Strategy Stock Crushed Bitcoin Since January —Should Its 20% Pullback Panic Investors?

A stock that outpaced Bitcoin's explosive rally just hit a wall—and investors are scrambling.

The Unlikely Outperformer

While crypto grabbed headlines, this strategic play quietly built staggering returns. Now a 20% correction raises eyebrows across trading desks.

Volatility Versus Vision

Pullbacks test conviction—especially when they erase months of gains in weeks. Traditional metrics scream caution while crypto veterans spot familiar patterns.

The Institutional Dilemma

Fund managers face their favorite headache: chasing momentum versus fearing gravity. Because nothing says 'professional analysis' like panic-selling at a discount.

Markets reward patience but punish hesitation. The real question isn't whether to worry—it's whether you trust the strategy or just the chart.

The Bitcoin treasury company narrative is getting stale

One reason for concern is the change in sentiment in the crypto market. Bitcoin treasury companies like Strategy once looked innovative, imaginative, and forward-looking. Now, they just look like a gimmick.

Image source: Getty Images.

Companies -- many of which have never bought bitcoin before -- are now raising hundreds of millions of dollars from outside investors to buy Bitcoin. In some cases, these companies are appearing out of thin air, with the help of a little financial sleight-of-hand. All told, more than 100 companies have now reimagined themselves as Bitcoin treasury companies.

S&P 500 chart by TradingView.

Strategy pioneered the Bitcoin treasury company model in 2020. Investors were willing to pay a premium for the company because the price of Bitcoin kept going up, and Strategy kept reassuring investors that it had found a clever new way to accumulate Bitcoin on the cheap.

Is Strategy valued correctly?

Compare Strategy's Bitcoin holdings to its market cap, and you'll see why it may still be overvalued. The company now holds 638,985 BTC worth about $75 billion. Its current market cap is $100 billion.

There's still a gap, but it's shrinking. And as investors attach less of a premium to Strategy's Bitcoin holdings, the loss of confidence could pull down the price of Strategy until the gap disappears entirely.

I generally agree with this new way of thinking. Strategy's ability to outperform Bitcoin for such a long period of time made little sense. How long could it really out-Bitcoin Bitcoin?

For now, I'm avoiding Bitcoin treasury companies. I'd rather get my exposure to Bitcoin by holding it directly.