coindesk.com
10x Research, led by Markus Thielen, likes bearish options bets on Strategy (MSTR) as the Nasdaq-listed bitcoin
In a report sent to clients Friday, Thielen recommended a bear put spread on MSTR, involving a long position in the $370 put option and a short position in the $300 put, both expiring on June 27.
This strategy will yield maximum profit if MSTR drops to $300 or lower by June 27, representing a bearish bet on the stock price. Put option insures the buyer against potential price drops in return for a small upfront premium payment.
The maximum loss for the put spread buyers if MSTR's price embarks on a new uptrend is limited to the initial cost of the strategy, which was $13.89 on Friday.
MSTR, however, fell 7% to $369 on Friday, according to data source TradingView. MicroStrategy holds 576,230 $BTC, the largest for any publicly-listed company, having steadily accumulated coins since August 2020 through debt financing.
Over the years, it has emerged as a preferred instrument for institutions looking to take exposure to $BTC without having to actually own the cryptocurrency.
The stock price has recently diverged from the upward-trending $BTC price, raising alarm bells on crypto social media.
While $BTC hit a record high of over $110K last week, MSTR's rise stalled at around $440, falling well short of its lifetime peak of $543 reached in November.
"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," Thielen said, explaining the bear put spread.
Thielen correctly predicted $BTC's recent rise into six figures.
Note that a similar divergence between MSTR and bitcoin marked $BTC's November 2021 top.
Past data does not guarantee future results, and the latest divergence between MSTR and $BTC does not necessarily mean that bitcoin's bull run is over.
That said, its does suggest waning enthusiasm about $BTC among tradfi investors. In addition, the MSTR bear put spread could offer a hedge against a potential weakness in $BTC.
"Bitcoin is breaking records, but Strategy is stalling—and that divergence matters. 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," Thielen said.
"Buying a Strategy put spread can be profitable, but it is also an effective hedge against a long Bitcoin position," Thielen added.