Remember when Strategy $MSTR was massively overvalued relative to its Bitcoin holdings?
For every dollar of Bitcoin they held, the market was pricing it as if it were worth $3.50. It was the equivalent of paying $35 for a $10 bill.
Lunacy.
Well, that $3.50 has since compressed all the way down to $1.30.
So WTF happened?
One word: options.
The iShares Bitcoin ETF launched options on November 19th. And the day MSTR’s premium to its Bitcoin holdings peaked?
November 20th.
Literally the very next day.
So too did the MSTR/Bitcoin ratio; in other words, MSTR has been underperforming Bitcoin itself ever since.
Here’s my hot take: that was the top in the MSTR/Bitcoin ratio.
I don’t think MSTR will ever meaningfully outperform Bitcoin again.
Because why would anyone own MSTR over spot Bitcoin or the iShares Bitcoin ETF?
The only reason MSTR could sustainably remain overvalued was because it was the first — and only — game in town. If you were mandated to only own stocks, the only way you could access Bitcoin was through something like MSTR.
And this brings me to my second point.
The whole “crypto corporate treasury” angle is a grift masquerading as adoption.
I think we’ll eventually see a future where more corporates hold a responsible allocation of Bitcoin — but not in its current form.
Just look at all the prominent treasury stocks. Why on earth would you want to own these instead of the underlying asset?
These names also fell yesterday, as the Nasdaq looks to tighten rules on the wave of companies raising money through crypto treasury strategies — and it’s no surprise.
These companies are just weak stand-ins that only existed because people didn’t have better options.
Bitcoin bottomed in the last bear market the week after FTX blew up, when all the skinny dippers were finally exposed by the receding tide.
I think the next bear market will play out the same way — only this time, it'll be MSTR and all the other treasuries that get caught, crushed under their own debt and leverage.
From where the sun rises first,
Louis Sykes Senior Crypto Analyst, All Star Charts
