Tom Lee Argues That Strategy Stock May Be the Ideal Hedge Against Ongoing Crypto Losses

Bitmine Immersion chairman Tom Lee says Strategy’s massive 650,000-BTC reserve has effectively turned the company into a “pressure valve” for the broader crypto market.

According to Lee, Strategy (MSTR) has evolved into one of the most widely used hedging instruments for crypto investors, a shift that has contributed to the stock’s 43% slide over the past month. “Strategy is probably the most important stock to watch right now,” he told CNBC on Thursday. “It’s become the definitive bitcoin proxy, and it’s the most liquid trade in the sector.”

Lacking robust tools to hedge losses directly within crypto markets, institutional traders have increasingly turned to shorting Strategy shares. The firm’s enormous bitcoin holdings tie its valuation closely to BTC$90,892.05, making it one of the cleanest indirect hedges available to large players.

“In crypto, when investors try to hedge bitcoin or ether exposure, there are very few markets deep enough to take that order flow,” Lee said. “So they short the most liquid proxies—and that’s MicroStrategy.”

Lee noted that bitcoin and ether derivatives still lack sufficient depth for sizable institutional hedging. “Anyone holding a large bitcoin long has almost no effective hedging ability within crypto itself,” he said.

Strategy’s stock, however, fills that gap. “Its option chain is so liquid that traders can hedge their entire crypto book through Strategy instead,” Lee explained. That dynamic, he said, means the company is effectively absorbing the industry’s hedging pressure.

Lee also pointed to the lasting effects of the Oct. 10 market crash, which wiped out $20 billion and severely impaired liquidity. Market makers—“the closest thing crypto has to a central bank,” in his view—remain weakened, leaving altcoins, mining stocks and bitcoin-proxy assets thinly traded.

Strategy has become one of the biggest casualties of the downturn, a trend Lee attributes directly to its role as crypto’s primary hedging outlet. He warned that the company’s expanding function as a system-wide buffer highlights deeper structural fragilities across the digital-asset market.