Speaking of bubbles…

One of the biggest bubbles in the entire market just burst and almost no one seems to have noticed.

I warned about this months ago.

Here’s the quick rundown in case you missed it.

Strategy (MSTR), formerly MicroStrategy, has completely defied traditional valuation logic for years.

Company CEO Michael Saylor figured out that stock market investors were willing to pay roughly $2 for every $1 of Bitcoin the company held.

Why?

Likely because many institutional investors were restricted from holding Bitcoin directly.

So MSTR became a workaround – a proxy for Bitcoin exposure.

Enough investors used this workaround that Strategy’s valuation broke from reality.

When I first wrote about this, the company held around $38 billion of Bitcoin, yet the market valued the stock at roughly $88 billion.

As someone who worked in valuation at an investment bank… this was absurd.

But Strategy didn’t hesitate. It leaned into the premium.

The company used its overinflated stock price to issue more shares and take on more debt so it could buy additional Bitcoin.

And as Bitcoin climbed, Strategy’s stock rose even faster.

That surge let the company raise even more capital, which it then funneled back into – you guessed it – buying more Bitcoin.

This became a self-reinforcing loop.

Today, that loop has broken. The money machine has stopped.

You can see the break in the numbers.

At today’s prices, Strategy owns roughly $66 billion worth of Bitcoin.

The company’s market cap is around $67 billion.

Once you factor in the company’s debt, the stock should trade somewhere in the $59 billion range.

Not perfect. Not exact.

But compared with the previous $38 billion of assets vs. an $88 billion valuation, this is practically rational.

In other words, the insane premium that turned MSTR into a market phenomenon… is gone.

The bubble didn’t explode spectacularly. It simply leaked.

Quietly. Predictably.

And just like every bubble before it, fundamentals eventually pulled everything back to earth.

This doesn’t mean Strategy collapses.

It just means the era of paying $2 for every $1 of Bitcoin is over.

The market has new tools now.

Bitcoin ETFs exist. Exposure is easier. The workaround is no longer necessary.

So here is my view going forward:

If you want Bitcoin exposure, own Bitcoin directly or buy a Bitcoin ETF.

Do not try to capture it indirectly through leveraged proxies like MSTR.

The premium that once justified that trade is dead.

And without the premium, Strategy is simply a company holding Bitcoin with debt attached to it.

And here’s the most important point:

Bitcoin is currently on sale.

It has pulled back sharply over the last month.

The headlines are negative. Sentiment is shaky.

But like it or not, Bitcoin has survived every crash, correction, crackdown, bear market, panic cycle, and obituary ever written about it.

Every single one.

This time isn’t any different.