Michael Saylor’s Strategy Is Beating Bitcoin — Could the Tide Be Turning?

Bitcoin has been seen as a ticket to financial freedom. With a capped amount of 21 million coins, it’s colloquially known as “digital gold” — an inflation hedge and money of the future. Its decentralized, borderless quality makes it immune to government intervention, further popular among investors.

Large institutions have been gradually incorporating Bitcoin in recent years. Tesla, BlackRock, and even governments such as El Salvador have placed Bitcoin on their balance sheets. Adoption is increasing, with Bitcoin’s network hash rate hitting new record highs in 2025, becoming more secure than ever before. Transaction volumes are also increasing, showing that Bitcoin is not only being held — it’s being used.

Strategy’s High-Stakes Bet on Bitcoin

Despite strong fundamentals, Bitcoin’s price has struggled. This has put pressure on companies linked to Bitcoin — particularly Michael Saylor’s Strategy. Unlike others, Strategy isn’t just holding Bitcoin — it’s borrowing billions to buy more, making its stock a leveraged bet on Bitcoin’s future.

Leverage Boosts Returns — But Increases Risk

The problem with leverage is that it magnifies both gains and losses. If Bitcoin’s price continues to drop, Strategy’s heavily leveraged balance sheet could quickly become a liability.

Interestingly, while Bitcoin’s price has declined in early 2024, Strategy’s stock has risen 2.7% year-to-date. This suggests that the stock is no longer purely trading on Bitcoin’s value but has become a speculative play in its own right.

The danger is that this premium could disappear quickly. If Bitcoin experiences a sharp downturn, Strategy’s debt-heavy structure could expose it to significant losses. Traders are already positioning for a potential drop. A hedging strategy involving a June $250/$200 put spread could generate profit if Strategy’s stock falls between $150 and $250. However, if the stock collapses below $200, the trader would be forced to buy at that price — still a risky bet given Strategy’s estimated book value of $150 per share.

Market Volatility and Broader Risks

Bitcoin is not alone in being under pressure. Wider market uncertainty is affecting equities. Deutsche Bank’s chief strategist, Binky Chadha, cautioned that the U.S. stock market sell-off is not yet over.

Chadha foresees that if the S&P 500 falls another 6.9%, it would place additional pressure on Bitcoin and Strategy. The S&P 500 closed Friday at 5,638.94 — already 8% off of its all-time high.

Uncertainty over trade policy and moderating corporate profits are contributing to market tension. Though Wall Street has long banked on a “Trump put” — i.e., Donald Trump would respond with policy adjustments to calm markets — Chadha is unconvinced. He speculates the administration would only take action following a sharp decline in consumer confidence and approval ratings.

Despite the short-term difficulties, Chadha is bullish on the long term. He retains a year-end target of 7,000 for the S&P 500, which implies that when uncertainty has passed, Bitcoin and Strategy may make a powerful recovery.