Written by: Jaleel Jia Liu,BlockBeats
The summer of 2025 is the summer of crypto stocks.
Looking at the capital market, the true protagonist this year is not Meta, not NVIDIA, and not those traditional tech giants, but the "strategic bitcoin-holding" stocks that have brought bitcoin onto corporate balance sheets. This chart can intuitively show MicroStrategy's madness.
Over the past year, bitcoin has risen nearly 94%, outperforming most traditional assets. In comparison, tech giants like Meta, NVIDIA, and Tesla have risen at most 30%, while Microsoft, Apple, and the S&P 500 index have basically hovered around 0, even experiencing pullbacks.
But MicroStrategy's stock price has soared by 208.7%.
Behind MSTR, a large group of crypto-holding US and Japanese stocks are staging their own valuation myths. Market value / net asset value premium (mNAV), lending rates, short positions, convertible bond arbitrage, and even GameStop-style short squeezes are brewing in the undercurrents of the capital market. Faith and structural games are intertwined, with institutional and retail investors having different mindsets - how do traders choose and retreat in this new "crypto stock" battlefield? What hidden logic is driving the market?
In this article, BlockBeats will deconstruct the frenzy and game of "strategic bitcoin-holding" stocks from the perspectives of three professional traders: from MSTR's premium fluctuations to the arbitrage battles of emerging companies, from retail investors' fantasies to institutional calculations, progressively unfolding this new capital narrative cycle.
The Truth of "Strategic Bitcoin-Holding" Stocks
Long BTC and short MicroStrategy seems to be the view of many traditional financial institutions and traders.
The first trader BlockBeats interviewed, Dragon Heart Salt, adopts precisely this strategy: "The implied volatility (IV) difference of such companies is huge. I buy bitcoin options in the over-the-counter market using SignalPlus software while selling call options for the company, such as MSTR, during US stock market opening."
In Dragon Heart Salt's own words, this is a "long BTC + short MSTR" volatility scissors difference strategy, a strategy that can generate stable returns.
"This strategy is actually a judgment of 'premium regression range'," said Hikari, another more conservative trader: "For example, if the current premium is 2x, and you expect it to fall to 1.5x, you can lock in the price difference for profit. However, if market sentiment becomes overly excited, pushing the premium to 2.5x or 3x, it will result in floating losses."
"Premium" seems to be a word that all traders cannot avoid when discussing "strategic bitcoin-holding" stocks.
So-called mNAV (Market Net Asset Value), in simple terms, is the multiple between a company's market value and its actual held crypto asset net value.
The popularity of this indicator is almost entirely due to MicroStrategy's bitcoin buying frenzy in 2020. Since then, MSTR's stock price has been almost tied to bitcoin's ups and downs, but the market has consistently priced it much higher than the company's actual "bitcoin net value". Today, this mNAV "premium phenomenon" has been replicated in more and more crypto asset US and Japanese stocks like Metaplanet and SRM. In other words, the capital market is willing to pay far more than the sum of "bitcoin-based + core business assets", and the remaining part is actually a bet on bitcoin holding, leverage, future financing capabilities, and imagination space.
(Translation continues in the same manner for the rest of the text)Convertible Bond Arbitrage: Wall Street's Mature Strategy for MSTR
If premium arbitrage and options trading are the required courses for retail investors and quantitative players in the "crypto stocks" world, then large funds and institutional players are more focused on the arbitrage space of convertible bonds.
On October 30, 2024, Michael Saylor officially launched the "21/21 Plan" during an investor conference call: issuing $21 billion in common stock through ATM (At-The-Market) over the next three years to continuously buy Bitcoin. In fact, in just two months, MicroStrategy completed its first round of goals - issuing 1.5 billion shares, raising $22.4 billion, and acquiring 27,200 BTC; immediately after, in the first quarter of 2025, the company launched another $21 billion ATM and simultaneously introduced $21 billion in perpetual preferred stock and $21 billion in convertible bonds, with a total financing tool scale of $63 billion within half a year.
Butter observed that this "overtime-style" issuance put heavy pressure on MSTR's stock price. In November 2024, although the stock price once reached a high of $520, as market expectations of dilution fell, the stock price continued to decline, falling below $240 in February 2025, approaching the premium low point during a Bitcoin pullback. Even occasional rebounds were often suppressed by preferred stock and convertible bond issuances.
For many more institutionalized hedge funds, the focus is not on betting on "long" or "short" directions, but on capturing volatility through convertible bond arbitrage.
"Convertible bonds typically have higher implied volatility than contemporaneous options, making them an ideal tool for 'volatility arbitrage'. The specific approach is to buy MSTR convertible bonds while short-selling equivalent common stocks in the market, locking the net exposure Delta≈0. With each significant stock price fluctuation, by adjusting the short ratio and buying low and selling high, volatility can be harvested as profit," Butter explained.
Behind this, a group of hedge funds are quietly executing Wall Street's most mature arbitrage game - "Delta Neutral, Gamma Long".
He added that MSTR's short interest once reached 14.4%, but many short sellers are not "shorting the company's fundamentals", but rather arbitrage funds using continuous shorting to dynamically hedge positions.
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Hikari analyzed it more directly. 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. The reason is simple: the float is too large, liquidity is too strong, and retail investors or speculators can hardly leverage the overall market value together. "In contrast, companies like SBET with an initial market cap of only tens of millions of dollars are more likely to experience a short squeeze." He added that SBET's trend in May this year was a typical case - the stock price rose from two or three dollars to $124 in just a few weeks, with the market value surging nearly forty-fold. Low-cap stocks with insufficient liquidity and scarce lending are the most likely breeding ground for "short squeeze" scenarios.
Butter also agreed with this view and explained to BlockBeats the two core signals of a "short squeeze" in more detail: first, an extreme single-day stock price surge that enters the top 0.5% of historical gains; second, a sharp drop in available lendable stock shares, making it almost impossible to borrow, forcing shorts to cover.
"If you find a stock suddenly surging in volume, with very few lendable shares, high short positions, and skyrocketing lending rates, this is basically a signal that a short squeeze is brewing."
Taking MSTR as an example, its total short selling volume was about 23.82 million shares in June this year, accounting for 9.5% of the float. In mid-May, it even peaked at 27.4 million shares, with short positions reaching 12-13%. However, from a financing and lending perspective, MSTR's short squeeze risk is not actually extreme. The current annual lending rate is only 0.36%, with 3.9-4.4 million shares still available to borrow. In other words, despite significant short pressure, it is still far from a true "short squeeze".
In stark contrast is the US stock SBET (SharpLink Gaming), which holds ETH. Currently, SBET's annual lending rate is as high as 54.8%, with stock borrowing extremely difficult and costly. About 8.7% of the float is short positions, and all short positions can be covered in just one day's trading volume. High costs combined with a high short ratio mean that if the trend reverses, SBET is likely to experience a typical "rolling short squeeze" effect.
Looking at the US stock SRM Entertainment (SRM), which holds TRX, the situation seems even more extreme. The latest data shows that SRM's annual lending cost reaches 108-129%, with borrowable shares hovering between 600,000-1.2 million, and short positions roughly 4.7-5.1%. Although the short ratio is only moderate, the extremely high financing costs directly compress the short space, and funds would face enormous pressure if the trend changes.
As for DeFi Development Corp. (DFDV), which strategically holds SOL, its lending cost once reached 230%, with short positions at 14%, with almost one-third of the float being shorted. Therefore, overall, while the crypto stock market has the soil for short squeezes, those truly capable of triggering a "long-short game" singularity are often stocks with smaller market caps, poorer liquidity, and higher capital control.
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