The Frenzy and Game of Encryption in US Stocks: From Premium to Arbitrage

In the summer of 2025, the encryption US stocks welcomed a wave of excitement. Unlike traditional tech giants, the "strategic holding" US stocks that incorporated Bitcoin into their balance sheets became the true main characters. Among them, MicroStrategy (MSTR) stood out, with its stock price soaring 208.7% in the past year, far exceeding Bitcoin's 94% increase.

In this new capital narrative, metrics such as market cap/net asset value premium (mNAV), borrowing rates, and short positions have become the focal points closely monitored by traders. This article will delve into the frenzy and game of "strategic holding" in U.S. stocks from the perspectives of three professional traders.

The Truth About "Strategic Holding Coins" in US Stocks

Most traders adopt the strategy of "long BTC, short MSTR" to take advantage of the implied volatility (IV) differences for Arbitrage. This strategy is essentially a judgment on the "premium regression range."

The mNAV premium index has become an important indicator for measuring the valuation of such companies. Taking MicroStrategy as an example, from 2021 to early 2024, its mNAV premium fluctuated between 1.0 and 2.0 times, with a historical average of about 1.3 times. Entering the second half of 2024, the premium began to rise, reaching a historical high of 3.3 times on certain extreme trading days.

Different traders have their own judgments regarding the reasonableness of premiums. Some believe that a premium of 2-3 times is reasonable, while others pay more attention to volatility indicators. In general, the trading logic has become commonly accepted: going long when there is low volatility and low premium, and going short when there is high volatility and high premium.

Convertible Bond Arbitrage: A Mature Strategy on Wall Street

For large funds and institutional players, convertible bond arbitrage has become an important arbitrage space. The recent "21/21 Plan" launched by MicroStrategy and frequent financing activities have provided more opportunities for this arbitrage.

In practice, institutions usually buy convertible bonds while borrowing an equivalent amount of common stock to short sell, achieving Delta neutrality. By adjusting the short ratio and buying low while selling high, they are able to convert volatility into profit. This "Delta neutral, Gamma long" strategy is one of the most mature arbitrage games on Wall Street.

However, this arbitrage strategy is not friendly to ordinary investors. As more and more hedge funds and institutions extract blood from the market through "secondary offerings + arbitrage", ordinary shareholders often become the last buyers.

Risks and Opportunities of Shorting MicroStrategy

Despite shorting MicroStrategy being a choice for many traders, it is not without risks. Experienced traders suggest that if one is to short, it is better to choose a combination with limited risks, such as buying put options, rather than directly naked shorting the spot or selling call options.

There are also double inverse ETFs specifically designed to short MicroStrategy on the market, such as SMST and MSTZ. However, these types of products are more suitable for experienced short-term traders or for hedging existing positions, and are not suitable for long-term investment.

As for whether a short squeeze similar to GameStop will occur, most analysts believe that companies like MicroStrategy, with a market value of hundreds of billions of dollars, are unlikely to experience extreme short squeezes again. In contrast, some smaller, less liquid "crypto stocks" may be more susceptible to short squeeze situations.

The Future of the "Coin-Stock" Market

As more and more companies join the "strategic holding" camp, market competition is becoming increasingly fierce. However, those that can truly win market favor are still the companies that possess continuous financing capabilities, clear asset structures, and stable core businesses.

For investors, companies with high premiums, those that have just transitioned, or have not raised more than two rounds of financing should be approached with caution. Ultimately, regardless of how the market changes, Bitcoin remains the most scarce and consensus-driven asset in the encryption market.