So many of you wrote under my posts about $MSTR asking why I don’t buy Bitcoin instead.
Let’s look at it in practice, using today as an example.
Bitcoin gained +11% today, which is respectable, while $MSTR managed +26% over the same period. Let’s see why.
Why $MSTR posts larger percentage moves than $BTCUSD:
Financial leverage: The company buys BTC with borrowed money (bonds). That means the stock reacts more aggressively to every Bitcoin move because it controls more assets than the company’s equity.
Market premium: Investors aren’t just buying BTC, they’re buying Michael Saylor’s strategy. They’re often willing to pay a price per share higher than the net asset value (NAV) of the held bitcoins.
In short, it’s a more volatile instrument that amplifies Bitcoin’s movement—both up and down.
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Bitcoin is already very volatile, and multiplying that volatility by betting on something that, if it collapses, won’t leave so much as ashes — I can understand that from people who are well off, who can tell themselves in advance that if they lose it, their life won’t change. But for the average investor, at most 5% of the portfolio, and I’d have to look myself in the mirror and admit that I know I’m a gambler 😉.
I don't like trading with leverage, so I still stick to a BTC ETF.
That makes sense. However, if you’re using leverage and Bitcoin drops below your buy levels — which I saw average around $75,000 — anything below that gets cut brutally. Margin calls would then trigger and it could be the end, maybe not only for the company, and Bitcoin could fall very deep. Buying as part of a speculative play — why not. But I need to know that I could end up at zero. Compared to Bitcoin, which might recover from that in a few years.
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The leverage plays a big role and it's clear that MSTR will always rise more. On the other hand, it's simply a volatile stock and investors should be careful when making those purchases.
Thanks for the explanation. Probably similar with ETH.