In the summer of 2025, it's the Crypto Equities Summer.

Looking at the capital markets, the true star of this year is not Meta, nor NVIDIA, nor those traditional tech giants, but the "strategic Bitcoin-holding" equities that have brought Bitcoin onto the balance sheets of publicly traded companies. From this chart, you can easily see the frenzy around MicroStrategy.

Over the past year, Bitcoin has surged by nearly 94%, surpassing the vast majority of traditional assets. In comparison, the likes of Meta, NVIDIA, Tesla, and other tech giants have seen gains of at most 30%. Meanwhile, companies like Microsoft, Apple, and the S&P 500 have hovered around 0 or even experienced pullbacks.

But MicroStrategy's stock price has soared by 208.7%.

Behind MicroStrategy, a large number of crypto-holding equities and J-equities are each creating their own valuation myths. Premiums on market value/net asset value (mNAV), loan rates, short positions, convertible bond arbitrage, and even GameStop-style short squeezes—all of these are brewing collisions in the undercurrents of the capital market. A mix of belief and structural gameplay, differing mindsets between institutions and retail investors—on this new battlefield of "coin stocks," how are traders deciding their positions? And what hidden logics are dominating the market?

In this article, BlockBeats will dissect the frenzy and game theory of this "strategic Bitcoin-holding" equities rally from the perspectives of three professional traders: from MSTR's premium fluctuations to the arbitrage shadow battles of rising star companies, from retail investors' fantasies to institutional analytics, unfolding the cycle of this new capital narrative step by step.

The Truth of "Strategic Bitcoin-Holding" Equities

Shorting MicroStrategy but longing BTC seems to be the trading view of many traditional financial institutions and traders.

The first trader interviewed by BlockBeats, DragonHeartSalt, adopts this very strategy: "The implied volatility (IV) difference of these companies is enormous. I buy Bitcoin options off-exchange using SignalPlus software and sell call options for companies like MSTR at the U.S. stock market open."

In DragonHeartSalt's own words, this is the "long BTC + short MSTR" volatility scissor spread strategy, a strategy to achieve stable returns.

「This strategy is actually a judgment on the 'Premium Reversion Range',」 said another trader with a conservative trading style, Hikari: 「For example, assuming the current premium is 2x, and you expect it to fall back to 1.5x, then when the premium drops to this level, you can lock in the price difference for profit. But if the market sentiment becomes overly exuberant, pushing the premium to 2.5x or 3x, you will experience unrealized losses.」

「mNAV Premium」 seems to be a term that all traders mention when discussing the 'strategic holding' of stocks.

The so-called 「mNAV (Market Net Asset Value) Premium」, in simpler terms, is the multiple between a company's market capitalization and the net value of its actual holdings of crypto assets.

The popularity of this indicator is largely attributed to the Bitcoin buying frenzy sparked by MicroStrategy (MSTR) in 2020. Since then, the price of MSTR has been closely tied to the rise and fall of Bitcoin, but the market price has consistently been significantly higher than the company's actual 'asset holding net value'. Today, this mNAV 'premium phenomenon' has also been replicated in more and more crypto asset stocks, such as Metaplanet and SRM. In other words, the capital market is willing to pay far more than the sum of 'coin-based + core asset' for these companies, with the remaining portion being a bet on holding, leverage, future financing capabilities, and imaginative space.

mNAV Premium Index, The Mirror of MicroStrategies

Looking back at the trend of the MicroStrategy mNAV Premium Index. From 2021 to early 2024, the mNAV premium has been running between 1.0 and 2.0, with a historical average of about 1.3—meaning the market is willing to pay a 30% premium on the Bitcoin on MSTR's books.

However, starting in the second half of 2024, MicroStrategy's mNAV premium has been hovering around 1.8. By the end of 2024, as Bitcoin continuously approached the $100,000 mark, MSTR's mNAV premium skyrocketed, breaking the 2x mark, reaching a historical peak of 3.3x on individual extreme trading days.

In the first half of 2025, the mNAV index fluctuated between 1.6 and 1.9. It is evident that behind each change in the premium range is a round of capital flow expectations and the rise and fall of speculative sentiment.

In the words of a Dragonheart Salt enthusiast, this is actually similar to the traditional enterprise's concept of operating leverage, where the market's assessment of these enterprises' future leverage will affect their premium: "MSTR has already been through multiple rounds of financing, with creditors all over Wall Street, and this fundraising ability is the core competitive advantage. The market expects you to continuously raise money before daring to give you a higher premium." In contrast, startups and small-scale "hodl stocks," even if they shout until they're hoarse, find it challenging to gain the same level of trust and premium from the capital markets.

What Premium Is Considered Reasonable?

Butter, a typical quant and data believer, bases all decisions on historical percentiles and volatility.

"A premium on MicroStrategy in the range of 2-3 times is considered reasonable." This is what Butter says after calculating the price change of Bitcoin and MicroStrategy's stock price in the past year during the same period.

From early 2024 to March, when Bitcoin surged from around $40,000 to $70,000, a 75% increase, MSTR skyrocketed from $55 to nearly $180, a surge of over 220%. In this round of increase, MSTR was about three times that of Bitcoin.

By November to December 2024, when Bitcoin once again tested the $100,000 mark, rising by about 33%, MSTR climbed from $280 to around $520, an increase of about 86%, more than twice that of Bitcoin.

However, during the subsequent pullback period from December 2024 to February 2025, when Bitcoin fell from $100,000 to $80,000, a drop of about 20%, MSTR's decline was also twice as much, with a cumulative decline of about 50%.

Similarly, from March to May of the same year, when Bitcoin rebounded to around $108,000, a 35% increase, MSTR's surge was close to 70%, still at twice the rate.

In addition to the premium index, Butter also focuses on the annualized volatility. According to his calculations, in 2024, Bitcoin's daily return standard deviation was about 4.0%, corresponding to an annualized volatility of about 76.4% for all-weather trading; while during the same period, MSTR's daily return standard deviation was about 6.4%, with a daily annualized volatility in the US stock market reaching 101.6%. Moving into 2025, BTC's annualized volatility fell to about 57.3%, while MSTR still maintained around 76%.

Therefore, Butter's core point is very clear: "The premium fluctuating within a range of 1.5-3 times is a very clear trading signal." By combining volatility with mNAV premium, Butter has distilled the simplest trading logic —— long when the market is low volatility + low premium, and short when it is high volatility + high premium.

Hikari's approach is similar to Butter's, but he also incorporates options strategies as a supplement: selling put options to earn the premium in a low premium range, and selling call options in a high premium range to collect time value. Here, he also reminds retail investors: "Margin accounts for both sides are independent. If both sides are leveraged, it is easy to get liquidated in extreme market conditions. All heavy positions, leverage, and option arbitrage require emphasis on risk management."

Convertible Bond Arbitrage, Wall Street's Mature Strategy of Playing MSTR

If premium arbitrage and options trading are the required courses for retail and quant players in the "coin-stock" world, then what truly large funds and institutional players value more is the arbitrage space at the convertible bond level.

On October 30, 2024, Michael Saylor officially launched the "21/21 Plan" during an investor conference call: to gradually issue $21 billion worth of common stock over the next three years through At-The-Market (ATM) offerings to continue buying Bitcoin. In just two short months, MicroStrategy completed the first round of targets —— issuing a total of 150 million shares, raising $22.4 billion, and acquiring an additional 27,200 BTC. In the first quarter of 2025, the company once again raised $21 billion through ATM offerings, while simultaneously introducing $21 billion worth of perpetual preferred stock and $21 billion worth of convertible bonds, bringing the total size of fundraising tools to $630 billion within six months.

Butter observed that this "overtime" issuance has put significant pressure on MSTR's stock price. Although the stock price surged to a high of $520 in November 2024, as the market anticipated the dilution, the stock price plummeted, dropping below $240 in February 2025, approaching the low point of Bitcoin's pullback period. Even occasional rebounds are often suppressed by the issuance of preferred stock and convertible bonds. In his view, this is also a key logic behind MSTR's stock price being extremely volatile in the short term, yet exhibiting sustained volatility in the long term.

However, for many more institutional hedge funds, the focus is not on betting on the "up" or "down" direction but on capturing volatility through convertible bond arbitrage.

「Convertible bonds usually have a higher implied volatility than options of the same tenure, making them an ideal tool for 'volatility arbitrage.' The specific method is to buy MSTR convertible bonds on one side and borrow an equivalent amount of common stock to sell short in the market, locking in a net Delta≈0 exposure. With each significant stock price fluctuation, by adjusting the short position ratio and buying low while selling high, one can harvest volatility as profits.」 Butter explained, 「This is one of Wall Street's most mature arbitrage games.」

Behind this, a group of hedge funds are quietly using convertible bonds to play Wall Street's most mature arbitrage game—'Delta Neutral, Gamma Long'.

He added that MSTR's short interest had once reached as high as 14.4%, but many shorts were not necessarily 'bearish on the company's fundamentals,' but rather funds engaging in convertible bond arbitrage, using continuous shorting to dynamically hedge positions. "They don't really care if Bitcoin goes up or down; as long as the volatility is high enough, they can repeatedly buy low and sell high to exploit the arbitrage spread." Butter summarized in this way.

And MSTR's convertible bond, in a sense, is also a type of bullish option derivative.

Hikari also has a set of experiences with options and convertible bond strategies. He described buying options as buying a lottery ticket, occasionally hitting a jackpot, but most of the time paying the market 'premium fee'; selling options is like being a lottery shop owner, relying on collecting premium fees for a 'steady income stream.' In his actual trading, both options and convertible bonds are tools for risk diversification and cost averaging.

「Unlike traditional spot or leverage contracts, the most significant aspect of options is in the 'time dimension.' You can choose different expiration dates such as 1 month, 3 months, 6 months, each with its own unique implied volatility, creating numerous possibilities for combinations, thus keeping the strategy three-dimensional. This way, no matter how the market moves, you can always control risk and return within your tolerance range.」

This mindset is the underlying logic of Wall Street's most mainstream derivative arbitrage. In the case of MSTR, such structured arbitrage has become the battleground for smart capital.

Is It Time to Implement Short Strategies?

However, for ordinary investors and retail traders, this seemingly lively arbitrage feast may not necessarily be a cause for celebration. Because as more and more hedge funds and institutions continuously 'bloodlet' the market through 'issuance + arbitrage,' common stockholders often end up as the ultimate bagholders: they may not be able to dynamically hedge like professional institutions, nor easily identify the risks of premium regression and dilution—once the company undergoes a large-scale issuance or faces an extreme market situation, paper gains will quickly turn into bubbles.

It is for this reason that in recent years, 'implementing short strategies' has become the hedge option for many traders and structural funds. Even if you are a staunch bull on Bitcoin, during periods of high premiums and high volatility, simply holding MSTR shares may face a larger net asset value drawdown than holding BTC alone. How to hedge risks, or to capture the 'regression market' of MSTR's premium, has become a question that every trader in the 'crypto-stock' market must confront.

When it comes to discussing the shorting micro strategy, Hikari's attitude noticeably became more cautious.

He said that he had suffered losses due to shorting micro strategy. He admitted that he had specifically written a post-mortem on this in his public account — last year, he started shorting MSTR at $320, and the price skyrocketed to $550, putting immense pressure on his position.

Although he ultimately "broke even" when MSTR retraced to just over $300, the pressure of facing a high premium and enduring the retracement was described by him as something "outsiders find hard to understand."

This trade completely reshaped Hikari's style. He stated that now, if he were to short, he would never do so by naked selling the spot or directly selling calls; instead, he would opt to first buy put options and other limited-risk strategies — even if it costs more, he would no longer rashly confront the market head-on. "You still have to tightly lock the risk within what you can accept," he concluded.

But as mentioned earlier and pointed out by Butter, MicroStrategy has significantly expanded its common stock and preferred stock authorization in recent years, escalating from 330 million shares to over a hundred billion shares directly, while frequently issuing preferred stocks, convertible bonds, and continuous ATM offerings. "These actions have set the stage for unlimited dilution in the future. Particularly, the ongoing ATM issuances and premium arbitrage have allowed the management team to 'risklessly' buy coins as long as the stock price is above net asset value, exerting continuous dilution pressure on the common stock price."

Especially if Bitcoin were to experience a significant retracement, this "high premium funding + continuous buying of coins" model would face even greater pressure. After all, at its core, MicroStrategy's model still relies on the market's continual high premium and confidence in Bitcoin.

As a result, Butter also mentioned two double-inverse ETFs specifically designed to short MicroStrategy: SMST and MSTZ, with expense ratios of 1.29% and 1.05%, respectively: "But this is more suitable for experienced short-term traders or investors looking to hedge existing positions. Not suitable for long-term investors, as leveraged ETFs suffer from the 'leverage decay' effect, often resulting in lower returns than expected in the long run."

Will "Holdings-Driven Stocks" face a GameStop-like short squeeze?

If shorting MSTR is seen as an institution and veteran risk hedging tool, then "short squeeze" is the ultimate narrative inevitable in each round of the capital market's climax. Over the past year, there have been no shortages of institutions publicly shorting "holding companies" like MicroStrategy and Metaplanet. Many investors cannot help but draw parallels to the GameStop retail short squeeze that rocked Wall Street — so, do these types of crypto equities also have the potential ground for igniting a short squeeze?

In this matter, although the analysis perspectives vary, the viewpoints of the three traders are somewhat similar.

Long Heart Salt believes that from the perspective of Implied Volatility (IV), currently underlying assets such as MSTR have not shown a clear "overbought" signal. The greater risk instead comes from variables such as policy or taxation disrupting the premium core logic. He joked, "Now all the short sellers should have gone to CRCL."

Hikari, on the other hand, provided a more direct analysis. He believes that giants like MicroStrategy, with a market cap of hundreds of billions of dollars, are unlikely to experience a GameStop-style extreme short squeeze again. The reason is simple: the float is too large, and the liquidity is too strong, making it difficult for retail investors or speculative funds to collectively impact the overall market cap. "In contrast, small-cap companies like SBET, initially valued at only a few million dollars, are the ones that could potentially be squeezed." He added that SBET's performance in May of this year is a typical example—its stock price surged from two to three dollars to 124 dollars in just a few weeks, nearly quadrupling its market cap. Low-cap assets with limited liquidity and scarce loanable shares are the most susceptible breeding ground for a short squeeze.

Butter also agrees with this view. He elaborated further to BlockBeats on the two core signals of a "short squeeze" event: first, when the stock price experiences an extreme single-day surge, with the increase entering the historical top 0.5% percentile; second, the available share of stocks for borrowing in the market sharply decreases to the point where it is almost impossible to borrow shares, forcing short sellers to cover.

"If you notice a stock suddenly experiencing a surge in trading volume, at the same time, the available shares for borrowing are minimal, the short interest is high, and the loan rate is skyrocketing, this is basically a signal that a short squeeze is brewing."

Using MSTR as an example, in June of this year, its total short sales volume was approximately 23.82 million shares, accounting for 9.5% of the float. Historically, in mid-May, this figure even climbed to 27.4 million shares, with short positions accounting for 12-13%. However, from a financing and loan supply perspective, MSTR's short squeeze risk is not actually considered extreme. The current loan rate is only 0.36% annually, and there are still 3.9–4.4 million shares available for borrowing in the market. In other words, although there is significant short selling pressure, there is still a long way to go before a true "short squeeze" occurs.

In stark contrast is the case of SBET, a US stock hoarding ETH. As of now, SBET has an annualized loan rate as high as 54.8%, and borrowing shares is extremely difficult and costly. About 8.7% of the float is held by short sellers, and all short positions can be covered with just one day's trading volume. High costs combined with a high short interest ratio indicate that once the trend reverses, SBET is likely to experience a typical "rolling short squeeze" effect.

Turning to the situation of shorting TRX, the US stock SRM Entertainment (SRM) seems to be even more extreme. The latest data shows that SRM's annualized borrowing cost has reached as high as 108–129%, with the lendable shares hovering between 600,000 and 1.2 million, and the short interest ratio roughly between 4.7–5.1%. Although the short interest ratio is only moderate, the extremely high financing cost directly compresses the short selling space. Once the market situation changes, the funding side will come under tremendous pressure.

As for the strategic holding of SOL, the US stock DeFi Development Corp. (DFDV), the borrowing cost once reached a staggering 230%, with a short interest ratio of 14%, where almost one-third of the float was used for shorting. Therefore, overall, although the tokenized stock market has the conditions to create a short squeeze, those truly able to ignite the "long-short game" singularity are often those stocks with smaller market capitalization, poorer liquidity, and higher degree of capital control.

MicroStrategy: The One and Only in the World

"For example, if you have a market capitalization of $10 billion, and the market believes you could raise another $20 billion for initiatives, then giving you a 2x premium is not considered expensive. But if you have just gone public and your market value is still small, even if you shout 'I want to raise $500 million' to the skies, the capital market may not really believe you." Longxin Salt pointed out the current watershed for crypto holding companies—only those who truly grow big and strong, with the ability for continuous fundraising and expansion, are eligible to enjoy a premium in the market. Those with limited scale, newly listed "small players" find it difficult to replicate MSTR's valuation myth in the market.

Looking back over the past two years, "strategic holding companies" have gradually gathered in the US stock market—some heavily invested in Bitcoin, some strategically positioned in mainstream assets like Ethereum, SOL, BNB, or even HLP, while some have mimicked MSTR's strategy, solely aiming to ride the "holding premium" wave.

How to view the investment logic and market positioning of such companies? Longxin Salt's viewpoint remains calm: "This track is too crowded now. Companies with just a 'shell' or gimmick, lacking real business and operational support, are fundamentally too 'young'. Public companies are not QQ groups, and you can't just gather a few people around a table to play the capital game." He emphasized that the capital market has a set of mature rules and bottom line, and relying solely on Web3 grassroots qualities and community enthusiasm makes it difficult to sustain a foothold in the US stock market.

In addition, there is also a big difference in how different countries and regions price such companies. For example, Japan's Metaplanet, fundamentally a company rooted in the hotel industry, is now the ninth largest Bitcoin holder globally. As Japan's local tax policies are more favorable to holding cryptocurrencies, and with many Asian investors unable to buy coins, "coin-stocks" like MSTR and Metaplanet have even become the "crypto ETF" in many people's minds. In contrast, in Hong Kong, some HK stocks are also attempting to allocate to cryptocurrency, but due to liquidity dispersion and insufficient market depth, they cannot enjoy the same benefits as in the US stock market. Longxin Salt bluntly stated: "I am not very optimistic about HK stock companies operating in this manner."

It is undeniable that placing a large amount of Bitcoin on a company's balance sheet is indeed a symbol of strength. However, the market's "rules of the game" have not changed—high-quality companies are few and far between, with most companies simply taking advantage of a trend and valuation premium. Once Bitcoin experiences a significant drop, those companies with leveraged balance sheets and lacking genuine business activities are easily plunged into distress as their refinancing capabilities dry up. They are forced to sell their held Bitcoin at the bottom of a bear market, further intensifying downward pressure on the entire market, triggering a chain reaction and forming a vicious cycle similar to a "death spiral."

During a bull market, these companies often exhibit a "left foot stepping on the right foot" self-reinforcing structure—rising coin prices, increased asset value, soaring market capitalization, market frenzy, and smooth refinancing. However, in a bear market, everything reverses, and the valuation system could collapse at any time. Long Xin Salt's experience is straightforward: "Do not buy resolutely at a high premium, do not buy those recently rebranded, fear the young and reckless, and stay away from companies with more than two rounds of financing—afraid that the leading creditor is actually an insider, similar to playing USD bonds with real estate developers."

During the interview process, Hikari's opinion, similar to Long Xin Salt's, was that many newly emerged "strategic holding companies" essentially replicate MicroStrategy's playbook—buying coins, financing, storytelling, and relying on the "holding premium" to drive up market capitalization. Some of them are even VCs or project teams from the cryptocurrency community transitioning into this strategy. Hikari admitted: "In fact, many of these companies are just here to scam money."

"The reason why MSTR has come this far is simply due to its significant scale and the large amount of Bitcoin it holds. In the future, it has many potential strategies, such as using these Bitcoins for large-scale collateralization or implementing complex options strategies to activate the assets. As long as the company is willing to distribute dividends and return these profits to shareholders, this path can actually continue," he said.

He added that besides MicroStrategy, he is currently only focusing on a few truly transparent in asset disclosure and legitimate core business "Bitcoin-holding stocks," such as Japan's Metaplanet and medical equipment company SMLR (Semler Scientific). "As long as the asset structure is clear enough and the core business is reasonable, these companies are still worth paying attention to."

As for how the market is changing and how strategies are evolving, Long Xin Salt, Hikari, and Butter all overwhelmingly agree on one thing: regardless of how the narrative unfolds, the scarcest and most consensual asset in the crypto market is still Bitcoin.

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