MSTR’s valuation top coincided with IBIT’s record launch, highlighting the interplay between equity-based and ETF bitcoin exposure
The launch of BlackRock’s iShares Bitcoin Trust (IBIT) options last November marked a pivotal moment for both bitcoin and related equity plays. On November 20, 2024, MicroStrategy (MSTR) hit its cycle peak valuation, just as IBIT options recorded over $2 billion in first-day trading volume.
MSTR’s valuation surge and decline
At the time, MSTR’s multiple to net asset value (mNAV) — a measure of enterprise value relative to its bitcoin holdings — hit 3.141, its highest point in the cycle. Bitcoin was trading close to $100,000, while MSTR stock surged to an all-time high of $540.
Since then, however, MSTR has fallen 40%, compressing its mNAV to 1.55. Despite the pullback, the company has dramatically expanded its bitcoin holdings. By the peak, MicroStrategy controlled 331,200 BTC, a massive increase compared to its earlier positions.
IBIT vs. MSTR: competing vehicles for bitcoin exposure
MSTR has long been a favorite for traders seeking a leveraged proxy for bitcoin, blending equity risk with crypto volatility. Investors have used it both as a high-beta bitcoin play and for options strategies.
In contrast, IBIT provides direct spot bitcoin exposure without corporate leverage. But with the debut of IBIT options, investors now have both traditional equity-linked and ETF-based vehicles to express their market views.
Despite IBIT’s strong launch and consistent growth, MSTR has outperformed significantly since the introduction of spot bitcoin ETFs in early 2024. While IBIT gained 128%, MSTR rallied more than 515% over the same period, reflecting its amplified sensitivity to bitcoin’s price cycle.
Low volatility keeps leverage subdued
Currently, bitcoin implied volatility remains below 40, a relatively muted level by historical standards. Low volatility dampens demand for leveraged products and option-based trades.
For leveraged instruments like MSTR to regain momentum, analysts suggest bitcoin volatility must rise, reigniting speculative flows into high-risk equity plays tied to the cryptocurrency market.
Disclaimer
This content is for informational purposes only and does not constitute financial, investment, or legal advice. Cryptocurrency trading involves risk and may result in financial loss.