Strategy’s 650,000-BTC reserve has effectively made it a “pressure valve” for the broader crypto market, according to Tom Lee, chairman and CEO of Bitmine Immersion.
Lee said that Strategy (MSTR) has become a go-to tool for investors looking to manage crypto risk—a dynamic that has contributed to the stock’s 43% decline over the past month. “Strategy is probably the most important stock to watch right now,” he told CNBC on Thursday. “It’s effectively the bitcoin proxy and the most liquid name in the space.”
With limited ways to hedge losses directly in crypto markets, institutional traders are increasingly shorting Strategy shares. The company’s massive bitcoin holdings link its stock price closely to BTC$90,892.05, providing a highly liquid, indirect hedge.
“In crypto, when investors try to hedge bitcoin or ether exposure, there aren’t many markets deep enough to handle the flows,” Lee explained. “So they short the most liquid proxies—and that’s MicroStrategy.”
Lee added that crypto-native hedging tools, like bitcoin and ether derivatives, still lack sufficient depth for large positions. “Anyone with a sizable bitcoin long has very limited ability to hedge using crypto derivatives,” he noted.
Strategy offers a workaround. “Its option chain is so liquid that traders can hedge all their crypto exposure through Strategy,” Lee said. As a result, the stock is “essentially absorbing all the hedging pressure the crypto industry is trying to offload to protect their longs.”
Lee also highlighted lingering effects from the Oct. 10 market crash, which erased $20 billion in value and disrupted liquidity. Market makers—the closest equivalent crypto has to a central bank—remain constrained, leaving altcoins, mining stocks, and bitcoin-proxy assets like Strategy thinly traded.
The company has been one of the hardest-hit assets in the current downturn. Lee says this is partly because it functions as a release valve for market stress, underscoring deeper structural fragilities in crypto’s market plumbing.
