10x Research recommended shorting Strategy shares

The material is not an investment recommendation and is published for informational purposes only.

What’s new? Analyst firm 10x Research, led by Markus Thielen, recommended shorting shares of Strategy (MSTR) in a Friday report to clients as they diverged from bitcoin’suptrend. Analysts noted that bitcoin has hit an all-time high while MSTR’s growth has stalled, indicating that investor enthusiasm is fading.

Material by CoinDesk

What else is known? In the report, Thielen recommended to clients a bear put spread on MSTR that includes a long position on a $370 put option and a short position on a $300 put option, both with an expiration date of June 27.

This strategy will maximize profits if MSTR falls to $300 or below by June 27, which would mean betting on a lower stock price. The put option insures the buyer against a possible price drop in exchange for a small premium.

On Friday, the value of MSTR fell 7% to close at $369. Michael Saylor’s Strategy owns 576 230 BTC and is the largest holder of the asset among publicly traded companies, it has been steadily accumulating coins since August 2020 through debt financing.

Michael Saylor: the US should buy up to 20% of bitcoins as a strategic reserve

He stressed the urgency of such investments, warning against competing countries being the first to acquire BTC

Read more

Over the years, MSTR stock has evolved into a preferred instrument for institutions looking to access BTC without directly owning the cryptocurrency.

The share price has recently deviated from the upward trend of the BTC price, which has raised concerns in the crypto community. While BTC was climbing above $111 000 last week, MSTR is trading 22% below last November’s record of $474.

“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,” explained Thielen.

A similar divergence between MSTR and bitcoin was seen with BTC peaking in November 2021 at the peak of the past bull market. Past data does not guarantee future results, and the latest divergence between MSTR and BTC does not necessarily mean bitcoin’s bull trend is over.

Nevertheless, it does indicate waning enthusiasm for BTC among investors from the traditional finance sector. In addition, MSTR’s bear put spread could provide insurance against potential BTC weakness.

“Buying a Strategy put spread can be profitable, but it is also an effective hedge against a long Bitcoin position,” Thielen added.