Traders are no longer looking for edges in Nasdaq-listed MicroStrategy (MSTR), a leveraged bet on bitcoin (BTC), signaling a cautious shift in market sentiment.
MSTR’s 250-day put and call bias, which shows the difference in implied volatility between puts (options to sell) and calls (options to buy), has bounced to zero from -20% in three weeks , according to data tracking website Market. Chameleon.
It means that call options, which traders use to make asymmetric profits from a potential rally in the underlying asset, are now trading on par with puts that offer downside protection rather than the unusually high premium seen ago. three weeks.
In other words, sentiment has gone from super bullish to neutral.
The move comes as MSTR’s stock price has declined more than 44% to $289 since hitting an all-time high of $589 on Nov. 21, and the valuation has fallen 34% in the past two weeks alone, according to the TradingView data source.
“With MicroStrategy shares now down 44% from their peak and other companies adopting bitcoin as a treasury asset strategy on a much smaller scale, the tailwind generated by this narrative appears to be losing steam,” said founder Markus Thielen. from 10x Research, said in a note to clients.
MicroStrategy began adding bitcoin to its balance sheet in 2020 and has since accumulated 446,400 BTC ($42.6 billion), often financing the purchases with debt sales. MSTR is therefore considered a leveraged bet on BTC in 2024 and ended 2024 with a 346% gain, dwarfing BTC’s 121% rise by leaps and bounds.
However, the year-end action was disappointing. While MSTR fell 25% in December, BTC fell only 3%, remaining relatively stable above $90,000.
It’s a sign that MSTR’s appeal as a leveraged bet on BTC is weakening.
“The stock’s poor performance, despite significant bitcoin acquisitions, indicates that investors are no longer willing to pay an implied price of $200,000 (or more) per bitcoin through MicroStrategy when it can be purchased directly at a cost much smaller,” Thielen said.
