BlackRock’s iShares Bitcoin Trust (IBIT) made headlines when it launched its options on November 19, sparking an impressive surge in trading activity that reached over $2 billion on its first day. The launch coincided with significant fluctuations in the cryptocurrency market, particularly for MicroStrategy (MSTR).
On November 20, MSTR’s multiple to net asset value (mNAV) peaked at 3.141, a calculation derived from its enterprise value divided by its bitcoin net asset value, which was reportedly below $110,724.82 at the time. This peak occurred as bitcoin neared the $100,000 mark, and MSTR’s stock soared to a record high of $540.
However, since that high point, MSTR has experienced a downturn, falling approximately 40%. The drop in stock price led to a reduction in its mNAV, which has now compressed to 1.55. At its peak, MicroStrategy held 331,200 BTC, reflecting a significant increase of around 305,000 BTC compared to its earlier holdings.
MicroStrategy has long provided investors with a unique avenue for exposure to bitcoin, combining equity investment with the inherent volatility of cryptocurrency. This feature has allowed traders to leverage their positions and utilize options strategies. While IBIT offers direct exposure to spot bitcoin, MSTR differentiates itself by providing a multifaceted investment approach.
Since the launch of spot bitcoin ETFs in January 2024, MSTR has shown remarkable performance, soaring over 515%, starkly contrasting with IBIT’s 128% gain during the same period. In terms of historical trading volume and volatility, MSTR continues to outstrip IBIT, solidifying its position as a favored trading vehicle among investors.
Currently, bitcoin’s implied volatility is reported at less than 40%, a relatively calm level that indicates subdued market expectations for significant price movements in the near future. Low implied volatility often leads traders to hesitate in pursuing leveraged or options-based strategies, suggesting that for leveraged products like MSTR to regain their previous momentum, a resurgence in bitcoin volatility is necessary. This trend highlights the dynamic nature of the cryptocurrency market and the ongoing evolution of investment strategies within it.
