U.S. Dollar Hegemony Expected to Support Strategy's (MSTR) Bitcoin Bet

Business Insider

4 hours ago

Strategy (MSTR), previously known as MicroStrategy, effectively functions as a leveraged proxy for Bitcoin (BTC-USD), and as such, it introduces a high degree of volatility to any portfolio. While a growing macroeconomic narrative suggests that U.S. dollar hegemony may be weakening, my ongoing analysis does not support this view.
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Investors considering MSTR should do so with the expectation of a bullish Bitcoin scenario under relatively stable macroeconomic conditions, not as a hedge against a collapse of the U.S. dollar. Bitcoin prices have been volatile throughout 2025, clawing back early losses to stand approximately at the same level as they did in January. Although crypto volatility is evident, I remain bullish on MSTR.
USD Hegemony Remains Intact Despite Incremental Weakening
As of 2024, the U.S. dollar remains the dominant currency, accounting for approximately 60% of global foreign exchange reserves, according to the International Monetary Fund (IMF). It also maintains dominance in global trade, representing roughly 80% of transactions, and comprises about 90% of foreign exchange market activity, reflecting unmatched liquidity and institutional trust. Given these factors, concerns about an imminent collapse of the U.S. dollar appear overstated.
A more realistic scenario is one of gradual, potentially reversible erosion, especially as advancements in AI and robotics drive long-term GDP growth, which could help offset the fiscal pressures associated with rising federal debt.
That said, we are witnessing a slow but steady diversification into alternative reserve assets, including the euro (EUR), Chinese renminbi (RMB), and gold. Some prominent investors interpret this trend as the early stages of a long-term structural shift away from dollar dominance. In this context, narratives can become self-fulfilling, especially if key stakeholders begin to more openly support the productivity gains associated with AI. A more optimistic outlook on technological progress could go a long way in restoring confidence in U.S. fiscal sustainability.
Given that Strategy would likely benefit in a scenario where confidence in the dollar erodes, I remain cautious about projecting outsized returns based solely on that premise. However, should such a macro disruption occur, both MSTR and Bitcoin exhibit 'antifragile' characteristics—that is, they tend to gain value in periods of systemic stress or uncertainty. This quality is rare and potentially valuable.
The key caveat is MSTR's high cyclicality; successful investment requires entering at a favorable valuation and either having a clear exit strategy or the conviction to hold through significant volatility.
Strategy Stock Offers Cyclical Hyper-Growth
Strategy's business model is based on issuing equity and convertible debt to finance Bitcoin acquisitions. The stock trades at a premium of around 100% of its Bitcoin holdings, in anticipation that the company will continue to leverage favorable financing conditions to expand its BTC reserves. Investors are essentially paying this premium because they expect Bitcoin holdings per share to increase in the future, and they're also betting on management's ability to execute BTC acquisitions at well-timed valuations. There are no direct competitors with a comparable trajectory to Strategy, so its best sector comparison is with BTC itself.
The company also has a Software segment, but this has become marginal to the broader BTC-accumulation strategy we're currently witnessing. In Q1 2025, the segment achieved $111 million in total Software revenue, a 3.6% decline compared to Q1 2024, according to Main Street Data.
In contrast, in June, Strategy's Bitcoin holdings increased to 592,345 BTC, with a market value exceeding $63.5 billion at $ 107,000 per BTC.
MSTR's GAAP earnings per share are currently -$16.49 as of the last earnings report, but this reflects the impact of legal fair-value rules on losses from unrealized Bitcoin positions. This mark-to-market hit, affecting hundreds of thousands of BTC, is what dominates the company's consolidated earnings. However, this is not a reliable gauge for the company's long-term return prospects, as Bitcoin's price is cyclical and highly volatile, meaning these periodic losses are inherent to the return horizon MSTR has embarked upon.
Beware of the Halving Cycle Upending Near-Term Returns
Bitcoin most predictably rallies based on halving cycles, and the last one was on April 20, 2024. This reduced the mining reward from 6.25 BTC to 3.125 BTC per block. These halvings enforce BTC scarcity, thereby strengthening its value.
Historically, halvings have been catalysts for long-term price appreciation, often accompanied by a substantial pullback period. We'll be nearing the peak of sentiment in 2026, so buying MSTR stock now is a 12-month trade with heavy volatility risk on the horizon.
Is MSTR Stock a Good Buy?
On Wall Street, Strategy stock has a consensus Strong Buy rating from top analysts, based on 12 Buys, zero Holds, and one Sell. MSTR's average stock target price is $524.92, indicating a 35% upside potential over the next 12 months. This suggests that, despite the cyclical nature of the investment, which remains inevitable, the upside in the immediate future is likely to be substantial.
Strategy Stock Is a Strong Investment, for Now
While some view MSTR as a tactical hedge against a potential collapse of the U.S. dollar, such a scenario remains highly improbable given the current structural strengths of the U.S. economy, particularly with emerging tailwinds from AI and robotics innovation.
In the near term, I'm bullish on MSTR due to favorable sentiment cycles surrounding Bitcoin; however, a cyclical downturn appears likely. For long-term investors seeking leveraged exposure to Bitcoin, such a pullback may offer the most attractive opportunity for accumulation.