In an intriguing twist for crypto enthusiasts, 10X Research, spearheaded by strategist Markus Thielen, has thrown its weight behind bearish options on MicroStrategy (MSTR) as the company’s share price veers off from Bitcoin’s bullish trajectory. This comes as MicroStrategy, the Nasdaq-listed entity renowned for its massive Bitcoin holdings, appears to be losing steam despite Bitcoin’s recent record-breaking performance.
Divergence and Strategy
The recommendation from Thielen involves a bear put spread strategy on MSTR, where investors would take a long position in the $370 put option and a short position in the $300 put option, both maturing on June 27, 2025. This maneuver promises to reap maximum returns if MSTR tumbles to $300 or below by expiry, effectively betting on a decline in the stock’s value.
Thielen, known for accurately predicting Bitcoin’s ascent to six figures, explained, “This trade captures the growing disconnect between Bitcoin’s strength and MicroStrategy’s fading momentum and volatility. Despite Bitcoin reaching all-time highs, MSTR remains significantly below its peak, suggesting investor enthusiasm is waning.” It’s a calculated gamble, with the maximum loss capped at the initial strategy cost of $13.89, assuming MSTR’s price trajectory unexpectedly reverses.
MicroStrategy’s Rocky Road
On Friday, MSTR’s shares slipped 7% to $369, a stark contrast to Bitcoin’s meteoric rise past $110,000 just last week. MicroStrategy’s steadfast accumulation of 576,230 BTC, financed through debt since August 2020, has made it a favored vehicle for institutional investors seeking Bitcoin exposure without direct ownership. However, with MSTR’s shares struggling to break past the $440 mark—far below its all-time high of $543 set in November 2021—the divergence has sparked concern across crypto circles. This concern is further amplified by Strategy’s $84B Bitcoin Expansion Plan Backed by Wall Street Analysts, highlighting the company’s ambitious growth strategies amid market uncertainties.
“The divergence matters,” Thielen asserted, underscoring the significance of this trend. “Retail is still chasing the dream, unaware that the right-tail upside may be gone. This is where the game changes: when the middleman runs out of premium and the engine stalls.”
Market Implications and Skepticism
The current scenario evokes memories of a similar MSTR-Bitcoin divergence that coincided with Bitcoin’s peak in November 2021. While history doesn’t guarantee future outcomes, such patterns can serve as cautionary tales for traders. The divergence is raising eyebrows about whether Bitcoin’s bull run might be running on borrowed time, especially among traditional finance (tradfi) investors. This skepticism is reminiscent of Strategy Raising Another $21B to Buy Bitcoin, Posts Large Q1 Loss on BTC Price Decline, which underscores the financial risks associated with such aggressive investment strategies.
Nevertheless, the MSTR bear put spread doesn’t only stand as a potential profit play but also a hedge against Bitcoin’s possible downturn. “Buying a Strategy put spread can be profitable, but it is also an effective hedge against a long Bitcoin position,” noted Thielen, suggesting a dual-purpose strategy for wary investors.
As the cryptocurrency market continues its unpredictable dance, the unfolding drama between Bitcoin and MicroStrategy offers a compelling subplot. The coming weeks—leading up to the June 27 options expiry—will reveal whether these bearish bets were prescient or premature. As always in the volatile world of crypto, investors will be keeping a keen eye on the charts, ready to adapt to the next twist in this financial saga.
Source
This article is based on: Bearish Bets on Strategy Look Alluring, Says 10X Research as MSTR Diverges From Bitcoin’s Bull Run
Further Reading
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Steve Gregory is a lawyer in the United States who specializes in licensing for cryptocurrency companies and products. Steve began his career as an attorney in 2015 but made the switch to working in cryptocurrency full time shortly after joining the original team at Gemini Trust Company, an early cryptocurrency exchange based in New York City. Steve then joined CEX.io and was able to launch their regulated US-based cryptocurrency. Steve then went on to become the CEO at currency.com when he ran for four years and was able to lead currency.com to being fully acquired in 2025.
