This post was originally published on this site.
Sign up for the Slatest to get the most insightful analysis, criticism, and advice out there, delivered to your inbox daily.
For the past several years, an objectively stupid stock market trade has been creeping further and further into your retirement. At long last, it’s retreating. Keep your guard up, though.
There is a company called Strategy—which until last year was called MicroStrategy. Strategy sells some software, enough to generate $128 million in revenue in the last quarter for which it reported earnings. But that’s not really its business. Strategy’s business is to regularly sell new stock to investors, use that money to buy Bitcoins, and pay dividends to some of its existing investors. But here is what is fun: Strategy’s more than 700,000 Bitcoins are worth $54 billion at current prices. Meanwhile, the entire market capitalization of Strategy, whose business is buying Bitcoins, was about $41 billion when the market opened on Tuesday. That means that instead of just paying roughly four dollars for a tiny slice of a bitcoin, anyone buying Strategy stock is paying around five dollars for the same theoretical exposure to Bitcoin.* You might also get some dividends, but you’re not getting much else, because Strategy doesn’t do much else besides buy Bitcoin. In fact, about 3 percent of all Bitcoin belongs to Strategy.
For years, the company pulled off this bizarre sleight of hand—effectively acting as a middleman that buys Bitcoin for you so your stock in the company is worth less than Bitcoin. It worked so well that it started to creep into normal people’s portfolios and retirement funds. The market began to fill with “crypto treasury companies” as Bitcoin rose in price yet remained intimidating and inaccessible to most people. With crypto becoming easier to buy than ever, and Strategy’s stock in a tailspin, that spell now appears to be breaking as the market questions whether this middleman deserves to exist at all.
In 2020 the very-online chief executive of MicroStrategy, Michael Saylor, decided to invest the company’s cash reserves into Bitcoin. One thing led to another, and eventually, MicroStrategy was buying Bitcoin as the bulk of its business. At the time, this was a slightly less absurd concept than it seems. Bitcoin was rising in price, but there were no crypto exchange-traded funds, for which you could give your money to an asset manager and have it buy Bitcoin for you for a small fee. If you didn’t want to futz with the word blockchain but did want Bitcoin exposure, you could buy MicroStrategy stock. This worked unbelievably well for a while, to the point that its stock was trading for about twice the value of its Bitcoin despite the company’s barely having another business. Bloomberg’s Matt Levine described it in April 2025 as a “perpetual motion machine” built out of buying $1 of Bitcoin, enjoying $2 of stock price gains, and selling stock in order to fund new Bitcoin purchases and the hundreds of millions of dollars in annual dividends it had agreed to pay to preferred shareholders.
Ponzi-adjacent? I’d say so. But also legal, and a more convenient way for retail investors to own Bitcoin. It’s impossible to say exactly why this trade has stopped working now, but oh brother has it stopped working. The price of Bitcoin has lost about a third over the past six months, but the price of Strategy has lost 60 percent. The company’s CEO has responded by simply selling more stock and buying more Bitcoin and indicating that he will keep doing that. We should never rule out the likelihood that this kind of vibes-based quintupling down will have a nice payoff at the end. Bitcoin and Strategy could both come roaring back fine.
We might be done here, though. It’s at least possible. Things have changed in recent years. The company’s stock was flying north of $400 a share last summer. But when Bitcoin got on a bad run last fall, Strategy fell much more dramatically. The stock is now priced around $150, existing in a world that might—might!—be less hospitable to the absurdity that once sent it to the moon.
There isn’t a legible reason for a normal person who wants Bitcoin to now think, Hmm, I’ll get it by purchasing stock from Strategy, or from one of its many smaller copycats who have turned their businesses into holding companies for some type of crypto. There are at least 168 public companies playing some version of this game, though most of them have business plans that are a little bit more varied than Strategy’s. It just sells stock to buy more of it and pay dividends.
This may seem like an abstract curiosity. I have never bought Strategy stock, and you, dear reader, most likely haven’t either. But as I wrote in March 2025, when times were good for Strategy, the company’s success was rapidly becoming your business. Strategy was, at the time, a big enough company that it constituted all of 0.1 percent of the typical market-tracking index fund that most of us use in our retirement and brokerage accounts, and a much bigger slice of tech-focused or crypto-focused funds. That little decimal point wasn’t a lot, but then, artificial intelligence was barely a decimal point’s worth of those index funds a few years ago. Eventually, it became the load-bearing sector of the whole market. (Nvidia alone is now 6.6 percent of Vanguard’s massively popular market-tracking fund that trades as VTI, to say nothing of all the other tech giants who have staked big chunks of their futures on A.I.) If the crypto treasury gambit had continued to juice stock prices, the copycat game would have spread further. Strategy’s tanking in recent months has, for now, solved that problem for the rest of us. The stock is down to 0.06 percent of VTI’s composition, as of New Year’s. Generative A.I. may now control your economic future, sure, but companies buying huge pots of Bitcoin currently do not.
There could be a lesson here about societal overinvestment in things in tech hype cycles, though the use cases for generative A.I. already seem much more expansive than whatever someone would claim the use case is for Bitcoin beyond speculation. For the time being, we can grant ourselves permission to stop paying attention to this phenomenon in at least one previously frothy part of the market.
Meanwhile, Saylor, Strategy’s boss with a cult following, continues to hype Bitcoin all the time. On Sunday, he posted a graph showing Strategy’s massive recent Bitcoin purchases amid the crash, typing only “More Orange.” (Strategy’s colors are now orange, like Bitcoin, and he tweets a version of this graph every few days.) Bitcoin will probably go up again at some point in the future. We should consider the possibility, however, that the days of a company successfully collecting a 100 percent premium to buy Bitcoin for other people may be waning. And thus the count of things to get less dumb in financial news lately rises to one.
Correction, February 3, 2026: This piece originally misstated that investors own 80 cents’ worth of Bitcoin for every dollar of stock. Investors actually pay around five dollars for the same amount of Bitcoin.
Get the best of news and politics