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.

When 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 exposure

Strategy’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 products

Where 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 doubt

In 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.

Is 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.

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