Has MicroStrategy Lost Its Convexity Edge Over Bitcoin?

Actionable Market Insights

Author

10x Research
July 19, 2025

Why this report matters

MicroStrategy once offered investors a powerful way to amplify Bitcoin gains—but that edge may be disappearing. With competition intensifying and NAV premiums shrinking, investors are beginning to question the stock’s ability to outperform Bitcoin.

Bitcoin (LHS) vs. MicroStrategy’s Net Asset Value (RHS) - Bizarre Divergence

Recent data reveals that volatility has collapsed, premium appetite has faded, and performance no longer justifies the risk. Meanwhile, a surprising divergence in Japan underscores how quickly sentiment can shift on Bitcoin proxy stocks. Are institutional traders quietly exiting while retail investors still chase yesterday’s narrative?

Main argument

The "convexity edge over Bitcoin" refers to the potential for Bitcoin proxy stocks, such as MicroStrategy, to outperform Bitcoin itself—delivering amplified returns—due to their structural leverage, premium to NAV, or embedded optionality from instruments like convertible bonds.

MicroStrategy (LHS) vs. MSTR Trading Volume (RHS, $ billions)

MicroStrategy’s daily trading value has fallen from $15 billion to $5 billion based on its 30-day average, mirroring a sharp drop in its 30-day realized volatility, from 165% to just 58%. It now trades at only a modest premium to Bitcoin’s realized volatility of 43%. Elevated volatility was a key factor in raising additional cash through stock sales and the sale of convertible bonds, as the embedded equity option benefits from greater price swings. This carries significant implications, which we explore in detail below.

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