Strategic stocks outperform Bitcoin over both 12 months and 5 years periods.
The strategy covers the Bitcoin acquisition strategy all over, and may even rebrand one’s country as a Bitcoin finance company.
The Strategic Stock Market valuation is entirely dependent on the continued rise of Bitcoin prices at present.
Over the past five years, Bitcoin (Cryptography: BTC) It was the world’s most performant asset and was not nearby. In 2020, 2023 and 2024, Bitcoin offered investors triple digit returns. Over the past five years, Bitcoin has now supported 956% of its heads.
Therefore, it may seem immeasurable that its inventory could outperform Bitcoin’s performance at that time interval. So you might be surprised by the strategy (NASDAQ:MSTR) – The company previously known as MicroStrategy does just that. In 2025, the strategy has risen by 20% when Bitcoin is struggling. So is it a better purchase?
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The strategy outperforms Bitcoin’s performance doesn’t really matter how long you’re looking at 12 months or five years from now. As can be seen in the chart below, strategy and Bitcoin performance were highly correlated until early 2024, when there was a significant divergence.
Bitcoin/US Dollar Chart by TradingView.
Over the past five years, the strategy has now increased by 2,758% compared to 956% of Bitcoin. Based solely on those numbers, you may be persuaded that your strategy is a great investment.
A five-year period is important. That’s because August 2020 was the official kickoff for the strategic Bitcoin acquisition. Since then, the company has steadily purchased Bitcoin and currently has 538,200 BTC on its balance sheet. At today’s prices, that Bitcoin is worth an impressive $50 billion.
In fact, the strategy holds so many bitcoins that it is now the world’s largest company holder. It holds more Bitcoin than the US government. And it’s all-in with Bitcoin and is moving forward to rebranding itself as a Bitcoin Finance Company (BTC) earlier this year. The main mission these days is to find more creative ways to buy and hold Bitcoin.
Therefore, investing in strategies is one way to get in touch with Bitcoin without buying it directly in the spot cryptocurrency market. Therefore, the strategy is popular as a Bitcoin proxy stock. If you don’t want to buy Bitcoin directly, you can purchase Strategic Inventory instead.
The story continues
However, in January 2024, a new spot Bitcoin ETF was launched. Suddenly, there were three different ways investors could get into Bitcoin. 1) Buy Bitcoin directly. 2) Indirectly purchase Bitcoin via Spot Bitcoin ETF. 3) Purchase Bitcoin proxy stocks such as strategy.
So the sudden divergence between Bitcoin’s performance and strategy performance in early 2024 is very interesting. In hindsight, many investors seem to have concluded that investing in strategic stocks is better than investing in Bitcoin ETFs and better than investing in Bitcoin directly.
In fact, they are now willing to pay a large premium on the stock. The strategy’s Bitcoin holdings are worth $50 billion, but the company’s market capitalization is around $100 billion. In short, we add up the value of our company Bitcoin Holdings and double it. That’s what investors think a strategy is worth it.
This premium has several possible explanations. Of course, the obvious explanation is that even if it’s a loss of money, the strategy still has a software business. There’s some value there. The company is still more than a pure Bitcoin finance company, and it is not fair to assign zero value to the software business.
Image source: Getty Images.
Another possible explanation is that investors are taking the price of a significant profit from the company’s Bitcoin Holdings. In fact, investors seem to be hoping that Bitcoin will double within the next 12 months. So, the strategy is carrying $50 billion in Bitcoin on its balance sheet, but investors think it will soon be worth $100 billion. That’s not out of the question given that Bitcoin has produced triple-digit profits over the past five years.
The final explanation is that investors are willing to pay a premium for the management skills of Michael Saylor, the company’s founder and executive chairman. After all, Saylor is the top Bitcoin evangelist and continues to find new and creative ways to pay for all of that Bitcoin.
It’s either interesting or scary depending on your perspective. At some point, this endless Bitcoin acquisition strategy may no longer be sustainable. If the software business is no longer profitable, the company is entirely dependent on the continued rise in Bitcoin prices.
It’s not just that Bitcoin prices have to rise. The value must increase. Otherwise, the stock price would no longer be worthy of a noble premium. It’s no wonder the strategy is trying to convince everyone, including the US government, to buy as much Bitcoin as possible. New buyers mean that Bitcoin prices will continue to rise.
It’s great that there are so many different ways to get into Bitcoin, but for me the best option is still to buy Bitcoin directly. I’m not yet sure, no matter how fantastic it is, it can outweigh Bitcoin over the long term.
Consider this before buying stocks in your strategy.
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Dominic Basulto has a position in Bitcoin. Motley Fool has a position and recommends Bitcoin. Motley Fools have a disclosure policy.
Better Buy: Bitcoin vs. Strategy (MicroStrategy) was originally published by The Motley Fool
Bitcoin/US Dollar Chart by TradingView.