A Leverage That Can Never Be Liquidated

Say we buy Bitcoin at $16,000, using 3x leverage.

There is a line under us. If Bitcoin drops below that line, we are liquidated. Our money is gone.

At 3x, that line sits around $10,700.

So Bitcoin dips. It touches the line. We are out. Then Bitcoin recovers and runs to $120,000.

We were right, and it did not matter.

There are two more costs while we wait.

We pay to borrow. Leverage is borrowed money, and borrowed money charges interest every day.

We pay the shorts. Longs and shorts have to balance on an exchange. Almost everyone wants to be long, so the crowded side pays the other side every few hours. We wanted to own Bitcoin, and we are paying the people betting against it.

Three problems. But the third one — liquidation — is the only one that ends us.

Now the other route.

Strategy is a stock. An ordinary share on the Nasdaq, ticker MSTR, bought the same way we would buy Apple or Tesla. Many people have never heard of it, so it is worth being clear: this is a company, and its only real business is holding a very large amount of Bitcoin.

Because it holds so much Bitcoin, its price follows Bitcoin. And every time Bitcoin moves, Strategy moves a bit more — up faster, and down faster.

It is not real leverage. Nobody lent us anything. But looking at its history, it behaves like leverage.

Here is what that looked like.

When Bitcoin was $16,000, Strategy was $16.

When Bitcoin reached $120,000, Strategy was $394.

Bitcoin went up about 7 times. Strategy went up about 25 times.

And the good part:

No borrow fee. Nobody lent us money.

No fee to the shorts. This is an ordinary stock.

We can never be liquidated. Not a small chance — zero. It is a stock. A stock has no liquidation line. Bitcoin could fall to $4,000 and our shares are still ours.

Not real leverage. But the whole shape of it is the same.

Same shape of gain. None of the three problems.

Bitcoin is only the example here.

Ethereum has Bitmine (BMNR), which hoards Ethereum the same way.

Solana has Forward Industries (FWDI).

So the method is simple: if we are confident about a coin, we can buy this kind of stock instead of using leverage on the coin.

Is it risk-free? No. The stock swings harder than the coin, and sometimes the coin rises while the stock does not.

But compared to real leverage — borrowing against our Bitcoin, or using DeFi leverage — the risk is much smaller, for one reason that never changes:

Nobody can close our position. Only we can.

Let's keep researching, and let's keep improving.