Bitcoin will continue to reach historical highs this year!

On November 24, 2024, the well-known short-selling institution Citron Research stated on social media that although they are optimistic about Bitcoin in the long run, they believe MicroStrategy (MSTR) stock price has strayed far from Bitcoin's fundamentals. Therefore, they adopted a hedging strategy of shorting MSTR and going long on BTC, betting that the movements of the two will eventually converge. However, data six months later showed that the price difference between MSTR and BTC not only did not narrow but instead widened by 7%. This means that if Citron's strategy was strictly followed, the hedging position has incurred substantial losses over the past six months.

Why does MicroStrategy (MSTR) have a Bitcoin asset premium rate as high as 103%? Although the market generally believes this phenomenon is due to its leveraged strategy of "issuing bonds to buy coins," by May 12, 2025, MSTR had held nearly $60 billion in Bitcoin, while its total liabilities were only $8.5 billion, resulting in an actual debt ratio of less than 15%. This financial structure indicates that traditional leverage theory cannot fully explain its high premium phenomenon. In fact, MSTR's extremely high asset premium rate more reflects the market's re-evaluation of its "Bitcoin bank" business model—strategic first-mover advantage and strong profit expectations.

For example, in securities trading, there is a significant layering effect in market liquidity: when investors buy a small amount of individual stocks, the trading price is usually close to the market price; however, if one attempts to acquire more than 5% of the shares, due to insufficient order book depth, the stock price may rise sharply. This additional cost caused by large transactions is known as liquidity premium. According to Coinglass, the total balance of all centralized exchanges currently remains at only 2.17 million coins, and replicating one MSTR (568,840 coins) would cost far more than $60 billion.

Liquidity premium essentially reflects the market's expectation gap regarding Bitcoin's future price, and the rise in premium rate indicates further strengthening of bullish sentiment in the market. From April 7 to May 12, 2025, the Bitcoin asset premium rate of MicroStrategy (MSTR) rapidly climbed from 55% to 103%, indicating that:

1. The market's valuation expectations for Bitcoin are being systematically raised.

2. Spot market buying liquidity is showing structural tightness.

Based on this analysis, we remain optimistic about Bitcoin continuing to reach historical highs this year.