Bitcoin: Break Out Confirmed

by JDH on July 12, 2025

The Bitcoin chart is a thing of beauty. The obvious resistance line is drawn from the highs in 2018, 2022, and then again in December 2024 and January 2025. Other than a brief trip above the line in 2021, that line has held for seven years—until this week. We don’t have a weekly close as I write this on Saturday morning, but it would certainly appear that the resistance line is broken.

That bodes very well for Bitcoin.  It’s an all-time high.  There is no overhead resistance.  Everyone who owns it is in profit.  Which begs the question:

What’s next for Bitcoin?

If you draw a Fibonacci retracement pattern from the February 2025 highs to the April 2025 lows, it looks like this:

So, a run to $130,000 is not out of the question, with an upper bound around $165,000 possible.  Of course, a correction back to $100,000 or lower is also likely.  We shall see.

Which brings us to MSTR—Microstrategy Inc. (now Strategy Inc., but the ticker symbol has yet to change), which was up 8% on the week.  Nice.

As you know, I’ve been running an experiment.  I bought 200 shares of MSTR back in January for around $335, and I’ve been selling covered calls against them.  Since then, I’ve lost just over $1,000 on my covered call strategy.  I would have been better off to just hold.

However, those shares are up over $19,000, so the overall trade is a good one.

The problem is that when MSTR is ripping higher, the calls increase in value, so I have to buy them back at a loss if I want to keep my shares (which I do).

So, since the middle of May, I have changed my Strategy (pun intended).  Instead of selling slightly out of the money calls with a week or two to expiration, I’m now selling calls way out of the money on Thursday that expire the next day.  I don’t get much of a premium, but they are almost guaranteed to expire worthless, which is the point.

This week I waited until Friday morning, and sold calls that were $10 out of the money for just over $1.  They expired worthless and I kept the dollar (thanks to a big run up at the opening).

Since that strategy is working, I’ll keep doing it during what I hope will be a continued bull run for the next few weeks.  We shall see.

Strategy Inc (MSTR) Deep Dive

by JDH on July 5, 2025

It’s time for a deep dive on MSTR—Microstrategy Inc. (now Strategy Inc., but the ticker symbol has yet to change).  Let’s start with a one year chart:

As the chart shows, MSTR had a blow-off top in November 2024 and then dropped 56% by the end of the first week of April.

Zooming in, since the first week of April, Strategy Inc. is up over 70%.

So, it’s volatile.  What’s next?  I have no idea, but obviously MSTR will either break the red resistance line and go higher, or collapse below the green uptrend line and go lower.  On the assumption that Bitcoin continues to rise, MSTR should also continue to go up, as it is a leveraged bet on the price of Bitcoin.

But here’s where it gets interesting.

Strategy Inc. has common shares (MSTR) but has four other classes of shares, each with different attributes.  Let’s review:

STRF (pronounced “Strife”) – Series A Preferred shares

STRF are preferred shares, paying 10% annually.  They are designed for institutional investors (like pensions).  The dividends are cumulative, so even if they don’t get paid this year, they accrue and must be paid before common share dividends can be paid.  So, they are kind of like a bond.  If an institution wants exposure to Bitcoin, but can’t hold it, Strife is a way to get exposure to Bitcoin and a relatively low risk yield.

STRK (“Strike”) – Series A Preferred shares

Like Strife, Strike has a cumulative preferred dividend, but it only pays 8%, and it is convertible to MSTR shares at a premium.  So, if MSTR’s stock price rises above the conversion threshold, holders can convert STRK into MSTR.  So, they are kind of like a long call option.

STRD (“Stride”) – Series A Preferred shares

These shares are non-cumulative, and they are junior to both STRF and STRK, so if the dividend doesn’t get paid one year, that’s it, you lose it, so they are more risky than Strife and Strike.  They are currently trading below par, so while the coupon rate is 10%, they are yielding around 12%, which makes sense because they are more risky.

The MSTR Capital Stack

So, if MSTR was to go bust, who gets paid first?  As with all companies, the secured creditors get paid first, then the unsecured creditors, then the equity holders.  At MSTR, the order of payment priority would be:

  1. STRF
  2. STRK
  3. STRD
  4. MSTR

In terms of risk, STRF is the least risky. The yield is high, and they are cumulative, so the risk of non-payment is low. However, there is no convertibility, so there is no upside. It’s like a bond.

STRK is higher risk, but the dividends are also cumulative, and you do get some upside.  It’s the middle ground between pure debt and pure equity.  If Bitcoin is going up, so will MSTR, and so will STRK.

STRD is at a higher risk.  The dividends are non-cumulative, but since it’s trading at a discount, the yield is highest.  As long as MSTR is paying the dividends, STRD is a great bet, because the yield is the highest.  While Bitcoin is going up, STRD should also go up, so you hold it during the upswing, pocket the dividends, and then sell when the yield drops.  This is not a long-term investment.  You hold during the uptimes and sell during the downtimes.

But what if you think Bitcoin is poised for a significant upswing?  You buy MSTR.

MSTR is for investors who think Bitcoin is going up and want a leveraged bet.  You don’t get any yield, so there is no downside protection.  MSTR is not for income; it’s for capital gains.  As we saw in the first chart above, it can go up 70% and drop 50%, all in a year.  It’s very risky.

Of course, there is a middle ground, as discussed here many times.  You can own MSTR, and sell out of the money covered calls to generate yield.  That’s a good strategy when Strategy Inc. is trading down or sideways, but when it has an explosive up move your profit is capped, so you’ve got to understand where you are in the cycle and act accordingly.

For me, now, I’m simply holding MSTR.  Simple and easy.

We’ll see how it works out.

 

 

Nothing is Happening. Yet.

June 14, 2025

Here’s the one-month Bitcoin chart, as of 7:00 am Eastern time on Saturday, June 14. It’s almost exactly flat over the last month. How can that be?  A change of less than 1% in a month? Aren’t a lot of “Bitcoin Treasury” companies buying Bitcoin?  Yes, Strategy Inc. MSTR—Microstrategy Inc., in the last month, has purchased […]

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I’ll Keep it Brief

May 31, 2025

I’ll spare you the charts this week, and keep it brief.  Bitcoin appears to be breaking down, and may go below $100,000. Long term, it doesn’t matter. Gold is also under pressure. The stock market isn’t looking great. So, I stay the course. Fortunately my MSTR call options expired worthless this week, so that helped […]

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Coulda Done Better

May 24, 2025

Bitcoin Let’s start with the long-term Bitcoin chart, going back to the peak in 2018: As you can see, the red uptrend resistance line perfectly hits the 2018, 2022, and 2025 peaks. That indicates major resistance somewhere around $115,000 USD. A six-month view of the same chart shows the red resistance line but also the […]

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Bitcoin: We Wait

May 17, 2025

Bitcoin has struggled to make a new high, and until it does, those struggles will continue. There is sold support around $101,000, so I’m sitting and waiting to see what happens next. My MSTR covered calls were unwound this week, at a profit, so that was good. Other than that, we wait.

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My Strategy on Strategy is Getting Out of Control

May 10, 2025

Last week, I said the MSTR Covered Call Strategy didn’t Work This Week.  Well, it didn’t work again this week, either. I am trying to “juice” my returns on the shares I own in MSTR—Microstrategy Inc. (now Strategy Inc., but the ticker symbol has yet to change).  I sell out-of-the-money covered calls that expire in one to […]

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The MSTR Covered Call Strategy Didn’t Work This Week

May 3, 2025

As discussed in previous posts, I own shares in MSTR—Microstrategy Inc. (now Strategy Inc., but the ticker symbol has yet to change).  To enhance my returns, I sell out-of-the-money covered calls, assuming that, as with all call options, the time premium erodes, and I can pocket that premium. That strategy works great when the underlying stock […]

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Bitcoin Break Out: False or Real?

April 26, 2025

Let’s start with a one-year chart of Bitcoin, with lots of funny lines: The US election results in November 2024 led to a run from $73,000 to two all-time highs above $108,000 in February 2024, and then Bitcoin corrected down to $73,000.  Since then, it has clawed its way back to almost $95,000.  The red […]

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The MSTR Covered Call Option Experiment Results – So Far

April 19, 2025

In January 2025, I started an experiment.  In a non-registered account, I deposited cash and purchased 200 shares of  MSTR—Microstrategy Inc. (now Strategy Inc., but the ticker symbol has yet to change).  The cost of those shares was $335.56.  On Thursday, April 17, 2025 (the markets were closed on Friday), MSTR closed at $317.31.  So, […]

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