors want to hedge exposure to bitcoin or ether, there are very few tools deep enough to absorb that activity,” Lee explained. “So they short the most liquid proxies—and that’s MicroStrategy.”
He added that crypto-native derivatives still lack the liquidity required for major players. “Anyone holding a sizable bitcoin long position has almost no effective way to hedge it in crypto derivatives,” Lee said. Strategy, however, offers a workaround. “Its option chain is so liquid that traders can hedge their entire crypto exposure through Strategy instead.”
As a result, Lee said, the stock is “essentially absorbing all the hedging pressure the crypto industry is trying to offload to protect their longs.”
Lee also cited lingering effects from the Oct. 10 market crash, which wiped out $20 billion and disrupted liquidity across exchanges. He described market makers as crypto’s “central bank” and noted that liquidity remains thin for altcoins, miner stocks, and bitcoin proxies like Strategy.
The company has been one of the hardest-hit assets during the current downturn, which Lee attributes to its role as a market stress-release valve. He warned that Strategy’s growing importance as a hedge reflects broader structural weaknesses in crypto markets.
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