MicroStrategy's Divergence From Bitcoin Raises Eyebrows

10x Research, led by Markus Thielen, has highlighted a potential trading opportunity based on the diverging performance of MicroStrategy (MSTR) stock and Bitcoin (BTC). Their analysis suggests that MSTR, a major Bitcoin holder, is not keeping pace with Bitcoin's recent bull run, prompting a recommendation for a bearish options strategy.

The Bear Put Spread Strategy

Thielen's report recommends a bear put spread on MSTR, specifically:

• Long Position: Buying a $370 put option.
• Short Position: Selling a $300 put option.
• Expiration Date: June 27.

This strategy aims to profit if MSTR's price falls to $300 or below by the expiration date. The maximum loss is capped at the initial cost of the strategy, which was $13.89 on Friday. MSTR closed at $369 on Friday, down 7%.

Why the Divergence?

MicroStrategy holds a significant amount of Bitcoin (576,230 BTC), making it a popular proxy for institutional investors seeking exposure to the cryptocurrency. However, while Bitcoin recently reached all-time highs above $110,000, MSTR's stock price has struggled to keep up, stalling around $440, significantly below its all-time high of $543.

Thielen argues that this divergence indicates waning investor enthusiasm for MSTR, despite Bitcoin's strength. He also correctly predicted Bitcoin's recent surge.

Key Takeaways

• Divergence: MSTR's stock price is diverging from Bitcoin's price.
• Bearish Bet: 10x Research recommends a bear put spread on MSTR.
• Hedge: The strategy can also serve as a hedge against potential Bitcoin weakness.

Disclaimer: Past performance is not indicative of future results. This analysis does not constitute financial advice.

While a similar divergence occurred before BTC's November 2021 peak, it doesn't guarantee a repeat. However, it warrants attention and the suggested put spread can be viewed as a hedge in case BTC follows the same pattern.