Bitcoin News Today: MSTR's Bitcoin Bet: Why Outperformance Hinges on Time, Not Price

MicroStrategy’s aggressive Bitcoin accumulation strategy has solidified its position as the world’s largest corporate holder of the cryptocurrency, with a stockpile valued at over $70 billion as of July 31, 2025 [4]. The company, which rebranded from its original name, MicroStrategy, has transformed from a business intelligence software firm into what it now calls the "world's first and largest Bitcoin Treasury Company." This strategic pivot, led by CEO Michael Saylor, has been central to the firm’s identity over the past five years [5].

Since 2020, Strategy has acquired 628,791 Bitcoin, making it nearly twice as large as its closest competitor, MARA Holdings, which holds 50,000 Bitcoin, valued at $5.9 billion [4]. The firm’s approach has involved a mix of capital issuance, including at-the-market (ATM) equity offerings and convertible debt, to fund its Bitcoin purchases. As of August 2025, Strategy has completed 36.72% of its ambitious 42/42 capital plan, which authorizes up to $42 billion in equity and $42 billion in debt to further grow its Bitcoin holdings [1].

Despite the company’s long-term success in acquiring Bitcoin, its stock price has faced periodic underperformance relative to Bitcoin itself, leading some investors to question the efficacy of the strategy. However, a deeper analysis reveals that the divergence is not as clear-cut as it appears. On longer timeframes—such as 1 year, year-to-date, and full-year 2024—Strategy has consistently outperformed Bitcoin, with returns of 171.95%, 318.23%, and 21.16%, respectively [1]. In contrast, Bitcoin recorded 95.44%, 107.81%, and 20.01% during the same periods. While the stock has underperformed on shorter 1-month and 3-month windows, this is largely attributed to behavioral biases and short-term market dynamics rather than a structural flaw in the strategy itself.

One of the key factors driving the perception of underperformance is the behavioral tendencies of retail investors. Psychological biases such as recency bias, loss aversion, and hyperbolic discounting have shaped the expectations of many investors. For instance, when Bitcoin set new all-time highs in 2025, many investors fixated on the stock’s failure to match those highs, even though Strategy had already outperformed Bitcoin on a longer-term basis. This fixation is further exacerbated by the rise of altcoins and meme stocks, which have fostered an expectation of rapid gains that Strategy does not always deliver [1].

From a statistical standpoint, Strategy’s correlation with Bitcoin has remained high, with a daily Pearson correlation coefficient above 0.8. However, the stock’s volatility has been significantly higher than Bitcoin’s, with a volatility factor of approximately 1.57. This means that while Strategy amplifies Bitcoin’s gains during bull markets, it also suffers deeper drawdowns during corrections. Despite this, risk-adjusted return metrics such as the Sharpe and Sortino ratios have favored Strategy over Bitcoin, with Sharpe and Sortino ratios of 1.57 and 2.84 for Strategy versus 1.09 and 1.94 for Bitcoin [1].

The structural factors contributing to MSTR’s underperformance episodes include dilution through capital issuance, selling pressure from convertible arbitrage, and competition in the Bitcoin treasury sector. The company has raised significant capital through ATM offerings and convertible debt, which has increased its share count by 40% since October 2024. While this dilution is offset by the appreciation of its Bitcoin holdings, the issuance has introduced latent selling pressure in the market. Convertible arbitrage strategies, where investors simultaneously purchase convertible debt and short the stock, have further created a headwind for MSTR’s price action [1].

In addition to these internal factors, external forces such as the rise of Bitcoin spot ETFs and the proliferation of alternative Bitcoin treasury strategies have fragmented the capital that once flowed predominantly to Strategy. ETFs like BlackRock’s IBIT and Fidelity’s FBTC now offer investors direct, low-cost exposure to Bitcoin, reducing the demand for leveraged proxy plays like MSTR. At the same time, the entry of new firms into the Bitcoin treasury space—ranging from smaller players like Metaplanet to Ethereum and Solana-focused companies—has diluted Strategy’s dominance in the market [1].

In response to the perception of underperformance and the need for predictive models, some investors have turned to the Ballistic Acceleration Model (BAM). Developed by Marty Kendall in 2024, the model attempts to forecast MSTR’s price trajectory using a quadratic fit on log-log axes. While the model initially showed strong historical alignment with MSTR’s price movements, it has proven to be structurally unstable and prone to overfitting. The reliance on polynomial extrapolation has led to unrealistic predictions, such as MSTR’s market capitalization exceeding half of Bitcoin’s, which the model’s creator himself has described as “somewhat ludicrous” [1].

In contrast, the power law model offers a more robust and theoretically grounded framework. This model posits that Bitcoin’s price growth follows a power law in time, driven by network adoption and Metcalfe’s Law. Strategy, as a leveraged expression of Bitcoin’s trajectory, inherits this growth pattern, with its valuation derived as a function of Bitcoin’s price. The power law model provides a stable framework for long-term valuation, anchored to the fundamental growth of Bitcoin’s network and its time-based scaling [1].

Ultimately, the long-term success of Strategy hinges on its ability to maintain its corporate commitment to Bitcoin accumulation. Any deviation from this strategy or a shift in leadership could disrupt the linkage between MSTR and Bitcoin. However, as of now, the firm continues to execute its strategy with discipline, leveraging its scale and market influence to grow its Bitcoin stack while navigating the challenges of capital dispersion and market volatility [1].

Source:

[1] Strategy Lags Bitcoin — What's Next for MSTR Investors? (https://www.ccn.com/analysis/business/why-strategy-isnt-keeping-up-btc-where-mstr-headed/)

[2] Michael Saylor's Strategy does not 'move the price' of Bitcoin (https://cointelegraph.com/news/michael-saylor-s-strategy-does-not-move-the-price-of-bitcoin-exec)

[3] Who's Getting Rich Off The $100 Billion Crypto Treasury ... (https://www.forbes.com/sites/juliegoldenberg/2025/08/19/whos-getting-rich-off-the-100-billion-crypto-treasury-boom/)

[4] Ranked: The Companies Who Own the Most Bitcoin in 2025 (https://www.visualcapitalist.com/ranked-the-companies-who-own-the-most-bitcoin-in-2025/)

[5] These Companies Own Billions of Dollars Worth of Bitcoin (https://www.voronoiapp.com/markets/These-Companies-Own-Billions-of-Dollars-Worth-of-Bitcoin-6250)