The summer of 2025 is the summer of crypto US stocks.

Looking at the capital market, the real protagonists of this year are not Meta, nor NVIDIA, nor those traditional technology giants, but the "strategically held" US stocks that have moved Bitcoin into the books of listed companies. From this chart, you can intuitively see the madness of micro-strategy.

Bitcoin has risen nearly 94% over the past year and has already beaten the vast majority of traditional assets. In contrast, tech giants such as Meta, NVIDIA, and Tesla rose by up to 30%, while Microsoft, Apple, and the S&P 500 basically hovered around 0 or even pulled back.

But MicroStrategy's share price soared 208.7%.

Behind MSTR, a large number of crypto-holding U.S. and Japanese stocks are staging their own valuation myths. Market capitalization/net value holdings (mNAV), borrowing rates, short positions, convertible bond arbitrage, and even GameStop-style short squeezing are all brewing in the undercurrents of the capital market. Belief and structural game are intertwined, and institutional and retail investors have different mentalities - in the new battlefield of "currency stocks", how do traders choose between advance and retreat? And what are the hidden logics that are dominating the market?

In this article, BlockBeats will dismantle the frenzy and game of "strategically holding coins" in U.S. stocks from the perspectives of three professional traders: from the premium fluctuations of MSTR to the arbitrage war of new upstart companies, from the fantasies of retail investors to the actuarial calculations of institutions, the cycle of this new capital narrative is gradually unfolded.

The truth about "strategically holding" U.S. stocks

Going long BTC and shorting micro-strategies seems to be the view of many traditional financial institutions and traders.

This is exactly the strategy adopted by Long Xinyan, the first trader interviewed by BlockBeats: "The implied volatility (IV) of these companies varies widely, buying Bitcoin options with SignalPlus software over-the-counter and selling call options on the same company, such as MSTR, at the opening of the U.S. stock market."

In Long Xinyan's own words, this is the volatility scissor difference strategy of "long BTC + short MSTR", which is a strategy that can obtain stable returns.

"This strategy is actually a judgment of the 'premium return to the range'", says Hikari, another trader with a conservative trading style: "For example, if the current premium is 2x and you expect it to fall back to 1.5x, then when the premium goes down to this point, you can lock in the spread and make a profit. But if the market sentiment is too high and the premium is pushed to 2.5 times, 3 times, there will be a floating loss."

"Premium" seems to be a word that all traders can't avoid when mentioning "strategic holdings" of U.S. stocks.

The so-called mNAV (Market Net Asset Value) is, in layman's terms, a multiple between a company's market capitalization and the net value of its actual crypto assets.

The popularity of this indicator is almost entirely due to the Bitcoin buying frenzy that MicroStrategy (MSTR) launched in 2020. Since then, MSTR's share price has been almost tied to the rise and fall of Bitcoin, but the market has given it a price that is significantly higher than the company's actual "net holdings". Today, this mNAV "premium" phenomenon has also been replicated in more and more crypto assets such as Metaplanet and SRM, U.S. and Japanese stocks. In other words, the capital market is willing to pay far more than the sum of "currency standard + local assets" for these companies, and the remaining part is actually a bet on currency holdings, leverage, future financing ability and imagination.

The mNAV premium index is a mirror for micro-strategies

Look back at the microstrategy mNAV premium index. From 2021 to early 2024, the mNAV premium has been running between 1.0x and 2.0x for a long time, with a historical average of around 1.3x – that is, the market is on average willing to pay a 30% premium more for Bitcoin on MSTR's books.

But starting in the second half of 2024, MicroStrategy's mNAV premium is hovering around 1.8x. At the end of 2024, it is even more exaggerated, while Bitcoin has hit the $100,000 mark in a row, MSTR's mNAV premium has also risen, breaking through multiple times, reaching an all-time peak of 3.3 times on some extreme trading days.

By the first half of 2025, the mNAV index will be in the range of 1.6-1.9 times. It is obvious that behind every change in the premium range is a round of expected flow of funds and the rise and fall of speculative sentiment.

In the words of Long Xinyan, this is actually similar to the operating leverage concept of traditional enterprises, and the market assesses that the future leverage of these companies will affect their premiums: "MSTR has raised multiple rounds of financing, and its creditors are all over Wall Street, and this ability to pull money and increase issuance is the core competitiveness. The market expects you to keep raising money before you dare to give you a higher premium." In contrast, even if the start-up and small new "currency holding U.S. stocks" shout loudly, it is difficult to gain the same trust and bonus from the capital market.

How much of a premium is reasonable?

Butter is a typical quant and data believer, and all decisions are based on historical quantiles and volatility.

"The market's premium of 2-3 times for micro-strategy is reasonable." Butter said after calculating how much the Bitcoin and MicroStrategy stock prices have changed over the same period over the past year.

From the beginning of 2024 to March, when Bitcoin climbed all the way from about $40,000 to $70,000, an increase of about 75%, MSTR soared from $55 all the way to nearly $180, an increase of more than 220%. In this round of gains, MSTR is about three times that of Bitcoin.

In November-December 2024, Bitcoin tested the $100,000 mark again, this time rising by about 33%, while MSTR rushed from $280 to around $520, an increase of about 86%, more than double Bitcoin's increase.

However, in the subsequent pullback period from December 2024 to February 2025, when Bitcoin fell from $100,000 to $80,000, a drop of about 20%, MSTR fell by about 20%, and MSTR fell by about 20%, with a cumulative decline of about 50%.

Similarly, from March to May this year, Bitcoin rebounded to about $108,000, an increase of 35%, while MSTR rose by nearly 70%, which is also 2x.

In addition to premium indices, Butter also focuses on annualized volatility. According to his calculations, the standard deviation of Bitcoin's daily return in 2024 will be about 4.0%, corresponding to an annualized volatility of about 76.4% for round-the-clock trading; Over the same period, MSTR had a standard deviation of about 6.4% daily return and an annualized volatility of 101.6% on U.S. stock trading days. Heading into 2025, BTC's annualized volatility falls back to about 57.3%, while MSTR remains around 76%.

Therefore, Butter's core point is clear: "The premium fluctuates up and down in the 1.5-3x range, which is a very clear trading signal." Combining volatility with mNAV premium, Butter distilled a "simplest trading logic" – go long when the market is low volatility + low premium, and short when high volatility + high premium.

Hikari does a similar thing to Butter, but he also combines options with an option strategy: selling puts at low premiums for premiums, and selling calls at high premiums for time value. Here he reminded ordinary investors: "The margin accounts on both sides are independent, and if both sides increase leverage, it is easy to be liquidated by extreme markets.

Convertible Bond Arbitrage, a proven strategy for Wall Street to play MSTR

If premium arbitrage and option operation are compulsory courses for retail investors and quantitative players in the "currency stock" world, then real large funds and institutional players pay more attention to the arbitrage space of convertible bonds.

On October 30, 2024, Michael Saylor officially launched the "21/21 Plan" in an investor conference call: a phased issuance of $21 billion of common shares through ATMs (At-The-Market) over the next three years to continue to buy Bitcoin. The fact is that in just two months, MicroStrategy has achieved its first round of goals - a cumulative issuance of 150 million shares, raising $2.24 billion and adding 27,200 BTC; In the first quarter of 2025, the company added another $21 billion in ATMs at one time, and simultaneously launched $21 billion in perpetual preferred stock and $21 billion in convertible bonds, bringing the total size of financing instruments to $63 billion in six months.

Butter observed that this "overtime" additional issuance put heavy pressure on MSTR's stock price. In November 2024, the stock price hit a high of $520, but as the market's expectations for a new round of dilution fell, the stock price fell all the way to $240 in February 2025, approaching the premium low of Bitcoin's pullback period. Even if there is an occasional rebound, it is often suppressed by the issuance of preferred shares and convertible bonds. In his view, this is also an important logic for MSTR's stock price to be extremely prone to rise and fall in the short term, and to have continuous volatility in the long term.

But for many more institutionalized hedge funds, the focus is not on betting on the direction of "up" or "down", but on capturing volatility through convertible bond arbitrage.

"Convertible bonds usually have higher implied volatility than options over the same period, making them an ideal tool for 'volatility arbitrage'. This is done by buying MSTR convertible bonds and borrowing the equivalent of common stock in the market to sell short, locking in a net exposure of Delta≈0. Every time the stock price fluctuates sharply, as long as you adjust the short ratio and buy low and sell high, you can reap the volatility into profits." "It's one of the most established arbitrage games on Wall Street," Butter explains.

Behind this, a group of hedge funds are quietly using convertible bonds to do Wall Street's most mature arbitrage game - "Delta neutral, Gamma long".

He added that MSTR's short interest was as high as 14.4%, but many of the bears were not "bearish on company fundamentals", but rather funds from convertible bond arbitrage, using continuous shorting to dynamically hedge their positions. "They don't care if Bitcoin goes up or down, as long as the volatility is big enough, they can repeatedly buy low and sell high to achieve arbitrage spreads." Butter sums it up this way.

And this convertible bond of MSTR is, in a sense, also a bullish option derivative.

Hikari also has experience in combining options and convertible bond strategies. He described buying options as buying a lottery ticket, occasionally winning the jackpot, and most of the time paying the "premium tuition" to the market; Selling options is like a lottery shop owner, relying on the premium to "trickle down". In his actual trading, options and convertible bonds are both powerful tools for diversifying risks and spreading costs.

"Different from traditional spot or leveraged contracts, the biggest significance of options is the 'time dimension'. You can choose 1 month, 3 months, 6 months with different maturity dates, and the volatility implied by different maturity dates has its own merits, which also creates countless possibilities for collocation, and makes the strategy a combination of three. In this way, no matter how the market goes, you can always control the risks and returns within your own tolerance."

This set of ideas is the underlying logic of the most mainstream derivatives arbitrage on Wall Street. In the case of MSTR, this type of structured arbitrage is becoming the main battleground for smart money.

Is it OK to short Micro Strategy?

But for ordinary investors and retail investors, this seemingly lively arbitrage feast may not be something worth celebrating. Because when more and more hedge funds and institutions continue to draw blood from the market through "additional issuance + arbitrage", common stock holders are often reduced to the last receiver: they may not be able to hedge as dynamically as professional institutions, and it is difficult to identify the risk of premium regression and dilution in time - once the company has a large-scale additional issuance or encounters extreme market conditions, the floating profit on the book will soon come to naught.

Because of this, in recent years, "short micro-strategy" has become a hedging choice for many traders and structured funds. Even if you are a hardcore long of Bitcoin, in the period of high premium and high volatility, simply holding MSTR shares will face a greater drawdown of equity than holding BTC alone. How to hedge risks, or reverse the "return market" of capturing the MSTR premium, has become a question that every trader in the "coin stock" market must face.

When it comes to the topic of shorting micro-strategies, Hikari's attitude has become noticeably more cautious.

He said he had "suffered a loss" because of his short-selling micro-strategy. He admitted that he also wrote a relevant review on the official account - last year he started to short MSTR at $320, and the market soared all the way to $550, and the position pressure was extremely high.

Although it was "difficult to recover" when the MSTR pulled back to more than $300 in the end, the pressure of withstanding high premiums and carrying the retracement was described by him as "difficult for outsiders to understand".

The deal allowed Hikari to completely rehab his style. He bluntly said that if you really want to go short now, you will never use the method of selling spot or directly selling call, but will give priority to buying a combination of limited risks such as put options (put) - even if the cost is higher, and no longer rush to face the market head-on. "It's better to lock the risk within what you can accept." He concluded.

However, as mentioned above and pointed out by Butter, MicroStrategy has significantly expanded its common and preferred stock mandates in recent years, from 330 million shares directly to more than 10 billion shares, while frequently issuing preferred shares, convertible bonds, and continuous ATM issuances. "These operations have laid the groundwork for bottomless dilution in the future. In particular, the continuous ATM issuance and premium arbitrage, as long as the stock price is higher than the net assets, the company's management can buy the currency 'risk-free', but the common stock price is under continuous dilution pressure."

In particular, assuming a sharp correction in Bitcoin, this model of "high premium financing + continuous coin buying" will face greater pressure. After all, the microstrategy model essentially relies on the market's continued high premiums and confidence in Bitcoin.

To that end, Butter also mentions two double inverse ETFs that specialize in shorting micro-strategies: SMST and MSTZ, with expense ratios of 1.29% and 1.05% respectively: "But this one is more suitable for experienced short-term traders, or investors who are used to hedge their existing positions. It is not suitable for long-term investors, as leveraged ETFs have a "leverage decay" effect, and long-term holding tends to have lower returns than expected."

Will "Holding U.S. Stocks" be similar to GameStop's short selling?

If shorting MSTR is a risk hedging tool for institutions and veterans, then "shorting" is the ultimate narrative that is inevitably triggered by every capital market climax. In the past year, there has been no shortage of "coin holding companies" such as MicroStrategy and Metaplanet. Many investors can't help but think of GameStop's sensational retail short squeeze on Wall Street - so, do such crypto U.S. stocks also have the soil to ignite the short squeeze market?

On this issue, although the analytical angles are different, the views of the three traders are somewhat similar.

Long Xinyan believes that from the perspective of implied volatility (IV), there is no obvious signal of "excessive overdraft" in targets such as MSTR at present. The greater risk comes from the disturbance of the core logic of premiums by variables such as policy or taxation. He quipped, "The bears should all go to CRCL now."

Hikari is more straightforward. He believes that a giant like MicroStrategy, which has a market value of tens of billions of dollars, will find it difficult to have a GameStop-style extreme short squeeze. The reason is very simple, the circulation is too large and the liquidity is too strong, and it is difficult for retail investors or floating funds to work together to leverage the overall market value. "In contrast, a small company like SBET, which initially has a market capitalization of only tens of millions of dollars, is likely to be shorted." He added that the SBET's move in May of this year is a case in point, with the share price rising from two or three dollars to $124 in just a few weeks, and the market value skyrocketed nearly 40 times. Low-capitalization targets with insufficient liquidity and scarce borrowing are the most likely to become a hotbed for the "short squeeze" market.

Butter agrees with this statement, and he explained the two core signals of the "short market" to BlockBeats in more detail: first, the stock price has experienced an extreme one-day surge, and the increase has entered the top 0.5% quantile in history; Second, the share of bankable stocks in the market has plummeted, and it is almost impossible to borrow shares, and the shorts are forced to cover them.

"If you see a sudden increase in volume on a stock with a small number of shares available for lending, a high short position, and a spike in borrowing rates, that's basically a sign that a short squeeze is brewing."

In the case of MSTR, for example, it shorted a total of about 23.82 million shares in June this year, accounting for 9.5% of the outstanding shares. Historically, it even climbed to 27.4 million shares in mid-May, with a whopping 12-13% short position. However, from the perspective of financing and borrowing supply, the short-squeeze risk of MSTR is actually not extreme. The current APR is only 0.36%, and there are still 3.90–4.4 million shares available in the market. In other words, although the bears are under pressure, there is still a long way to go before they are truly "shorted".

In stark contrast, SBET (SharpLink Gaming), a US stock stock that hoards ETH. As of now, the annualized interest rate of SBET securities lending is as high as 54.8%, which is extremely difficult and expensive to borrow. About 8.7% of the outstanding intraday positions are short positions, and all short positions can be covered with only 1 day of volume. The high cost and high short ratio mean that once the market reverses, the SBET is likely to have a typical "rolling short squeeze" effect.

Looking at SRM Entertainment (SRM), a US stock stock, which is hoarding TRX, it seems to be more extreme. The latest data shows that SRM's annualized cost of borrowing even reaches 108–129%, the number of shares available to borrow hovers between 60–1.2 million, and the short ratio is roughly 4.7–5.1%. Although the short ratio is only medium, the extremely high financing cost directly compresses the short space, and once the market changes, the capital side will be under great pressure.

As for DeFi Development Corp. (DFDV), a U.S. stock with strategic savings SOL, the borrowing cost was as high as 230%, the short ratio was as high as 14%, and almost one-third of the circulating stock was taken short. Therefore, on the whole, although the currency stock market has the soil for shorting, the real ones that have the singularity of detonating the "long and short game" are often those stocks with smaller market capitalization, worse liquidity, and a higher degree of capital control.

There is only one microstrategy in the world

"For example, if you have a market cap of $10 billion, and the market believes that you can refinance another $20 billion to do something, then it's not too expensive to give you a 2x premium. But if you have just been listed and your market value is still very small, even if you shout 'I want to raise 500 million', the capital market may not really believe you." Longxinyan pointed out the core watershed of the current crypto holding companies - only if they are truly bigger and stronger, have the ability to continuously finance and continue to expand their balance sheets, can they be eligible to enjoy the high premium of the market. It is difficult for "small players" with limited size and new listings to replicate the valuation myth of MSTR in the market.

Looking back on the past two years, "strategic coin holding companies" in the U.S. stock market have gradually gathered - some have heavy positions in Bitcoin, some have deployed mainstream assets such as Ethereum, SOL, BNB and even HLP, and some imitate MSTR strategies and simply want to eat a wave of "coin holding premium".

What do you think about the investment logic and market positioning of such companies? Long Xinyan's opinion is still calm: "This track is too crowded right now. Companies that only have a "shell" or gimmick, and lack real business and operational support, are too "young" in nature. Listed companies are not QQ groups, and it is not just a few people who can play the capital game by getting together at a table." He emphasized that the capital market has a mature set of rules and bottom lines, and it is difficult to gain a long-term foothold in the U.S. stock market by relying on Web3's reckless temperament and circle enthusiasm alone.

In addition, the pricing of such companies varies greatly from country to country. For example, Japan's Metaplanet, which is essentially a publicly traded company with a hotel background, is now the ninth largest bitcoin holder in the world. Due to Japan's local tax policy favoring the holding of crypto assets, and many investors in Asia cannot buy cryptocurrency, "crypto stocks" such as MSTR and Metaplanet have even become "crypto ETFs" in the hearts of many people. On the other hand, in Hong Kong, some Hong Kong stock companies are also trying to allocate crypto assets, but due to the diversification of liquidity and lack of market depth, they have not yet enjoyed the dividends like US stocks. Long Xinyan said bluntly: "I'm not too optimistic about Hong Kong stock companies doing this."

There's no denying that putting a lot of Bitcoin on a company's balance sheet is a sign of strength. But the "rules of the game" haven't changed – there are very few quality companies, and most are just taking the opportunity to chase a wave of wind and valuation premiums. Once bitcoin plummets, companies with leveraged balance sheets and a lack of real business can easily fall into trouble due to the exhaustion of refinancing capabilities, and have to be forced to sell their bitcoin holdings at the bottom of the bear market, which in turn exacerbates the downward pressure on the entire market, triggering a chain reaction and forming a vicious circle similar to a "death spiral".

In a bull market, such companies tend to present a self-reinforcing structure of "left foot on right foot" – the price of the currency rises, the value of the currency increases, the market value soars, the market is sought after, and the refinancing is smooth. But when you enter a bear market, everything will be reversed, and the valuation system can collapse at any time. Longxinyan's experience is very straightforward: "Resolutely do not buy those with high premiums, and do not buy those who have recently transformed, are too young and afraid of waves, and do not touch those with no more than two rounds of financing - I am afraid that the creditors in front of me are actually their own people, just like real estate developers playing with dollar bonds."

During the interview, Hikari's views were similar to those of Longxinyan, and he said that many new "strategic coin holding companies" are actually replicating MicroStrategy's script - buying, financing, telling stories, and relying on "coin holding premiums" to increase market value. Some of them are even the VCs and project parties in the currency circle. Hikari admitted, "Actually, many of these companies are here to cheat money."

"In fact, the fundamental reason why MSTR has come to this point is that it is large enough and holds enough bitcoins. There are many potential ways to play in the future, such as using these bitcoins for large-scale staking, or engaging in some complex option strategies to revitalize assets. As long as the company is willing to pay dividends and give these earnings back to shareholders, this road can actually continue to play.

He added that in addition to micro-strategy, he currently only focuses on a few "crypto-holding U.S. stocks" with clear real asset disclosure and serious main business, such as Japan's Metaplanet and medical device company SMLR (Semler Scientific), "as long as the asset structure is clear enough and the main business is not outrageous, this kind of company is still worth paying attention to."

As for how the market changes and how the strategy changes, one thing that Dragonheart, Hikari and Butter all agree on is that no matter how the narrative develops, in the end, the most scarce and most consensus in the crypto market is still Bitcoin.