Strategy vs Bitcoin: Can MSTR Stock Price Really Outperform BTC?—February 2025 Update

• Stock Price Now Mirrors Bitcoin: Before Strategy’s initial Bitcoin purchase in August 2020, its stock price exhibited a negative Pearson correlation with BTC, where the two assets typically moved in opposite directions.
• Strategy’s Stock Premium: Over the past four years, Strategy’s stock has traded at an average premium of 54.28%.
• Rising Capital Allocation to Bitcoin: Excluding the slowdown in Bitcoin acquisitions in 2022, Strategy has maintained a consistent and escalating pace of capital commitment toward expanding its Bitcoin holdings.

Strategy has become a major attraction for investors seeking exposure to Bitcoin (BTC) through a traditional corporate structure. The company’s aggressive acquisition of Bitcoin has sparked intense debates about its role not just as a software company but also as a significant player in the cryptocurrency market.

In this CCN Reports edition, we will examine Strategy’s true valuation by delving into its Bitcoin holdings, acquisition strategies, and future projections. By comparing Strategy’s approach with direct Bitcoin investment, we offer a nuanced analysis of whether the company serves as a superior investment vehicle compared to Bitcoin itself.

Key considerations include the sustainability of its acquisition pace, the influence of market conditions on future purchases, and wider implications for investors seeking stability and access to the volatile yet potentially lucrative cryptocurrency market.

From Skeptic to Bitcoin Maxi: The Evolution of Michael Saylor’s BTC Perspective

To truly grasp the intricacies of Strategy’s financial strategies, it’s essential to explore the driving force behind the company’s bold pivot to Bitcoin — Michael Saylor. His journey from a vocal Bitcoin skeptic to one of its most ardent proponents provides crucial context for understanding the company’s current state and direction.

The context will serve as a fundamental reference point in deciphering the rationale behind Strategy’s Bitcoin accumulation, which will be explored in detail below.

Born on Feb. 4, 1965, in Lincoln, Nebraska, Saylor was raised in a military family, which instilled in him a blend of discipline and ambition from an early age.

He pursued his education at the Massachusetts Institute of Technology on a full Air Force ROTC scholarship, majoring in aeronautics and astronautics, as well as science, technology, and the history of science. The academic foundation endowed him with a unique ability to identify disruptive technologies well before they entered the mainstream and discern their implications for society.

In 1989, Saylor co-founded Strategy, which would later establish itself as a leader in business intelligence. His vision for Strategy centered on harnessing the growing potential of data analytics to enable better-informed business decisions. The company quickly distinguished itself through its innovative approach to relational online analytical processing, transforming the way enterprises handled and analyzed large datasets.

But Saylor’s vision extended far beyond business intelligence. In his 2012 book, “The Mobile Wave: How Mobile Intelligence Will Change Everything,” he foresaw that mobile technology would transform multiple sectors—from commerce to communication to social structures.

He argued that the rise of mobile devices, coupled with advancements in cloud computing and social networks, would shake up traditional industries and fundamentally reshape the way businesses and economies function.

Yet, despite his strong track record in recognizing disruptive trends, Saylor did not immediately see Bitcoin’s potential. In late 2013, his view on Bitcoin was anything but positive. In fact, he openly expressed skepticism. On Dec. 7, 2013, Saylor cautioned his followers on X (formerly Twitter):

The sentiment was echoed in another post a few days later, in which he said :

“Bitcoin days are numbered. It seems like just a matter of time before it suffers the same fate as online gambling.”

Nevertheless, a subtle shift in Saylor’s perspective started to surface in early 2014. On March 2, 2014, he shared an opinion piece by Joe Nocera, a New York Times columnist, who characterized Bitcoin as a commodity rather than a currency, marking the beginning of a more profound understanding of the cryptocurrency.

Saylor’s growing interest in Bitcoin’s properties, particularly its decentralized nature, and resistance to government control, became more apparent in a March 12, 2014, post:

By March 25, 2014, Saylor had begun to articulate a new rationale, viewing Bitcoin as property rather than just a currency. He wrote :

“A logical/predictable outcome of crypto-currency debate–‘Bitcoin Is Property Not Currency in Tax System, IRS Says.’”

Later on, Saylor reflected on how Bitcoin unexpectedly altered the trajectory of his life and career. He was ready to retire after serving as a public company CEO for decades. However, Bitcoin disrupted his plans. As he put it:

“Bitcoin plopped itself into my life […] I started actively researching, and it dragged me down the rabbit hole.”

This exploration prompted him to revisit and delve deeply into subjects such as Austrian economics, history, and technology, which he hadn’t engaged with in years.

Saylor described how this process turned him back into a student, a role he hadn’t anticipated at that stage in his life. Instead of stepping into retirement, Bitcoin dragged him “onto the world stage”—he found himself traveling, engaging in public debates, and becoming a vocal advocate.

As Saylor himself acknowledged:

“I was now drawn into a role of advocacy […] and these are all things that I discovered late in life. I would say I’m a late bloomer.”

Strategy’s Core Software Business Overview

To determine the true value of Strategy’s stock, it’s vital to conduct a thorough examination of the company’s core business activities. Rather than focusing on revenue sources or the nature of the products and services offered, the emphasis should be on the financial health of the company.

This involves assessing the company’s consistency of profit generation and whether the business operations contribute positively to the company’s financial stability. By analyzing profitability and cash flow, one can measure whether the core business sustains value independently of its Bitcoin holdings.

An analysis of Strategy’s historical performance from 2004 to 2019 focuses on the period predating its Bitcoin purchases, providing a clearer insight into its financial well-being. This time frame allows for an evaluation of the company’s core operations without the distortions caused by subsequent Bitcoin acquisitions.

With the initiation of Bitcoin purchases, Strategy’s balance sheet underwent changes, including increased debt and a growth in “digital assets,” which resulted in impairment losses due to the unclear accounting rules for cryptocurrencies.

For instance, in 2022, digital asset impairment losses made up 76.9% of Strategy’s operating expenses, contributing to a net loss of -$1.47 billion.

The Financial Accounting Standards Board (FASB) addressed this matter by issuing ASU 2023-08 in 2023. Starting December 15, 2024, all companies must measure crypto assets at fair value, with changes recorded in net income. In simpler terms, companies now report gains and losses based on current market values. While Strategy has yet to adopt the new rule, the company stated in its Q4 2024 earnings report that it will reflect the change in its Q1 2025 financials.

Although the new accounting standard clarifies financial evaluations, it also introduces complexities to appraising the company’s fundamental operations. If the value of Bitcoin holdings rises while the core business is declining, it could misleadingly suggest profitability where none exists. Again, the key factor here is that Strategy now operates as a Bitcoin treasury company rather than a business analytics firm, but we still need to evaluate its non-Bitcoin operations before shifting focus to its broader strategy.

A genuinely profitable business should generate net income at the end of the year with room for future growth, regardless of external asset fluctuations.

To understand whether Strategy’s core business is truly profitable, it’s crucial to examine its earnings per share (EPS) over time. Strategy’s EPS has shown significant volatility over the years. Thus, in 2010, its EPS stood at $0.3850, but then, it dropped to $0.0450 by 2014, only to surge to $0.9329 in 2015 (Figure 3).

However, from a 15-year perspective, EPS appears relatively stagnant. As seen in Figure 3, the long-term trend is nearly a straight line. Barely any movement. “Real” volatility only became pronounced after the company adopted its Bitcoin strategy. Despite short-term spikes, the overall EPS performance from 2004 to 2019 declined by -68.03%, a poor result by any standard.

To put it into perspective, Palantir (PLTR), another analytics firm (albeit with some differences), went the opposite way. It started with negative EPS but has grown 131.41% over the past four years.

Depending on the selected timeframe, Strategy’s performance could appear either on a downward or upward trend, but neither perspective provides a complete and accurate picture on its own (Figure 5). For example, measuring EPS growth from 2011 to 2019, 2012 to 2019, 2013 to 2019, and 2014 to 2019 shows a positive trend. However, in nearly every other timeframe, the growth rate is negative, with the exception of 2017 and 2018 comparisons against 2019.

To address this, another key metric to consider is the compound annual growth rate (CAGR) over multiple periods: 1, 2, 3, and up to 15 years.

For comparison, Yahoo Finance aggregates analysts’ estimates and projects a growth rate of 8.84% for Strategy (Figure 6). Conversely, simply taking the 15-year CAGR of EPS gives a figure of -7.30%, suggesting that EPS will decline by 45.47% by 2032. Nonetheless, this interpretation is misleading.

Gross profit shows it best (Figure 7). It measures revenue after subtracting the cost of goods sold. Even during Bitcoin acquisitions, gross profit stayed in line with its overall trend. The core business did not collapse or fade into irrelevance. That matters because it suggests that, despite all the volatility, the company’s core operations kept functioning.

Additionally, not only do analysts disagree with the negative projection, but the historical EPS performance of Strategy also challenges this view.

For example, while EPS remained stagnant, it never turned negative. Growth was absent, but at least the company was making money instead of bleeding cash.

It is safe to assume that Strategy will likely continue generating a similar level of earnings. Traditional forecasting models like Holt-Winters and ARIMA would not work well in this case due to the erratic fluctuations. A better approach involves using historical average EPS as a baseline while accounting for volatility with standard deviation.

With an average EPS of $0.4263 and a standard deviation of $0.26, a reasonable projection places future EPS within a range of $0.16 to $0.68 by 2032. So, the likelihood of a loss solely from the company’s business analytics activities alone is low. Recognizing this is vital for two reasons.

First, it helps determine whether the business can sustain itself until 2032 or if it may need to liquidate some of its Bitcoin holdings to ensure survival—and, if so, determine the extent of liquidation. Secondly, it evaluates the company’s worth based solely on its business operations, disregarding the influence of Bitcoin reserves.

To value Strategy’s business, we will use the 2019 P/E ratio of 42.57 as a benchmark (Figure 8). Software application stocks, according to Finviz, had an industry average P/E of 61.32 as of Feb. 13, 2025, with a forward P/E of 37.43. That puts Strategy on the higher end but not out of reach.

A high P/E ratio does not always mean a stock is expensive. Growth changes the equation. That is where the Peter Lynch ratio (PEG) comes in. Take the P/E and divide it by the CAGR. If the number stays close to 1, the stock is fairly priced. Strategy’s 8-year CAGR of 9.1% lands right next to the analyst estimate of 8.84%. Rounding to 9% makes sense for a conservative estimate.

PEG = 42.57/9 = 4.73

A PEG ratio above 1 indicates that the stock is overvalued, as the price does not adequately reflect the slower growth rate.

By taking a conservative approach and assuming a standard P/E ratio of 20, along with an average EPS of $0.4263 over 15 years, the stock price is estimated to be $8.5.

Considering the total float as of Feb. 9, 2025, which includes class A and B shares, totaling 258,180,000 shares, the resulting market cap for the business operations would only be $2,194,530,000. This valuation offers a conservative and realistic assessment of Strategy’s value based solely on its core business, without factoring in any impact from its Bitcoin holdings.

While the lower EPS figure might suggest a very low valuation for Strategy’s core business, there are additional factors to consider. 

Since starting its Bitcoin acquisitions, Strategy has relied on substantial tax benefits tied to Bitcoin’s volatility. The company holds a large Bitcoin position, and when the market value drops below purchase cost, it records impairment losses that reduce reported earnings.

Impairments create deferred tax assets, which are future tax deductions that only apply if Bitcoin prices recover. Nonetheless, the timing of tax recognition matters. Impairment losses lower accounting income, but taxable income does not always decline at the same rate. Tax deductions typically occur when assets are sold at a loss, not when impairments are recorded. This mismatch leads to a higher effective tax rate in periods of heavy impairment.

Strategy’s net income has declined due to both impairment losses and higher tax expenses. When Bitcoin rebounds, the company can use deferred tax assets to offset taxes, boosting net income like it did in 2022.

For instance, from 2020 to 2024, Strategy’s reported net income (loss) figures were as follows:

• 2020: -$7.524 million
• 2021: -$535.480 million
• 2022: -$1.469 billion
• 2023: $429.121 million
• 2024: -$1.167 billion

Historically, Strategy received tax benefits, often around $20 million annually. That changed after Bitcoin impairments began in 2020. Instead of gaining tax benefits, the company started facing higher tax expenses.

If we adjust for both tax benefits and digital asset impairment losses (DAIL), we get a clearer picture of the company’s true operational income in recent years. But even with those adjustments, a perfectly accurate picture remains out of reach. Tax treatment varies year by year. Simply stripping out tax benefits and impairment losses does not guarantee a precise net income figure. The only way to “get closer” to true operational earnings would be to remove only digital asset impairments, as tax complexities introduce too many unknowns.

The adjusted numbers show that Strategy does consistently generate profit.

That said, Strategy faces steep challenges in terms of competitiveness within the software industry. The company operates in a highly competitive sector with rapid technological evolution and intense pressure from larger, better-resourced players.

By competing against software giants and specialized analytics firms, Strategy struggles to maintain a distinct edge or capitalize on emerging trends outside its Bitcoin holdings. This limits its capacity to generate substantial growth from core operations, making it increasingly reliant on Bitcoin’s performance to sustain shareholder value.

Bitcoin Acquisitions

Strategy made its initial Bitcoin purchase on Aug. 11, 2020. Since then, the company has been actively acquiring Bitcoin, amassing tens of thousands of BTC each year. As of Feb. 13, 2025, Strategy held 478,740 BTC, obtained at an average price of $65,033 per BTC, with an average annual acquisition rate of 79,790 BTC.

The 2022 Acquisition Slowdown

In 2022, Strategy’s Bitcoin acquisitions significantly slowed down, with only 8,109 BTC purchased for $276,083,796. Despite Bitcoin prices hovering around $15,000 by August 2022—a tempting buying opportunity compared to the $11,863 per BTC purchase price in August 2020—the company decided against increasing its BTC holdings.

The reason behind this is quite simple: Lower Bitcoin prices undercut Strategy’s ability to secure new loans or raise equity at attractive terms. When Bitcoin’s value declines, lenders see increased risk in extending credit tied to it, which shrinks Strategy’s access to capital. In 2022, as Bitcoin hovered around $15,000, this became a reality.

BTC Price ↑ → MSTR Portfolio Value ↑ → MSTR Access to Capital ↑ → MSTR BTC Reserves ↑

Strategy operates as a seller of volatility. It thrives when liquidity is abundant. During a bear market, fewer shares trade, and investor interest fades, further restricting capital-raising opportunities. With stagnation comes lower trading volume, which creates another issue: at-the-market (ATM) stock offerings risk driving the price down significantly. Strategy chose to avoid that risk, prioritizing shareholder value over aggressive Bitcoin accumulation.

This pattern will likely repeat in 2026. If Bitcoin experiences another downturn, Strategy will avoid heavy buying to protect its stock price rather than dilute value in a weak market. Instead, it will wait for higher prices, leveraging volatility when conditions favor expansion.

Annual Acquisition Patterns

Excluding 2022 and early 2025, Strategy’s average annual BTC acquisition stands at 109,572.75 BTC, which amounts to approximately $6.91 billion. Over the years, Strategy has been increasing its yearly capital allocation for Bitcoin purchases.

It’s essential to focus on the dollar amount invested rather than just the quantity of BTC, given Bitcoin’s price fluctuations driven by its scarcity and growing demand.

For instance, with an investment of $2 billion, Strategy could acquire 20,000 BTC at a price of $100,000 per BTC. However, if the price of Bitcoin rises to $200,000, the same investment would only secure 10,000 BTC.

In 2024, Strategy invested $21.97 billion to acquire 257,250 BTC. This is the largest financial commitment the company has made so far, and the amount of Bitcoin acquired is considerably higher than in previous years. To sustain its aggressive purchasing strategy, Strategy filed for over ten at-the-market equity offerings in 2024 alone.

Future Projections

Most analyses tend to concentrate on Strategy’s present valuation without considering the prospective expansion of its Bitcoin holdings. With Saylor’s commitment to aggressively purchasing Bitcoin, it is reasonable to anticipate continued accumulation.

Moreover, Strategy has introduced the Bitcoin Yield KPI to assess the efficiency of its approach to acquiring Bitcoin in a manner it deems beneficial for shareholders. The company sees it as a way to help investors understand its choices regarding funding Bitcoin acquisitions through the issuance of additional common stock or convertible instruments.

The Bitcoin Yield is calculated by comparing the diluted number of shares per Bitcoin at the start of a given period to the diluted number of shares per Bitcoin at the end of the same period. For instance, in 2024, the company achieved a Bitcoin yield of 74.35%.

At the beginning of 2024, Strategy held 189,150 BTC and had 207,636,000 diluted shares outstanding, resulting in 1,097.73 diluted shares per Bitcoin. By the end of the year, reserves increased to 447,470 BTC, while diluted shares rose to 281,735,000, reducing the diluted shares per Bitcoin to 629.62. The yield calculation for 2024 is as follows:

BTC Yield = ((1,097.73 / 629.62) – 1) * 100 = 74.35%

In 2025, Strategy aims to achieve a minimum annual yield of 15%. That means the diluted number of shares per BTC will drop from 629.62 to 547.5. To estimate the ending BTC reserves, we need the exact or at least an approximate increase in diluted shares.

If dilution follows the average 34% increase seen in 2023 and 2024, the share count would reach 377,524,900. Dividing by 547.5 gives us 689,543 BTC. That’s an increase of 243,143 BTC, with 32,340 BTC already acquired. If the average BTC purchase price in 2025 reaches $150,000, the total cost would be around $36.47 billion, which is a figure that seems too high for 2025.

If Strategy opts for a lower dilution rate of 20%, similar to 2021’s bull market, the share count will reach 338,082,000, leading to 617,501 BTC. That’s an extra 171,101 BTC, with a total purchase cost of $25.67 billion at $150,000 per BTC. This falls within a realistic range for Strategy in 2025, aligning with previous capital-raising cycles and Bitcoin accumulation strategies.

Historical data also illustrates how this KPI has translated into actual shareholder value:

Based on these figures, the projections for upcoming Bitcoin acquisitions are as follows:

The table presents a forecast of Bitcoin acquisitions by Strategy through 2032 under three different scenarios: bear, base, and bull cases. The projections rely on daily BTC acquisition rates of 80, 120, and 160 BTC per day. Based on these conditions, the company’s Bitcoin holdings could reach 681,070 to 914,670 BTC by 2032.

Strategy’s Ambitious $42 Billion Capital Plan

At the end of October 2024, Strategy announced a bold new direction with its “21/21 Plan,” aiming to raise $42 billion over the next three years. The strategy breaks into $21 billion from equity, using an at-the-market offering, and another $21 billion from fixed-income securities. The plan also includes an increased BTC Yield target of 6% to 10% annually from 2025 through 2027, an upward revision from the previous KPI targets of 4% to 8%.

The plan is the biggest reason behind 2024’s rapid Bitcoin expansion.

Why is this game-changing? 

In five years, up until the announcement, Strategy has allocated just $9.94 billion toward Bitcoin acquisitions. However, following the announcement of the $42 billion plan, the company has already utilized $21.23 billion—50.55% of the total—in three and a half months. 

At this pace, Strategy could exhaust the remaining $20.77 billion by the end of 2025, almost 2 years ahead of the original target of 2027.

If, for example, the average purchase price for Bitcoin during this period reaches around $150,000 per BTC, Strategy could potentially accumulate an additional 138,466 BTC, which falls 11% short of our current projections above.

The most important part is that nothing stops Saylor and Strategy from announcing another $42 billion, or even a $100 billion plan, in 2025 or later.

Even with Bitcoin’s higher price, Strategy’s established track record will enhance its future access to capital, allowing for an even faster acquisition rate.

Debt and Financing of Strategy’s Bitcoin Acquisitions

Strategy secures the substantial capital required for its aggressive Bitcoin acquisitions mainly through two methods: share dilution and debt financing.

Share Dilution

Strategy’s witnessed a notable increase in share dilution in recent years. As of December 2020, the company had 95.87 million shares of class A and class B common stock outstanding. By Dec. 31, 2024, this number had surged to 245.78 million shares, making an approximate 156% increase (all numbers were adjusted to reflect the 10:1 stock split in August 2024).

In traditional investment analysis, this type of dilution is commonly seen as unfavorable because the increase in the number of shares usually lowers the value of current shares.

The reasoning is simple: As more shares enter the market, the ownership stake and potential earnings per share for existing shareholders decrease, resulting in lower per-share value and a diluted stake in the company.

The 10 Billion Share Proposal

On Dec. 23, 2o24, Strategy filed a form with the SEC, notifying shareholders about a proposal to increase authorized Class A common stock shares from 330 million to 10.33 billion. The proposed amendment to the company’s certificate of incorporation would enable a massive share expansion, which appears aimed at two key objectives: facilitating a potential 10-for-1 stock split and reserving additional shares for future at-the-market offerings and convertible note conversions.

According to the Q4 2024 earnings call in February 2025, the plan was approved. Additionally, preferred shares increased from 5 million to 1.005 billion.

Strategy’s historical trend of increasing its outstanding share count by around 25% annually suggests that reaching 10.33 billion shares could take about 6.5 years, assuming a future 10:1 split is executed.

Projected Number of Diluted MSTR Shares by 2032

Assuming Strategy continues to issue new shares each year to finance its Bitcoin acquisitions, an exponential growth model offers the most straightforward approach for estimating future share counts. Although share dilution involves complexities and uncertainties, we can still project a close approximation for our calculations.

This method provides a reasonable estimate, though it could either overestimate or underestimate the actual number of shares. Only time will reveal the accuracy of these projections.

Using this approach, we estimate that by 2032, Strategy could have around 1.44 billion diluted shares, which would represent a 397.51% increase from the current share count.

Since this projection applies to diluted shares, we can assume that basic shares outstanding would be around 1.22 billion, which is approximately 15% lower than the diluted share count.

A Contemporary Perspective on Dilution

The conventional perspective is challenged in the context of Strategy. When viewed through the lens of the company’s unique strategy—effectively blending software operations with Bitcoin holdings—the reality appears more nuanced. Despite the dilution, the appreciation of Bitcoin per share presents a compelling alternative viewpoint.

Since Q3 2020, the Bitcoin per diluted share has increased by 438.42%. This implies that each share of Strategy now represents a more significant portion of Bitcoin assets than previously, even with the expanded share count.

Put simply, at a Bitcoin price of $100,000, each diluted share now effectively holds $165.403 in Bitcoin value, considering the current reserve supply and factoring in a 10:1 stock split.

A stock split increases the number of shares a company has by dividing each existing share into several new shares. For example, in a 10:1 stock split, each share an investor owns is split into 10 shares. This reduces the price per share while maintaining the overall value of the investment. However, this action can be viewed as a double-edged sword.

On one hand, a stock split can attract investors by making shares more affordable and improving liquidity. Many brokerage platforms do not permit the purchase of fractional shares, meaning investors cannot buy 0.1 or 0.5 shares.

The reduced price per share is more accessible for individual investors, even though the overall value of the investment remains unchanged before and after the split.

If an investor had $10,000 to invest, they could purchase 10 shares at $1,000 each before the split or 100 shares at $100 each after the split. In both scenarios, the investor maintains the same proportion of ownership in the company, and their overall exposure to the stock remains unchanged.

A stock split does not affect the total value of the investment or the investor’s ownership percentage; it simply makes the shares seem more affordable and accessible.

On the other hand, some investors may be deterred by a stock split, perceiving it as a cosmetic change rather than an indication of a genuine value. They might consider stock splits to be a superficial move, as splits do not impact the company’s overall market capitalization or financial health.

Debt Financing

Strategy also leverages debt to fund its Bitcoin acquisitions. The company has utilized low-interest debt, such as convertible and senior secured notes, to reduce financing expenses. As of February 2025, as per the Q4 report and SEC filings, the company’s total debt amounts to $6.52 billion.

The core idea underpinning this strategy is centered on the notion of accretive financing, a term often employed by Saylor. When issuing equity or taking on debt at favorable conditions, the aim is for the Bitcoin investment to boost the company’s total worth more than any dilution impact from additional shares.

Furthermore, with low interest rates on debt and a rise in Bitcoin value, this strategy fortifies Strategy’s financial standing and ultimately benefits all shareholders.

Saylor encapsulates this strategy with his advice, “Don’t bleed your capital with taxable dividends. Don’t surrender your capital with stock buybacks. Don’t dilute your shareholders with risky, overpriced M&A activity.” His focus remains on leveraging financial instruments that support long-term growth while safeguarding shareholder value.

Private Debt as a Strategic Tool

Strategy’s decision to raise $3 billion in private debt to fund Bitcoin purchases is a smart way to acquire capital. 

The private debt provider lends the money at a 0% interest rate and gains the right to convert the debt into shares at a later date. It works like a long-dated call option. The lender effectively secures the ability to buy Strategy shares in the future and bets on the stock’s potential to rise based on its historical performance.

For Strategy, this method brings in capital without short-term dilution because issuing shares directly through an at-the-market offering would dilute shareholder value immediately. 

In contrast, raising funds through private debt delays any potential dilution. Shareholders benefit from the Bitcoin acquisition without feeling the immediate impact of more shares entering circulation.

The approach is also a strategic play by Michael Saylor. He doesn’t rely on retail investors through an ATM offering. He taps into private markets and ensures better terms and less immediate impact on existing shareholders.

The private market’s appetite for long-term exposure to Strategy stock speaks volumes about the confidence in the company’s strategy and execution. It’s simple and a win-win situation for everyone involved.

Future Debt Projections

In the Q4 2024 earnings call, Strategy clarified its approach to debt management, stating that it aims to keep leverage below 20–30% of its Bitcoin holdings. The company does not measure leverage directly against Bitcoin holdings but instead evaluates it relative to out-of-the-money convertibles. As of February 13, 2025, this ratio stands at 6.43.

The long-term target remains below 20–30%, meaning that any future debt issuance will likely be constrained by this threshold. This directly impacts Bitcoin’s acquisition strategy, as it suggests that debt will not be the primary driver of purchases but rather a secondary tool balanced against equity issuance.

Determining the exact level of future debt requires forecasting Bitcoin’s price since leverage is measured relative to the asset’s value. At the end of the report, we will revisit this projection when evaluating MSTR’s price outlook and Bitcoin’s potential trajectory. A bear, base, and bull case scenario with 30%, 20%, or 10% leverage would translate into different absolute debt levels, but those figures remain unknown without a clear estimate of Bitcoin’s future price.

Correlation Between Strategy and Bitcoin

Strategy’s stock price typically correlates with the movement of Bitcoin. As the price of Bitcoin rises, Strategy’s stock often sees more pronounced gains. Conversely, during Bitcoin’s price decreases, Strategy stock tends to experience more significant declines.

This relationship can be quantified using the Pearson correlation coefficient. This coefficient measures the linear relationship between two variables on a scale from -1 to 1. A coefficient of 1 indicates a perfect positive correlation, -1 indicates a perfect negative correlation, and 0 indicates no correlation.

Historical Correlation Analysis

To assess the influence of Strategy’s Bitcoin acquisitions on its stock price, we compare two periods: before and after the company’s initial purchase of Bitcoin on Aug. 10, 2020.

Pre-Bitcoin Purchase Period (Oct. 5, 2009, to Aug. 9, 2020)

Throughout this period, the Pearson correlation coefficient between Strategy’s stock price and Bitcoin stood at 0.029. The low correlation indicates that, historically, the movements of Strategy’s stock price and Bitcoin’s value have shown little to no direct relationship, occasionally moving in opposite directions.

Post-Bitcoin Purchase Period (Aug. 10, 2020, to Dec. 31, 2024)

Following Strategy’s investment in Bitcoin, the Pearson correlation coefficient rose to 0.897. The strong positive correlation now indicates that the company’s stock price closely tracks the movements of Bitcoin, demonstrating a more direct relationship between the two.

Analysis of the Difference

The transition from a low to a strong positive correlation indicates a shift in market perception of Strategy. It has evolved from being seen solely as a business analytics company to being recognized as a major Bitcoin holder and a proxy for investment in Bitcoin. As a result, the stock has become more volatile and sensitive to Bitcoin’s price changes.

The change in investor perception and the increased volatility suggest that Strategy’s future stock performance will closely follow Bitcoin’s market trends.

Premium on Strategy’s Stock Price

Following Strategy’s aggressive acquisitions of Bitcoin, the company’s stock price has shown increased volatility, along with a premium that reflects market expectations. This premium represents the extra value investors attribute to Strategy beyond just the worth of its Bitcoin holdings.

Since Strategy adopted its Bitcoin strategy, the premium has averaged 36.06%. If the stock’s fair value, based solely on Bitcoin reserves, was $100, the market has typically priced it at $136.06.

However, Bitcoin’s cyclical nature makes the asset experience 1-2 years of steep declines, followed by 2-3 years of rapid growth. The premium has reflected both euphoria and panic, reaching above 300% in Q4 2024 at peak bullish sentiment and crashing below -50% in Q2 2022 when fear dominated. The average (36.06%) and even median (4.49%) NAV premiums fail to capture these extremes, thus misrepresenting the real trend.

For example, the 2020 premium (214.61% average, 195.22% median) skews the data. 2021 provided the only “close to correct” premium, an average of 17.85% and a median of 6.46%. In the first year of Bitcoin adoption, the market had little precedent for valuing Strategy’s shift. At that stage, Bitcoin adoption was still uncertain. The market saw potential but no guarantees, so a small premium made sense.

2022 and 2023 moved into panic mode and drove the premium negative. Likely due to misconceptions around potential margin calls, which never actually came close to happening. By 2024 and 2025, confidence in Michael Saylor’s leadership and the company’s aggressive Bitcoin accumulation changed the narrative. The average premium surged to 77.29% in 2024 (73.63% median) and even higher in 2025, with an average of 87.66% (87.84% median).

So, a reasonable estimate to value Strategy’s reserves, leadership, execution, and potential for growth would be an 80% premium. At $100,000 per BTC, the fair value of MSTR stock sits at $185.43 per share. With an 80% premium, that climbs to $333.77 per share.

Understanding the Premium

A premium represents the extra value investors assign to Strategy stock beyond the worth of its Bitcoin holdings. It occurs when investors see additional benefits or potential that surpass the stock’s fundamental financial metrics.

In the case of Strategy, the premium on Strategy’s stock can be attributed to several key factors:

1. Despite its significant Bitcoin investments, Strategy continues to operate as a software company, showcasing steady revenues, profits, and growth potential in its core business. The operational value adds a layer of stability and appeal, making the company attractive to investors beyond its Bitcoin holdings alone.
2. Michael Saylor’s leadership plays a crucial role. His strong and vocal support for Bitcoin has elevated Strategy’s position in the corporate realm, particularly in the context of cryptocurrency adoption. Investors see Saylor’s strategic vision and management approach as assets that enhance the company’s market value.
3. Market sentiment and speculation further contribute to the premium. With the anticipation of Bitcoin’s value increasing in the future, investors are pricing in potential future gains. Thus, the speculative element boosts the perceived value of Strategy’s stock.

Moreover, Strategy is progressively being perceived as a more formal and secure avenue for investing in Bitcoin. It serves as a proxy or even as a pseudo-Bitcoin ETF. The perception positions the company as a compelling option compared to directly investing in Bitcoin, outperforming not only Bitcoin itself but also Bitcoin ETFs and major stock indices like the S&P 500 or the Magnificent 7.

Investors view Strategy as offering the benefits of Bitcoin exposure with the added security and legitimacy of a publicly traded company.

The Current Premium and Value Perspective

As of Feb. 17, 2025, Strategy’s NAV premium stands at approximately 90%, meaning the stock is almost two times more expensive than the value of its Bitcoin reserves alone.

Nonetheless, a unique way to assess Strategy’s valuation would be viewing Bitcoin acquisitions as business revenue and the debt it takes on as business expenses.

We showcased shareholder value above using diluted shares per BTC and BTC yield. For example, in 2024 alone, it generated $13.14 billion using this approach. What’s even greater is that while a correct way of evaluating a business typically involves looking at the end-of-year performance (like the year-end Bitcoin price), Strategy’s strategy of holding and not selling its reserves creates a dynamic, unlike any other business.

Technically, we can retrospectively see that the value generated was actually much higher due to Bitcoin’s inherent nature of price appreciation. The method might seem controversial, but it highlights a unique aspect of Strategy’s business model. Unlike traditional revenues, which are fixed and cannot be adjusted retrospectively, Bitcoin’s value can increase as long as Strategy holds it.

The P/E Ratio and Strategy’s Valuation

Strategy’s valuation at $86.5 billion ($335/share) gives it a price-to-earnings (P/E) ratio of 6.58 ($86.5 billion divided by $13.14 billion in “Bitcoin revenue” in 2024).

The P/E ratio reflects the number of years it would take a company to generate enough earnings to match its initial investment, assuming earnings stay constant. In Strategy’s case, it would take just six and a half years to earn back the investment, which is exceptionally low for a high-growth company.

For context, the S&P 500, as of Feb. 17, 2025, has a P/E ratio of 30.68, meaning it would take almost 31 years for the average company in the index to generate equivalent earnings. Considering that Strategy aims to become the first Bitcoin bank, it also makes sense to compare its valuation to the banking industry, which trades at a P/E ratio of 13 to 14. By comparison, the company offers a much faster “payback period,” which makes its valuation appear compelling.

Risk-Adjusted Return of Strategy

Although Strategy has faced controversy in the stock market, it has proven to be a solid investment over the years. The standard deviation, a measure of volatility, of Strategy’s stock before its Bitcoin purchases was 36.83% from October 2009 to August 2020.

For comparison, Bitcoin had a standard deviation of 147.23%, while the S&P 500 benchmark (SPX) had a standard deviation of 17.79% during the same period.

Following the Bitcoin acquisitions, Strategy’s stock volatility experienced a significant surge, reaching a standard deviation of 96.57% from August 2020 to February 2025.

In contrast, Bitcoin’s standard deviation decreased to 62.16%, and the S&P 500’s to 16.5%. In simpler terms, the stock has become a riskier asset post-Bitcoin acquisition.

While volatility is an important factor, it doesn’t paint the full picture. Risk-adjusted return metrics can also help assess whether an asset’s gains justify its risk.

• Sharpe Ratio: Measures returns relative to total risk by dividing excess return by standard deviation.
• Sortino Ratio: A variation of the Sharpe Ratio that only considers downside volatility, calculated by dividing excess return by downside deviation.
• Calmar Ratio: Compares annualized returns to maximum drawdowns, showing how well an asset recovers from steep declines.
• Martin Ratio: Similar to Calmar, but uses the Ulcer Index (which factors in both the depth and duration of drawdowns) instead of the maximum drawdown.
• Omega Ratio: Measures the probability of positive vs. negative returns, calculated as the ratio of returns above a threshold to those below it.

As seen in the table above, Strategy outperformed both the S&P 500 and Bitcoin across all key risk-adjusted metrics from February 2024 to February 2025.

The stock’s higher volatility post-Bitcoin adoption suggests increased risk, but its stronger risk-adjusted returns indicate that the market has rewarded the shift. Investors now face a scenario where Strategy’s stock displays higher volatility, but the potential returns validate the heightened risk. Bitcoin remains a high-risk, high-reward asset, but Strategy’s stock now offers an even more compelling investment case.

Book Value of Strategy

Another important aspect to consider when evaluating Strategy is the book value of its stock. The book value represents the company’s assets minus its liabilities, providing a tangible measure of its worth. According to Strategy’s Q4 2024 report, the company had $1,934,312,000 in assets, excluding its Bitcoin holdings.

With Bitcoin priced at $100,000, Strategy’s Bitcoin holdings amount to $47.87 billion.

To calculate the book value, one must add the assets value to the Bitcoin holdings and then subtract the company’s debt, which stands at $6.52 billion as of February 2025. Preferred shares also count as a liability, at least for now, as they represent a claim on the company’s assets. With 7.3 million preferred shares priced at $100 per share, they add an additional $730 million liability to the balance sheet.

This results in a total book value of $42.56 billion. With the current number of outstanding shares, both Class A and Class B, this translates to a book value per share of $164.86.

Combined Fair Value Calculation

To determine the fair value, we combine the book value per share and the intrinsic value of the company:

Fair value per share = $164.86 + $8.5 = $173.36

By applying the 80% premium discussed earlier, the adjusted fair value increases to:

Fair value with an 80% premium = $173.36 × 1.8 = $312.05

Given Bitcoin at $100,000 and MicroStrategy’s reserves, a stock price of $312.05 reflects fair value. Should the stock price fall below this mark, it would be considered an undervalued asset, presenting a potential investment opportunity.

Is MicroStrategy a Better Investment Than Bitcoin?

To assess whether MicroStrategy is a better investment than Bitcoin, it is essential to project Bitcoin’s potential price by 2032 across various scenarios.

What Will 1 Bitcoin Be Worth in 2032?

Rainbow Chart

The first approach to forecasting Bitcoin’s price by 2032, the year of the sixth halving, is the Rainbow Chart. This chart utilizes logarithmic regression to mitigate the extreme price fluctuations that Bitcoin has experienced, making the long-term trends clearer.

It displays Bitcoin’s historical price data on a logarithmic scale and divides it into color bands, each representing different levels of market sentiment. The lower band (dark blue) signifies undervalued conditions, while the upper band (red) indicates overvalued conditions.

By mid-April 2032, during the sixth halving, the dark blue band on the Rainbow Chart shows Bitcoin prices between $223,208.93 and $283,696,85, with an average of $253,452.89. In contrast, the upper red band ranges from $1,456,772.46 to $1,911,617.11, with an average of $1,684,194.78.

In a base case scenario, the estimated midpoint between these ranges is $968,823.84.

Stock-to-Flow

The second method for predicting Bitcoin’s price by 2032 involves using the Stock-to-Flow (S2F) model. The S2F model assesses Bitcoin’s scarcity by comparing its current supply (stock) to the new supply being introduced (flow).

It utilizes this ratio to estimate future prices based on Bitcoin’s halving cycles, which gradually decrease the rate of new supply over time.

According to PlanB, the creator of the original model, Bitcoin’s price by 2032 is projected to reach approximately $5,000,000. This estimate is based on the model’s assumption that the ongoing reduction in supply will continue to drive the price upwards.

What Experts Say About Bitcoin’s 2032 Price

Another way to predict Bitcoin’s price by 2032 is to consider the predictions from various analysts. Below is a summary table of predictions for Bitcoin around that year. Predictions that focus on timeframes outside of 2029–2035 have been excluded to maintain relevance.

For MicroStrategy, the original prediction was set for 2045. However, by applying their Annual Rate of Return (ARR) scenarios—21% for bearish and 37% for bullish—we adjusted the prediction to fit the 2032 timeframe. This adjustment yields a projected range of $300,000 to $900,000.

At the Paris Blockchain Week 2024, Jan F. van Eck, the CEO of the investment management firm VanEck, suggested that Bitcoin could achieve 50% of gold’s market cap in the next five to ten years. Currently, gold’s market cap is around $22.43 trillion.

If Bitcoin manages to reach 50% of that, the market cap would be $11.215 trillion, or around $565,842 per BTC at today’s gold price of $2,940.

By 2030, the London Bullion Market Association (LBMA) anticipates that gold will reach $7,000 per ounce . Historically, gold’s market cap has increased by about 2.3 times since January 2014 .

Assuming a conservative two-times increase in gold’s market cap by 2032 and factoring in ongoing gold mining, which adds about 2,500 to 3,000 tonnes per year to the existing supply of 216,265 tonnes , the total gold supply would rise to around 240,000 tonnes.

With the projected gold price of $7,000 per ounce, the gold market cap could reach $59.26 trillion. If Bitcoin captures 50% of this market cap, its price would be approximately $1,494,962.

The remaining predictions are mostly general estimates without much detailed context. However, Jurrien Timmer from Fidelity offered a more comprehensive analysis by employing multiple models.

He incorporated the S2F model, the adoption model, which predicts price based on user growth and market adoption, and Metcalfe’s law, which links network value to the number of users. Each of these models generated different price estimates, resulting in a broad range from $1 million to $10 million per BTC.

Excluding the most extreme value from Timmer’s S2F model, the combined predictions from all sources suggest a price range for Bitcoin between $847,143 and $1,387,177, depending on whether the scenarios are bearish or bullish. The central estimate derived from these forecasts places Bitcoin’s price at around $1,117,160 by 2032.

Why the Bitcoin Power Law Model Stands Above the Rest Prediction Models

The Bitcoin Power Law theory provides one of the most reliable frameworks for predicting Bitcoin’s long-term price behavior. 

It builds on mathematical principles, using Bitcoin’s historical data to define a range of probable prices that align with the asset’s trajectory. Instead of relying on cycles or short-term events, the model focuses on structural trends in the network.

The foundation of the model lies in its use of quantile regression, a method that evaluates all available data points to create statistically significant boundaries. Unlike simple linear models, quantile regression considers the distribution of data, which ensures that predictions reflect the full dataset rather than just a handful of peaks or troughs. For Bitcoin, this approach has held true since July 2010.

At its core, the power law formula expresses the relationship between Bitcoin’s price and time. When the log of Bitcoin’s price is plotted against the log of time since its Genesis Block, the data forms a straight line on a log-log scale. This suggests a power-law relationship, with Bitcoin’s price increasing predictably over time.

The power law’s strength comes from its statistical rigor. The model’s R-squared value, which measures how well the data fits the regression line, consistently exceeds 0.94. An R-squared value above 0.9 signifies a strong correlation between time and price, proving the model’s predictive accuracy. 

If the R-squared value were to drop below the 0.9 threshold, the model’s reliability would weaken but not collapse entirely. For a complete breakdown, Bitcoin’s price would need to fall significantly below the lower bound of the model’s range and stay there for an extended period.

Additionally, one of its most compelling aspects is independence from the halving cycle. Many models hinge on Bitcoin’s 4-year supply halving events, often leading to speculative price movements. The power law avoids this reliance and focuses instead on broader adoption trends and network effects. By doing so, it captures Bitcoin’s price growth as a reflection of its utility and increasing user base rather than periodic supply shocks.

Quantile regression also helps the model manage Bitcoin’s volatility. Extreme price movements, whether spikes or crashes, don’t disrupt its predictions. The Power Law theory evaluates the entire dataset and then establishes boundaries that remain stable over time. 

While the extreme ends of the quantiles, such as the 0.001 quantile, are more sensitive to new data, the inclusion of over 750,000 points in the dataset minimizes their impact. Hence, it ensures the model remains steady even in volatile markets, which gives investors confidence in its ability to provide meaningful insights.

Unlike models that focus on specific price events or short-term patterns, the power law accounts for Bitcoin’s entire historical trajectory. Critics often argue that models like Stock-to-Flow overfit the data and tie predictions too closely to past price peaks or halving events. This creates a risk of inaccuracy when market conditions shift. 

The power law avoids this pitfall and evaluates Bitcoin’s price as part of a broader system governed by network growth and adoption.

The power law’s alignment with Bitcoin’s network effects strengthens its validity. As Bitcoin adoption grows, the network becomes more valuable, which attracts additional users in a reinforcing feedback loop. This mirrors Metcalfe’s Law.

While no model is perfect, the power law’s ability to capture Bitcoin’s price behavior with high statistical significance makes it a valuable tool.

One of the key reasons for its value lies in its scale invariance, which ensures that the relationships within the system remain consistent regardless of the scale at which they are observed. 

In the context of Bitcoin, scale invariance means that patterns observed in its price movements over short timeframes are consistent with those seen over longer periods. It ensures that the Power Law model can project Bitcoin’s price trajectory regardless of the time scale as long as the underlying network effects and adoption trends remain intact.

Based on the Power Law theory, Bitcoin could reach three key price points by December 2032:

• $380,076.18
• $1,071,200.21
• $2,903,045.40

CCN’s 2032 Bitcoin Price Prediction

We have two models that could potentially predict Bitcoin prices by 2032.

The first model envisions Bitcoin as a global reserve asset. To begin, we look at the current valuation of the global asset market, which is estimated to be around $900 trillion.

Bitcoin, currently with a fully diluted market capitalization of $2.1 trillion at $100,000 per BTC, represents a mere 0.23% of this total.

Considering the precedent set by companies like MicroStrategy and the growing trend of corporate Bitcoin adoption—exemplified by El Salvador’s move to embrace Bitcoin, investments from Fairfax County retirement funds , and potential future regulations in countries like the U.S. that might recognize Bitcoin as a reserve asset—even a conservative projection of $500,000 per Bitcoin would only elevate its market share to $10.5 trillion, or about 1.17% of the global asset market.

A more optimistic scenario with Bitcoin reaching $1,000,000 would place it at 2.34% of the global market.

The second model centers on Metcalfe’s Law, popularized by Timothy F. Peterson in his 2018 paper entitled “Metcalfe’s Law as a Model for Bitcoin’s Value.” According to Metcalfe’s Law, the value of a network is proportional to the square of the number of connected users (n^2).

For Bitcoin, the “network” is represented by the number of Bitcoin wallets, which serves as a proxy for the total user count.

Peterson’s adaptation of Metcalfe’s Law incorporates adjustments for Bitcoin inflation using a Gompertz function. This function is addressing the declining rate of new Bitcoin entering the market.

The model demonstrates that Bitcoin’s value increases non-linearly as the user base expands, showing a strong correlation between Bitcoin’s price and network growth, with an R^2 value above 80%.

While Peterson’s research from 2011 to 2017 provides valuable insights, it lacks forecasts for 2032. We used his model as a basis to create our own projections for Bitcoin’s potential future prices.

To apply Metcalfe’s Law, we first need to estimate the number of Bitcoin wallets or users by 2032. Research from Boston Consulting Group, Bitget, and Foresight Ventures suggests that this number could reach 1 billion by 2030 .

This represents an increase of 42% to 44% from the current estimate of around 560 million to 580 million wallets in 2024, according to Triple-A and the Crypto.com exchange.

For our projections, we will assume that the number of wallets in 2032 will be similar to the 2030 estimate. Given that 51% of these wallets are expected to hold Bitcoin, the number of Bitcoin wallets could reach around 510 million by 2030-2032.

Our model also draws inspiration from Fred Krueger, InvestAnswers, and Vixcontango and has been adjusted to reflect current projections and trends. This adjustment leads to a projected Bitcoin price of $1,483,224, which we round to $1.5 million per BTC by 2032.

It closely matches predictions from other analysts, with the exception of the Stock-to-Flow model. In our view, the S2F model is not a dependable method for evaluating Bitcoin’s future price, as it often generates overly bullish and unrealistic forecasts.

When considering the mean of analyst predictions, the rainbow chart, and the global reserve scenario, we estimate a price of $1,132,794 per Bitcoin.

Based on our projections for Bitcoin’s price in 2032 and our assumption that Strategy’s Bitcoin reserves will grow to between 681,070 and 914,670 BTC, we outline the following scenarios:

The table highlights that Bitcoin consistently outperforms Strategy in terms of return on investment (ROI) when compared to MSTR’s true value. Even after factoring in Strategy’s potential 300% NAV premium, Bitcoin still outperforms the stock in all scenarios, with ROIs reaching up to 1,400% in the bull case.

It is unlikely that MSTR will experience the same level of explosive stock appreciation seen when the Bitcoin strategy was first adopted. Scaling becomes more difficult at higher valuations. A move from $1 billion to $100 billion requires $99 billion in added market cap, while a jump from $100 billion to $1 trillion demands $900 billion. The larger the company grows, the harder it becomes to sustain those kinds of percentage gains.

But size isn’t the only factor at play. It’s a feedback loop. As more retail and institutional investors recognize the effectiveness of Strategy’s strategy, they will either replicate it by purchasing Bitcoin themselves, driving Bitcoin prices higher, or investing directly in MSTR as a simpler alternative. 

Both scenarios further benefit MSTR, reinforcing its position as a market leader in Bitcoin exposure. The more this strategy gains attention, the more willing investors become to pay a higher premium for MSTR, which would amplify the stock’s value.

Moreover, since 2022, the premium has grown not only due to Bitcoin’s price increases but also because Bitcoin has become a mainstream investment case. Adoption in traditional finance has surged, with institutions increasingly integrating Bitcoin into their portfolios. The synergy between MSTR’s strategy and Bitcoin’s growing role in traditional finance makes the 300% premium a reasonable outlook.

The Leveraged ETFs

In August 2024, the SEC approved the Defiance Daily Target 1.75X Long MSTR ETF (MSTX) , which aims to offer 1.75 times the daily percentage change in Strategy’s stock price. MSTX achieves its leveraged exposure through the use of financial derivatives, primarily swap agreements.

These swaps are contracts with financial institutions that allow the fund to gain exposure to the performance of MSTR without owning the stock directly.

The fund rebalances its holdings daily to maintain the 1.75x leverage target, which is why the returns can deviate from expectations if held over periods longer than one day. Since the fund is actively managed, it incurs higher fees (1.29% annually), more than typical ETFs such as VOO or VTI.

However, investors must also be aware of two factors. First, since MSTX is leveraged at 1.75x, it will magnify losses as well as gains. Second, calculating the future return of this ETF is challenging due to the compounding effect and daily rebalancing.

The actual return of a leveraged fund with 1.75x daily leverage will not simply be 175% of the stock’s return over the same period.

Determining the exact return would require calculating each day’s performance, but no one can predict daily stock returns over 8 years or even a shorter time frame. Nonetheless, MSTX remains a consideration for investors looking to amplify potential gains beyond what the stock alone can offer.

In February 2024, MSTX recorded gains in the low 100% range since its inception. By comparison, MSTR achieved a 50% increase over the same period since MSTX’s launch. MSTX employs 1.75x leverage tied to MSTR’s performance, delivering amplified returns during periods of consistent MSTR upward movement. However, flat or declining MSTR trends triggered rapid value erosion in MSTX. A hypothetical 50%–60% decline in MSTR can pose serious risk of complete capital loss for MSTX investors.

Same thing can be said about other ETFs such as MSTY, MSTZ, and MSTU.

• MSTY returned 17% since its debut, while MSTR surged 366% over the identical timeframe.
• MSTZ 96% decline vs MSTR’s 142% gain.

Although MSTU outperformed MSTR slightly (194% vs 142%), extended MSTR stagnation and range-bound movement have already exerted downward pressure on MSTU. If Strategy continues to oscilitate around 300s, MSTU will suffer the same fate as the rest of ETFs, underperforming against MSTR.

Conclusion

Our analysis aimed to account for all possibilities by 2032, including share dilution, Bitcoin reserves, debt, Bitcoin price, and Michael Saylor’s commitment to the strategy.

While Bitcoin shows stronger returns in its raw performance metrics, the results highlight that Strategy’s potential is deeply tied to its ability to maintain or grow its premium valuation. 

Currently, the NAV premium sits below 100%, but it could reach or surpass and maintain this level in the future due to increasing Bitcoin reserves, adoption, rising prices, and its growing recognition as a bridge between Bitcoin and traditional financial systems.

Bitcoin is a commodity without an issuer. It offers sovereignty and global accessibility. It can be self-custodied anywhere, even in regions where holding traditional stocks is challenging. In contrast, Strategy represents a different investment proposition. As a publicly traded company, it carries counterparty risk and demands extensive due diligence, including the review of comprehensive disclosures.

But Strategy serves a specific purpose for particular investors who cannot directly purchase Bitcoin or Bitcoin ETFs and are limited to publicly traded companies. For those seeking Bitcoin exposure within traditional financial frameworks, Strategy provides an indirect way to participate in Bitcoin’s potential growth.

Although we predict Bitcoin surpasses MicroStrategy in performance by 2032, only time will tell how each ultimately fares. Per Figure 26, our bull case scenario projects MicroStrategy achieves a 1,111% return from a $335 per share base, while Bitcoin delivers a 1,400% return from $100,000 per BTC. But their success will depend heavily on the widespread adoption of Bitcoin by various entities across the globe. This includes potential recognition by governments as a reserve asset, integration by pension funds and institutional investors as a key component of their portfolios, and broader acceptance by nations as a legal currency. The adoption milestones directly impact Bitcoin’s valuation and, consequently, MicroStrategy’s performance, given its strategic exposure to Bitcoin holdings. Hence, widespread Bitcoin adoption could lift both far beyond our predicted levels.

CCN Reports is a regular series that delves into the details to provide in-depth analysis of cryptocurrencies and the companies associated with them. We aim to engage a global audience interested in what’s what, who’s who and perhaps even why’s that.