Hayes: BitMEX Co-Founder Calls Out MicroStrategy’s Fading Premium

BitMEX co-founder Arthur Hayes has expressed skepticism about the long-term viability of Strategy (formerly MicroStrategy) as a Bitcoin investment vehicle. In his view, buying a spot Bitcoin exchange-traded fund (ETF), like IBIT, is more rational for investors seeking crypto exposure.

Hayes argues that Strategy's business model relies on issuing shares or debt to buy Bitcoin, which may no longer be effective due to the narrowing premium valuation.

The premium, which allowed MSTR to issue shares at favorable prices, has significantly narrowed in recent months. According to YCharts data, the premium to net asset value (NAV) has fluctuated but Hayes suggests this era is over.

Hayes believes that for investors seeking Bitcoin exposure through traditional stock market channels, buying a spot ETF like IBIT is more straightforward and rational than investing in Strategy. Unlike MSTR, which is a leveraged bet on Bitcoin's price through a corporate structure, ETFs directly track the underlying asset, offering lower counterparty risk and greater transparency.

The approval of spot Bitcoin ETFs in January 2024 provided a regulated, familiar vehicle for traditional investors, reducing the need for proxies like MSTR. As the market matures, the rationale for paying a premium for a Bitcoin-holding company diminishes, especially when direct exposure is available at lower cost.