Strategy, long regarded as a high-beta proxy for Bitcoin, is showing signs of strain as hedge funds increasingly dominate its trading and its largest shareholder scales back exposure.
According to an August 18 report by 10x Research, Strategy’s shares have been confined to one of their tightest trading ranges in years, repeatedly testing the $360 support level. The persistent challenges in surpassing this threshold reflect declining volatility and waning investor conviction in the stock.
The report highlights that Vanguard, Strategy’s largest shareholder, reduced its stake by 10% in the last quarter. While some long-only investors stepped in, hedge funds now largely control market activity, heightening the significance of the $360 level. Analysts suggest this price could be pivotal in determining whether the stock sees further declines or a potential recovery.
Historically, Strategy offered outsized exposure to Bitcoin price swings, giving investors a leveraged play on the cryptocurrency. However, 10x Research notes that this dynamic may be weakening. When Strategy lags Bitcoin by roughly 20% over a month, it has historically been a buying opportunity. Yet, the rise of hedge fund-driven trading indicates that market sentiment is shifting.
The research also compared Strategy with other Bitcoin treasury companies, finding that investor appetite for such holdings is declining. Since mid-July, Strategy shares have fallen 13%, while Tokyo-listed Metaplanet has dropped 37%. Analysts attribute these declines to a collapse in volatility for both Bitcoin and Strategy, reducing the premium once paid for exposure and limiting the stock’s ability to amplify Bitcoin’s upside.
New investment flows appear to be moving toward Ethereum treasuries and crypto IPOs, seen as offering fresher opportunities. 10x Research noted that this trend aligns with its July 19 forecast that Bitcoin-focused treasuries would lose their edge as summer volatility waned.
Meanwhile, Strategy made its first BTC purchase in August, celebrating five years since adopting the cryptocurrency as a core treasury asset. According to a U.S. Securities and Exchange Commission filing, the company acquired 155 BTC for $18 million during the week ending August 10.
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