Bitcoin sentiment falls to 2023 low, but ‘risk on’ environment may emerge to spark BTC price rally
Bitcoin (BTC) sits in one of its least bullish phases since January 2023. According to Bitcoin’s “bull score index,” investor sentiment is showing its lowest reading in two years. Bitcoin bull score index. Source: CryptoQuantCryptoQuant’s “Crypto Weekly Report” newsletter explained that “bull score index” readings that sit below 40 for extended periods increase the likelihood of a bear market. The bull score remained above 40 throughout 2024, only dipping below this threshold in February 2025, as identified in the chart above. However, over the past 24 hours, Bitcoin price has displayed resilience when compared against the massive losses seen in the US stock market. On April 3, Bitcoin closed the day with a green candle, while the S&P 500 was down 4.5%, a historic first. The S&P 500 and Dow Jones extended their decline on April 4, dropping 3.87% and 3.44%, respectively, while Bitcoin held steady near the breakeven point. Related: Arthur Hayes loves tariffs as printed money pain is good for BitcoinIs Bitcoin near a risk-on phase?Data from CryptoQuant indicates that Bitcoin’s Value Days Destroyed (VDD) metric currently sits around 0.72, suggesting that Bitcoin price is in a transitional phase. Since 2023, such periods have preceded either price consolidation or renewed accumulation before a bullish breakout.Bitcoin value days destroyed. Source: CryptoQuantThe Bitcoin VDD metric tracks the movement of long-term held coins, and it has signaled a notable market trend since late 2024. The metric peaked at 2.27 on Dec. 12, signaling aggressive profit-taking and this dynamic matched the highs seen in 2021 and 2017. However, VDD dropped to 0.65 in April, reflecting a cooling-off period where profit-taking has subsided. This opens the possibility of a “risk-on” market for Bitcoin. In financial terms, a “risk-on” scenario occurs when investors embrace higher-risk assets like cryptocurrencies, often driven by optimism and mean reversions in trends. Amid ongoing market uncertainty that has been fueled by the US-led trade war, Bitcoin could unexpectedly gain from these tense conditions. Speaking on Bitcoin and the crypto market’s potential as a hedge against traditional market volatility, crypto trader Jackis said, “A reminder, this is not a crypto-driven drop but an overall risk-on, tariff, trade war-driven drop. While all of that is unfolding, it seems that crypto has likely undergone most of its downside already and has been lately absorbing all of the selling well.”Similarly, the Crypto Fear & Greed Index also exhibited a “fear” category with a score of 28 on April 4. The index registered an “extreme fear” score of 25 on April 3, suggesting that the current price may present a compelling buying opportunity.Crypto Fear & Greed Index. Source: alternative.meRelated: 10-year Treasury yield falls to 4% as DXY softens — Is it time to buy the Bitcoin price dip?This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.
Bitcoin crash risk to $70K in 10 days increasing — Analyst says it’s BTC’s ‘practical bottom’
Analysts say Bitcoin (BTC) price could drop to $70,000 within the next ten days as one BTC pricing model suggests that the US-led trade war could upend investors’ risk-asset sentiment.In his latest X analysis, network economist Timothy Peterson warned that Bitcoin may return to its 2021-era all-time high.$70,000 is Bitcoin’s “practical bottom”Bitcoin price expectations continue to deteriorate as the impact of “higher than expected” US trade tariffs hits home.For Peterson, the outlook now includes an uncomfortable trip down memory lane.“Bitcoin to $70k in 10 days?” he queried.An accompanying chart compared Bitcoin bear markets and included Peterson’s Lowest Price Forward (LPF) metric — a historically accurate yardstick for gauging long-term BTC price bottoms.“While this chart is not a prediction, it does provide data-driven expectations for what Bitcoin could do,” he continued. “If it continues to track along the 75th percentile bear market range, then 70k would be the practical bottom.”Bitcoin bear market comparison with LPF data. Source: Timothy Peterson/XPeterson noted that the theory ties in with current LPF data, which last month said that BTC/USD was 95% certain to preserve the 2021 highs as support. Prior to that, the metric successfully delivered a $10,000 price floor in mid-2020, with Bitcoin never again dropping below it after September that year.Continuing, Peterson revealed probabilities for April which showed BTC price expectations in a state of flux.“Bitcoin went from 75% chance of having a positive month to a 75% chance of having a negative month in just 2 days,” he summarized alongside another proprietary chart.April BTC price expectations. Source: Timothy Peterson/XRelated: Bitcoin sales at $109K all-time high ‘significantly below’ cycle tops — GlassnodeBitcoin’s current price action is “often what a bottom looks like”The bearish outlook of Peterson’s model is far from the only bearish warning coming to light this week.As noted by onchain analytics firm Glassnode, many traders are attempting to shield themselves from further crypto market turmoil.“Puts are trading at a premium to calls, signaling a spike in demand for downside protection. This skew is most pronounced in short-term maturities – a level of fear not seen since $BTC was in the $20Ks in mid-’23,” it revealed in an X thread on April 4.Bitcoin options delta skew. Source: Glassnode/XGlassnode nonetheless acknowledged that while under pressure, current price performance does not constitute a post-tariff capitulation of the sort seen in stocks.“Despite this, $BTC hasn’t broken down like equities did on recent tariff headlines. That disconnect – rising panic without a price collapse – makes the current options market setup especially notable,” it continued.“Skew like this usually appears when positioning is one-sided and fear runs high. TLDR: panic is elevated, but price is holding. That’s often what a bottom looks like.”This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.
Bitcoin bulls defend $80K support as ‘World War 3 of trade wars’ crushes US stocks
Bitcoin (BTC) price dodged the chaotic volatility that crushed equities markets on the April 4 Wall Street open by holding above the $82,000 level.BTC/USD 1-hour chart. Source: Cointelegraph/TradingViewUS stocks notch record losses as analysts predict “long trade war”Data from Cointelegraph Markets Pro and TradingView showed erratic moves on Bitcoin’s lower timeframes as the daily high near $84,700 evaporated as BTC price dropped by $2,500 at the start of the US trading session.Fears over a prolonged US trade war and subsequent recession fueled market downside, with the S&P 500 and Nasdaq Composite Index both falling another 3.5% after the open.S&P 500 1-day chart. Source: Cointelegraph/TradingViewIn ongoing market coverage, trading resource The Kobeissi Letter described the tariffs as the start of the “World War 3” of trade wars.”BREAKING: President Trump just now, “WE CAN’T LOSE!!!”A long trade war is ahead of us. https://t.co/babI1cf5wi pic.twitter.com/6KCsHp0a8v— The Kobeissi Letter (@KobeissiLetter) April 4, 2025“Two-day losses in the S&P 500 surpass -8% for a total of -$3.5 trillion in market cap. This is the largest 2-day drop since the pandemic in 2020,” it reported.The Nasdaq 100 made history the day prior, recording its biggest single-day points loss ever.The latest US jobs data in the form of the March nonfarm payrolls print, which beat expectations, faded into insignificance with markets already panicking.Market expectations of interest rate cuts from the Federal Reserve nonetheless edged higher, with the odds for such a move coming at the Fed’s May meeting hitting 40%, per data from CME Group’s FedWatch Tool.Fed target rate probabilities comparison for May FOMC meeting. Source: CME GroupBitcoin clings to support above $80,000As Bitcoin managed to avoid a major collapse, market commentators sought confirmation of underlying BTC price strength.Related: Bitcoin sellers ‘dry up’ as weekly exchange inflows near 2-year lowFor popular trader and analyst Rekt Capital, longer-timeframe cues remained encouraging.#BTC Bitcoin is already recovering and on the cusp of filling this recently formed CME Gap$BTC #Crypto #Bitcoin https://t.co/ZDvsF6ldCz pic.twitter.com/PSbAESmqnY— Rekt Capital (@rektcapital) April 4, 2025“Bitcoin is also potentially forming the very early signs of a brand new Exaggerated Bullish Divergence,” he continued, looking at relative strength index (RSI) behavior on the daily chart.“Double bottom on the price action meanwhile the RSI develops Higher Lows. $82,400 needs to continue holding as support.”BTC/USD 1-day chart with RSI data. Source: Rekt Capital/XFellow trader Cas Abbe likewise observed comparatively resilient trading on Bitcoin amid the risk-asset rout.“It didn’t hit a new low yesterday despite stock market having their worst day in 5 years,” he noted to X followers. “Historically, BTC always bottoms first before the stock market so expecting $76.5K was the bottom. Now, I’m waiting for a reclaim above $86.5K level for more upward continuation.”BTC/USDT perpetual futures 1-day chart. Source: Cas Abbe/XEarlier, Cointelegraph reported on BTC price bottom targets now including old all-time highs of $69,000 from 2021.This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.
The future of DeFi isn’t on Ethereum — it’s on Bitcoin
Opinion by: Matt Mudano, CEO of Arch Labs Ethereum is struggling, and decentralized finance (DeFi) is suffering as a result. Layer-2 (L2) solutions have fractured liquidity, making capital inefficient. In search of greener pastures, the community has turned to Solana — only to find a memecoin-driven ecosystem fueled by pump-and-dump schemes, attracting liquidity extractors, and turning the chain into a playground for speculation and fraud.DeFi needs a reset that returns to first principles and aligns with Satoshi’s original vision of a decentralized financial system. The only network capable of sustaining the next evolution of DeFi isn’t Ethereum or Solana. It’s Bitcoin.DeFi is struggling on Ethereum Ethereum was once the undisputed home of DeFi, but today, it’s clear that the ecosystem is struggling. The network’s roadmap constantly changes, with no clear path toward long-term sustainability.L2 solutions were supposed to scale Ethereum. Instead, they’ve fractured DeFi into isolated liquidity silos. While L2s have lowered transaction fees, they now compete for liquidity rather than contributing to a unified financial system. The result? A fragmented landscape that makes capital inefficient and DeFi protocols harder to scale.Ethereum’s proposed solution — chain abstraction — sounds promising in theory but fails in practice. The fundamental issue is a structural misalignment of incentives, and as a result, Ethereum is gradually losing its competitive edge in DeFi.It’s time to ask: Can DeFi’s future lie in a fragmented Ethereum?Solana isn’t the answerWith Ethereum losing its competitive edge, many developers and users have turned to Solana. The blockchain has seen an 83% increase in developer activity year-over-year, and its decentralized exchanges (DEXs) have outperformed Ethereum’s for five consecutive months. There’s a fundamental problem: Solana’s DeFi growth isn’t built on sustainable financial applications — a memecoin frenzy fuels it.The recent surge in activity isn’t driven by innovation in decentralized finance but by speculative trades. Following the TRUMP memecoin craze, the total extracted value from Solana’s memecoins ranged between $3.6 billion and $6.6 billion. This isn’t DeFi growth — it’s a liquidity extraction engine where short-term speculators cash in and move on.Solana has real strengths. Its speed and low transaction costs make it ideal for high-frequency trading, and its ecosystem has made meaningful strides in decentralized physical infrastructure networks (DePINs), AI and decentralized science, or DeSci. But the dominance of memecoin speculation has turned the chain into a playground for fraud and pump-and-dump schemes. That’s not the foundation DeFi needs.Solana isn’t the answer if the goal is to build a lasting financial system.Bitcoin DeFi is thrivingIt’s time to return to first principles and build DeFi on the original blockchain: Bitcoin — the most trusted, decentralized network backed by the soundest money in the digital economy.This is not just theoretical. Bitcoin DeFi is already experiencing explosive growth. Consider the numbers: Total value locked (TVL) in Bitcoin DeFi surged from $300 million in early 2024 to $5.4 billion as of Feb. 28, 2025 — a staggering 1,700% increase. The Bitcoin staking sector is dominating, with protocols like Babylon ($4.68 billion TVL), Lombard ($1.59 billion) and SolvBTC ($715 million) leading the charge. This demonstrates the growing demand for Bitcoin to become a productive asset rather than a passive store of value.Recent: Bitcoin DeFi takes center stageBitcoin-native DeFi isn’t simply copying Ethereum’s playbook — it’s pioneering new financial models. Advancements in the space have introduced dual staking, allowing users to stake Bitcoin (BTC) alongside native tokens to enhance security and earn yields. Meanwhile, novel approaches to tokenizing Bitcoin’s hashrate turn mining power into collateral for lending, borrowing and staking, further expanding Bitcoin’s financial utility.In addition, Ordinals and BRC-20 tokens have driven record-high transaction activity, with inscriptions reaching 66.7 million and generating $420 million in fees — highlighting the growing demand for tokenized assets on Bitcoin.It is clear that Bitcoin is no longer just digital gold — it’s becoming the foundation for the next phase of decentralized finance.The future of DeFi is on BitcoinThe future of DeFi lies with Bitcoin, where incentives align with long-term value creation. Unlike Ethereum’s fragmented model and Solana’s speculative economy, Bitcoin-based DeFi is built on institutional-grade liquidity and sustainable growth.As the largest and most liquid crypto asset, Bitcoin boasts a $1.7 trillion market cap and $94 billion in exchange-traded fund (ETF) holdings. Even a fraction of this liquidity migrating into DeFi would be a game-changer. Bitcoin holds over $1 trillion in untapped liquidity and continues to attract strong interest from institutional investors and sovereign wealth funds, with governments already exploring it as a potential reserve asset.Several projects are already building on Bitcoin, building a sustainable ecosystem where users can hold the most trusted digital asset while making it productive through DeFi mechanisms. Ethereum had its moment. Solana had its hype. It’s Bitcoin’s turn to actualize Satoshi’s original vision of a decentralized financial system.Opinion by: Matt Mudano, CEO of Arch Labs.This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.
Solana whales begin offloading SOL amid $200M staking unlock
Solana whales have offloaded their tokens to cash in on gains from a staking play that began four years ago. In April 2021, four whale addresses staked 1.79 million Solana (SOL) tokens, then worth about $37.7 million. The stake was unlocked on April 4, in what Arkham Intelligence called “the largest single-day unlock of staked SOL.” The firm noted that the next similar unlock is not expected until 2028.At the time of the unlock, the tokens were valued at roughly $206 million, representing a 446% gain from the initial staking period.Solana tokens scheduled to be unlocked on April 4. Source: ArkhamSolana whales sold nearly $50 millionAfter the tokens were unlocked, the whales started to dump their holdings. Arkham data shows that over 420,000 SOL tokens, worth about $50 million, had been unstaked by the four Solana wallets at the time of writing. Following the unlock, blockchain analytics firm Lookonchain said the whales had started offloading their funds. One wallet address dumped nearly 260,000 SOL tokens worth over $30 million. Three other wallets sold about $16 million in SOL. Arkham data shows that the four wallets still hold about 1.38 million SOL tokens worth roughly $160 million. The SOL unlock follows a significant decrease in SOL token prices since April 2. CoinGecko data shows that on April 2, SOL hit a high of $131.11. At the time of writing, Solana was trading at $114.66, a 12% decrease in two days. Solana token seven-day price chart. Source: CoinGeckoRelated: Babylon users unstake $21M in Bitcoin following token airdropFTX wallets unstaked $431 million in SOLThe unstaking event by four whale wallets follows another large unlock, by bankrupt crypto exchange FTX and its trading arm, Alameda Research. On March 4, FTX and Alameda wallets unstaked over 3 million Solana tokens worth about $431 million. The event was FTX’s largest SOL unlock since it started selling its tokens in November 2023. Data from the analysis platform Spot On Chain shows that since November 2023, the bankrupt crypto exchange has unstaked 7.83 million SOL tokens. The assets were sold for $986 million at an average price of $125.80 per SOL.Magazine: XRP win leaves Ripple a ‘bad actor’ with no crypto legal precedent set
American Bitcoin’s ambition is to dominate mining — Hut 8 CEO
Earlier this week, Bitcoin mining giant Hut 8 revealed a partnership that includes two members of the Trump family — Donald Jr. and Eric — and its plans to launch a new mining venture, American Bitcoin. In an exclusive interview on Decentralize with Cointelegraph’s Byte-Sized Insight series, Hut 8 CEO Asher Genoot shared new details about the venture’s vision, why the timing was right and how the company plans to scale.The right team and the right time“We’ve thought about splitting out our Bitcoin mining and energy infrastructure businesses for some time,” Genoot said. “Meeting Eric and Don Jr., and seeing their deep passion for Bitcoin and infrastructure, was the perfect catalyst.”According to Genoot, the goal is clear: to build one of the world’s largest and most efficient Bitcoin mining platforms, rooted in American soil and aligned with pro-Bitcoin sentiment growing under President Donald Trump’s administration. “Eric told me, ‘I don’t want to get involved in anything that isn’t the biggest and the best,’” he said.The move comes at a pivotal moment for US-based mining. With China out of the picture post-2021 crackdown, and Washington now openly exploring the idea of a strategic Bitcoin reserve, America’s place in the global mining ecosystem is under transformation.Still, size isn’t everything. Genoot emphasized that efficiency and cost-effectiveness are core to the strategy. “We don’t want to just be the biggest. We want to be the most efficient and cost-effective miner. If our cost basis isn’t low, we might as well just buy Bitcoin.”Related: Bitcoin miner Hut 8 argues to toss ‘short and distort’ shareholder suitMining and accumulating BTCAmerican Bitcoin’s structure allows it to mine BTC at low cost, accumulate more when the market allows, and potentially expand into other Bitcoin ecosystem services. Hut 8 currently holds over 10,000 BTC on its balance sheet, worth up to $1 billion depending on market conditions. American Bitcoin aims to surpass that.And the company isn’t just bullish on Bitcoin; it’s bullish on power consumption. Genoot pushed back on criticism that mining wastes energy: “Power consumption has only increased with every tech revolution. Cheap, excess energy is what drives Bitcoin mining — and a lot of that energy is renewable.”Looking ahead, Hut 8’s mining spinoff has big ambitions. “Our focus is scaling. Our focus is taking this company public on a US exchange,” Genoot said. “You’ll hear more from us soon.”Listen to the full episode of Byte-Sized Insight for the complete interview on Cointelegraph’s Podcasts page, Apple Podcasts or Spotify. And don’t forget to check out Cointelegraph’s full lineup of other shows! Got thoughts? Join the conversation on X or email us at [email protected]: SEC’s U-turn on crypto leaves key questions unanswered
First Digital redeems $26M after FDUSD depeg, dismisses Sun insolvency claims
First Digital Trust (FDT) has redeemed almost $26 million in stablecoin withdrawals after its FDUSD token briefly lost its US dollar peg following allegations of insolvency by Tron founder Justin Sun.First Digital USD (FDUSD) briefly depegged on April 2, falling as low as $0.87 after Sun claimed that First Digital was insolvent.On April 4, Sun doubled down on his allegations, claiming the firm had transferred over $450 million of customer funds to a Dubai-based entity and that it violated Hong Kong securities regulations.Source: H.E. Justin Sun“FDT transferred $456 million of its custodial clients to a private company in Dubai without their authorization and has not yet returned the money,” Sun claimed.Despite the claims, blockchain data from Etherscan shows First Digital has honored about $25.8 million in FDUSD redemptions since the incident.FDUSD redemptions. Source: Etherscan “We continue to process redemptions smoothly, demonstrating the fortitude of $FDUSD,” noted First Digital in an April 3 X post.When users redeem FDUSD for US dollars, the corresponding amount of FDUSD is burned onchain for the stablecoin to maintain a 1-to-1 peg with the US dollar and ensure the circulating supply matches reserves.Related: Wintermute transfers $75M FDUSD since depegs, in $3M arbitrage opportunityFollowing Sun’s claims, First Digital assured users that it is solvent and that FDUSD remains fully backed and redeemable.Source: First Digital“First Digital stands firm: Justin Sun’s baseless accusations won’t distract from Techteryx’s own failures — our stablecoin FDUSD remains fully backed and solvent,” First Digital stated in an April 3 X post.Related: Bitcoin price can hit $250K in 2025 if Fed shifts to QE: Arthur HayesStablecoin depegs “greater systemic risk” than Bitcoin crashStablecoins depegs pose “a greater systemic risk” to crypto than a Bitcoin (BTC) crash, as “stablecoins are integral to liquidity, DeFi and user trust,” according to Gracy Chen, CEO of Bitget.Stablecoin depegs can cause “cascading failures like the TerraUSD collapse in 2022,” Chen told Cointelegraph, adding:“Current transparency, collateral quality and accountability among leading stablecoin issuers are insufficient — Tether’s lack of full audits, USDC’s exposure to banking risks and algorithmic stablecoins’ fragility highlight the market’s vulnerability to the next depeg event.”“To mitigate risks, the market should enforce real-time audits, prioritize high-quality collateral like US Treasurys, strengthen regulatory oversight and diversify stablecoin usage to reduce reliance on a few dominant players,” Chen added.Additionally, on April 4, Sun announced a $50 million bounty program offered to recover the TrueUSD (TUSD) reserves “misappropriated by bad actors, including FDT.”The bounty amount is equivalent to about 10% of Sun’s liquidity support or the stolen TUSD reserves, he said, adding that the program will be fully transparent, with an official portal launching soon.Source: Justin SunIn May 2022, the $40 billion Terra ecosystem collapsed, erasing tens of billions of dollars of value in days. Terra’s algorithmic stablecoin, TerraUSD (UST), had yielded an over 20% annual percentage yield (APY) on Anchor Protocol before its collapse.As UST lost its dollar peg, crashing to a low of around $0.30, Terraform Labs co-founder Do Kwon took to X (then Twitter) to share his rescue plan. At the same time, the value of sister token LUNA — once a top 10 crypto project by market capitalization — plunged over 98% to $0.84. LUNA was trading north of $120 in early April 2022.Magazine: Financial nihilism in crypto is over — It’s time to dream big again
Has Michael Saylor's Strategy built a house of cards?
Strategy Inc., formerly MicroStrategy, has discarded its core product, assumed a new identity, swallowed over half a million BTC, spawned equity classes with double-digit yields, and inspired an arsenal of leveraged ETFs — a unique and significant market phenomenon.Michael Saylor’s firm has constructed a comprehensive financial framework based around Bitcoin, tying its corporate performance directly to the cryptocurrency’s price fluctuations. As a result, Strategy’s common stock has evolved into a proxy for Bitcoin exposure, its preferred shares offer yields tied to cryptocurrency risk, and a series of leveraged and inverse ETFs now track its equity movements, all fundamentally connected to its substantial Bitcoin holdings.Recently, there was an announcement of another purchase by MSTR (Strategy’s common equity) of close to $2 billion of BTC in one clip, inviting even more raised eyebrows and caution. This concern is not merely because of Strategy’s bet on Bitcoin, but the market architecture which has grown around it. A parallel financial ecosystem has emerged, binding its fate to a risk asset that, as Saylor himself notes, trades 24/7. He’s championed the idea that “volatility is vitality,” suggesting that this constant motion draws attention, sustains interest, and breathes life into the entire “Strategyverse” and its related equities.To some, this is financial innovation in its purest form: bold, unhedged, and transformative. To others, it is a fragile lattice of conviction and leverage, one black swan away from unraveling.From MicroStrategy to Strategy: A pivot into the abyss or the vanguard?MicroStrategy, once a staid business intelligence software provider, has been reborn as Strategy Inc., a corporate avatar synonymous with Bitcoin. The company has made an unabashed leap from offering data analytics to becoming a full-throttle Bitcoin acquisition vehicle.The numbers speak for themselves. As of March 30, Strategy holds 528,185 BTC, acquired for approximately $35.63 billion at an average price of about $67,458 per Bitcoin. The most recent tranche of BTC in 2025 involved the acquisition of 22,048 BTC for around $1.92 billion, at an average of roughly $86,969 per coin. Year to date, Strategy has achieved a BTC yield of 11.0 percent.This shift has transformed MSTR into a proxy Bitcoin ETF of sorts, albeit with operational leverage and corporate risk baked in. But unlike the SEC-blessed spot ETFs, MSTR offers amplified exposure: it behaves like Bitcoin, only more so due to the company’s use of leverage and financial engineering.Read more: MicroStrategy’s Bitcoin debt loop: Stroke of genius or risky gamble?Now, with the introduction of STRK (8% yield) and STRF (10% yield), Strategy has expanded its reach. These preferred shares offer fixed-income style returns, but their performance is deeply tethered to Bitcoin’s fate. When Bitcoin surges, yield-bearing holders cheer. They’re still promised yield when it falls, but their capital risk climbs.Financial innovation? Yes. Structural risk? Most certainly.Market performance of Strategy-adjacent equities (Base = 100). Source: TradingViewWhen indexed to 100 at the start of 2025, the performance of Strategy and related instruments demonstrates the effects of volatility and leverage in the Bitcoin-correlated financial ecosystem. As of early April 2025, MSTR has declined moderately by approximately 8%, tracking the broader downward trajectory of Bitcoin itself, which is down around 16%.The company’s preferred shares, STRF and STRK, have slightly appreciated above their initial indexed values, reflecting investor preference for dividend stability amidst market volatility.MSTU and MSTX have markedly underperformed, dropping around 37% to 38% from their normalized starting points, due to volatility drag and compounding losses inherent in leveraged daily reset structures.This YTD snapshot underscores how leverage magnifies returns and the potential risks associated with short-term market movements.Inside the Strategyverse: Bitcoin as treasury, equity as exposureStrategy’s operating income, still derived from its legacy software business, now plays second fiddle to its crypto balance sheet.However, the firm hasn’t just stockpiled coins; it has created a latticework of financial instruments that reflect and refract BTC price action. MSTR is no longer merely equity; it has become a high-beta Bitcoin play. STRK and STRF are yield-bearing hybrids, offering fixed returns yet functioning like risk instruments in a crypto-linked treasury experiment.The structural concern is this: by tying every new yield product, equity issuance and debt vehicle to Bitcoin, Strategy has effectively replaced diversification with correlation. Critics argue there is no hedge here, only degrees of bullishness.This raises the concern that a company can maintain corporate solvency and investor trust when its financial ecosystem is built atop the volatility of a single, historically unstable asset.Leveraged and inverse productsWhere there is heat, there will be leverage. The market has responded to Strategy’s gravitational pull by creating a suite of leveraged and inverse products tied to MSTR, giving retail and institutional players access to turbocharged Bitcoin exposure without holding the asset directly.Investors seeking amplified returns in anticipation of price gains can deploy strategies such as MSTU (T Rex) or MSTX (Defiance), both offering 2x long daily returns, or MST3.L, which provides 3x long exposure listed in London.Conversely, investors expecting price declines might choose SMST, offering 2x short exposure, or MSTS.L and 3SMI, each providing 3x short exposure listed in London.These instruments are typically employed by traders looking for short-term directional bets and should be handled cautiously due to daily reset mechanics and volatility risks.These are not traditional ETFs. They are complex, synthetic instruments with daily reset mechanisms and inherent decay risks. Volatility drag ensures that even in a sideways market, leveraged longs underperform. For shorts, the risk of a short squeeze, particularly in parabolic bull runs, is ever-present.Related: Trade war puts Bitcoin’s status as safe-haven asset in doubtIn practical terms, these products allow traders to speculate on MSTR’s price with minimal capital outlay. But they also amplify misalignment. A trader betting on Bitcoin’s month-long trend might find that their 3x long MSTR ETF underperforms expectations due to compounding losses on down days.The strategic risk here lies in mismatch: retail investors may perceive these ETFs as direct Bitcoin exposure with leverage. In reality, they are trading a proxy of a proxy, subject to corporate news, dilution, and macro shifts.Exposure at different levels of the Strategyverse. Source: Dr. Michael TaboneIs Strategy’s strategy conviction or leverage risk?Between 2020 and 2025, Strategy has executed over a dozen capital raises via convertible notes, ATM equity programs and, most recently, the STRF preferred offering priced at a 10 percent yield. The March 2025 raise helped fund the latest $1.92 billion Bitcoin buy.It is not just about buying Bitcoin. It is about the market constructing a meta-structure where every market instrument, common stock, preferred shares and synthetic ETFs feeds into the same gravitational pull. Each capital raise buys more Bitcoin. Each purchase pushes up sentiment. Each ETF amplifies exposure. This feedback loop has become the hallmark of Strategy’s financial architecture.With each new issuance, however, dilution risk grows. STRK and STRF investors depend not only on Strategy’s solvency but also on Bitcoin’s long-term appreciation. If BTC stumbles into a prolonged bear market, can those 10% yields continue? For investors, Strategy’s approach presents clear opportunities and risks. It offers a streamlined pathway for gaining exposure to Bitcoin through familiar financial instruments, combining elements of equity, fixed income, and derivatives. At the same time, investors must carefully consider the volatility of Bitcoin itself, the potential impacts of dilution from continuous capital raises, and the overall health of Strategy’s balance sheet.Ultimately, the investment outcome will heavily depend on the trajectory of cryptocurrency markets, the Strategy’s financial management and evolving regulatory landscapes.Magazine: Financial nihilism in crypto is over — It’s time to dream big again