The biggest painful trade in Bitcoin investment! Strategy stock premium 50%, retail investors suffered a loss of 17 billion.

The 10X Research report shows that retail investors lost $17 billion chasing indirect Bitcoin investments through companies like Strategy. This painful trading stems from valuation drift, where the premiums of these stocks reached absurd levels during the peak of the pump, with some cases showing company stock prices exceeding their Bitcoin net asset value by 40% to 50%.

The Fatal Flaws of Proxy Trading: Valuation Drift and Premium Traps

Every cryptocurrency boom carries a cruel symmetry: an idea born from freedom is ultimately packaged, securitized, and sold back to the public, this time at an astonishing price. According to the latest report from 10X Research, retail investors are trying to indirectly invest in Bitcoin through publicly listed “digital asset vault” companies like Metaplanet and Strategy, resulting in a total of $17 billion in painful trading losses.

This logic makes sense on paper. Since you can directly buy shares of companies that hold Bitcoin, why bother managing a private wallet or dealing with the inefficiency of ETFs? Strategy has turned this “strategy” into a kind of frenzy, sparking a wave of corporate imitation from Tokyo to Toronto.

By mid-2025, dozens of small and medium-sized “Bitcoin treasury” will emerge, some of which are genuine and others are opportunistic, positioning themselves as pure agents of Bitcoin's rise. However, there is a fatal flaw: valuation drift. 10X Research points out that during the peaks of the pump, the premiums on these stocks reached absurd levels. In some cases, the company's stock price was even 40% to 50% higher than its Bitcoin net asset value per share.

This is primarily driven by the enthusiasm of momentum traders and retail investors, rather than the underlying asset. According to a report by Bloomberg, this quickly ceases to be an investment in Bitcoin and instead becomes a painful trade exposed to crowd psychology. When investors pay 1.5 times the price to buy stocks that are essentially worth only 1 times Bitcoin, they are actually paying a huge premium for “convenience” and “professional management.” However, this premium lacks a solid foundation, and once market sentiment reverses, the premium can quickly disappear or even turn into a discount.

When Premium Meets Reality: Wealth Evaporation at Double Speed

As Bitcoin experienced a 13% pullback in October, the impact on these government bonds was also magnified. These stocks not only followed the decline of Bitcoin but also experienced a crash, with the speed of evaporating paper wealth being more than twice that of the underlying asset's decline. Strategy has dropped nearly 35% from its recent high, while Metaplanet has plunged over 50%, wiping out most of the speculative gains made during the summer.

For latecomer retail investors, such losses are not only painful but also devastating. 10X Research estimates that since August, retail investor portfolios focused on digital asset sovereign bond stocks have accumulated losses of about $17 billion. This is mainly concentrated among unhedged individual investors in the United States, Japan, and Europe. The scale of this painful trading is shocking, equivalent to about 0.5% of the entire cryptocurrency market's market capitalization.

Amplification Mechanism of Painful Trading:

When in green: Bitcoin pumps 10%, and the proxy stocks may rise 15-20% due to the expanded premium, attracting retail investors to chase high.

When it drops: Bitcoin drops 13%, and proxy stocks may drop 30-50% due to the disappearance of premiums, causing retail investors' losses to double.

This asymmetric risk-reward structure makes Bitcoin investment through proxy stocks a high-risk gamble. Retail investors enjoy amplified gains when the price is in green, but suffer much greater losses when it declines. Worse still, when the premium turns into a discount, even if the Bitcoin price recovers, the stock prices may struggle to fully rebound.

The case of a 35% drop from the peak is highly representative. If Bitcoin only drops 13% from its peak, yet Strategy's drop reaches 35%, it means its stock price has a beta coefficient of 2.7 relative to Bitcoin. This high beta characteristic is an advantage in a bull market, but a disaster in a bear market. The plunge of Metaplanet by over 50% is even more exaggerated, indicating that small digital asset portfolios are more vulnerable in market fluctuations.

The Psychology of Second-Level Speculation: The Ironic Cycle of Bitcoin Investment

Ironically, the original intention of Bitcoin was to serve as a sovereign asset, free from the oversight of financial intermediaries. However, as Bitcoin became institutionalized, retail investors found themselves back in familiar territory, purchasing other people's versions of Bitcoin through the public stock market. This painful transaction essentially betrays the core philosophy of Bitcoin.

These agents don the glamorous cloak of “corporate beliefs,” filled with extraordinary CEOs and open-source brands. But in reality, they are merely leveraging Bitcoin against the corporate balance sheets; in an environment of tightening liquidity, this is undoubtedly a risky bet. As the macro headwinds from Washington and Beijing trigger a new round of deleveraging, these agents precisely closed their positions. They targeted those investors who mistakenly believed they had found a smarter way to “stock up.”

This psychological trap is extremely common in the Bitcoin investment space. Retail investors often overestimate the convenience of indirect holdings while underestimating the risks of intermediary structures. They believe that by purchasing shares of listed companies, they can gain exposure to Bitcoin while enjoying the liquidity and regulatory protection of the stock market. However, the reality is that they are taking on dual risks: the volatility of Bitcoin itself and the volatility of the company's stock valuation.

Ironically, when the market is in panic, the liquidity of these proxy stocks is often worse than that of Bitcoin itself. Investors who hold Bitcoin directly can sell it at market prices at any time, while investors in proxy stocks may face huge bid-ask spreads and liquidity exhaustion.

$17 billion lesson: the harsh reality of decentralized ideals

These numbers do not bring much comfort. But for anyone paying attention to the cycle between innovation and frenzy surrounding Bitcoin, this lesson holds true. The closer cryptocurrency gets to traditional markets, the more likely it is to inherit their distortions. Owning an idea through a company that monetizes belief may be convenient, even exciting, but convenience comes at a cost.

As 10X Research candidly points out, the packaging of equity for digital assets does not replace the assets themselves. In this chapter of the Bitcoin story, this distinction has cost retail investors 17 billion reasons to remember why decentralization was so appealing in the first place. The nature of this painful trade is: when you choose convenience over autonomy, you also forfeit control over risks.

The loss of 17 billion USD is distributed among hundreds of thousands of retail investors. Each person's story may be different, but the lesson is the same: the core value of Bitcoin investment lies in self-control, rather than through intermediary structures. When the stock prices of Strategy and Metaplanet plummeted, these retail investors could not choose their own exit timing and strategy like directly holding Bitcoin. They were locked into the company's balance sheet structure, bearing the dual impact of management decisions and market sentiment.

In the long run, the painful lesson of this $17 billion trade may drive more investors back to the essence of Bitcoin: self-custody and direct holding. The launch of Bitcoin ETFs provides a more transparent and lower-cost way of indirect holding, but even ETFs come with management fees and tracking errors. For investors who truly understand the philosophy of Bitcoin, no intermediary structure can replace the ultimate truth of “Not your keys, not your coins.”