$MSTR's Fate

29 Nov, 2024

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Okay, that title might be a bit misleading, as the "easy money" in terms of an entry point for $MSTR has already passed — specifically, the overextension trade from 11/21/24. That said, there’s still plenty of "meat on the bone."

Anyway, I’m going to save you the trouble and avoid revisiting the mechanics behind the premium that $MSTR is trading at, the convertible debt, or Saylor's total disregard for the price at which he’s purchasing Bitcoin. These topics have been covered extensively across the internet over the past two weeks, so there’s no need to rehash them here. Plus, for the last couple of months, I’ve been sharing this bigger-picture idea with anyone who would listen, and it finally setup.

Instead, what I’ll cover is how in many ways, $MSTR is playing out similarly to $AMC’s run in June of 2021. We saw multiple legs up, incredible trading volume, and a very opportunistic higher-timeframe overextension trade. Now, those who missed the entire move up are trying to dip-buy on the way down — and, as you’d expect, it’s not going so great... Many have developed a weird cult like following like we saw on $AMC & $GME

Here is how $AMC played out. As you can see, we had quite the extension, and in fact, the overextension trade was really something else! Many crushed it. However, in the following days, many moved on—including myself—but not Shark. Day after day, I’d look over at the blotter and see that he was shorting all pops and covering dips on both $AMC and $GME, operating under the thesis that the high was set. He was shitting out $100-200k days while everyone else had long moved on.

After the 1-2 day capitulation trade (shorting on the day of the big move up...), people weren’t even talking about it, let alone trading it—but not him. Over the next few months, $AMC and $GME became a human printer for him. He would short pops and cover dips, buy dips and sell pops, and ultimately developed an incredible feel for the name "post-top". The endless liquidity and consistent big-hitting days were something special to witness. It’s been on my mind ever since, as I’ve been waiting for the most opportunistic moment to deploy such a higher time frame (HTF) thesis.

Now, three years later, we find ourselves in a similar scenario. This is exactly how I see $MSTR playing out since last Thursday, 11/21/24, where I believe it topped out (premium was ridiculous, Saylor is getting sloppy, and it setup with one of the best higher time frame over-extension trades I've ever seen). In fact, it is my greatest intraday trade to date, but I also structured it to really stick it out—until the premium collapses, and ideally, $MSTR even ends up trading at a discount over the next couple of years to Bitcoin. I am short common of $MSTR, long $MSTZ (2x levered inverse), and I am levered on the option front as well on $MSTR

Now, I understand that I’m no Shark. I do believe the top is in, and I stand by my thesis that $MSTR’s premium will eventually get completely washed out over time. But I also know I don’t have the "feel" that Shark does. I can’t trade as actively or as skillfully as he does, comfortably shorting 2-10 point up moves and trading in and out. That’s just not my MO.

That said, while I have this bigger-picture trade on, I am comfortable trading overnight momentum on it in a separate account (both long and short). I've spoke in great detail about this strategy that I deploy, so you can view that post here. This approach allows me to stay "active" within the wiggles of the move, but in a way that aligns with my style and fits the constructs of my business.

Anyway, I just wanted to quickly share my overall thoughts on $MSTR, without diving into the mechanical details that have already been extensively covered elsewhere.

Disclaimer: The content shared on this blog is based on my personal opinions and is intended for informational purposes only. It should not be taken as financial advice. Please conduct your own research or consult with a financial professional before making any investment decisions.

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