Through Friday, bitcoin had fallen 28% from its intraday highs on January 20th. This swoon mirrored the post-election rally between early November and mid-December, when the crypto trade soared on hopes that the incoming administration and a Republican Congress would establish a crypto strategic reserve, an idea he floated during his second Presidential campaign. However, the flurry of executive orders, President Donald Trump signed over 70 within a month of the inauguration, did not include the hoped-for reserve. That combined with some mixed inflation data, mediocre consumer data, and sales guidance from the likes of Walmart, and a bumpy road in the AI trade after the provocative DeepSeek and Alibaba LLM announcements during the Chinese New Year caused a negative investor sentiment shift which hit the crypto complex hard. Bitcoin maverick Michael Saylor’s company Microstrategy fell more than 56% from the peak through Friday in the sell-off. However, the space rebounded sharply over the weekend after President Trump posted on Truth Social that the administration is moving forward on a “Crypto Strategic Reserve,” anchored by BTC and ETH , including XRP, SOL, and ADA. This rebound brings a resurgent hope for the future of the cryptocurrency space. Analyzing crypto Cryptocurrencies tend to be volatile and sensitive to investors’ general risk appetite in the short term. However, fundamental drivers will drive them long-term, including adoption and a supportive regulatory environment. This announcement confirms that the new administration is taking a very different stance on crypto from the previous one. It can feel overwhelming for those interested in getting involved. Which cryptocurrency? Can they trust the crypto wallet platforms? Should they self-custody? Stories of hacks, thefts, scamcoins, and the discomfort of opening new accounts on unfamiliar platforms may discourage participants who otherwise believe in the technology and see a broader, legal role for cryptocurrencies in the future. Michael Saylor’s company, now called Strategy (MSTR) , exposes investors to bitcoin, but the business’s capital structure does confuse some people. The company issues debt to purchase Bitcoin, which introduces leverage, and its market capitalization exceeds the book value of the Bitcoin held less debt. Additionally, the bonds the company has issued are convertible, meaning that some of the potential future upside in the shares, if any, would belong to the convertible bond holders. So while investors may be impressed with Saylor’s conviction and creativity in financing his incremental bitcoin purchases as I am, they might prefer the simplicity of a security that trades like a stock, with valuation that trades more like the underlying asset, bitcoin. The trade For those investors, the iShares Bitcoin Trust ETF (IBIT) , operated by Blackrock, presents a promising option. With a $50 billion market cap and operated by the world’s largest asset manager, the ETF’s objective is to reflect the performance of spot bitcoin. If one trades stocks and options in a brokerage account, this security is as accessible as any ETF, and very active and liquid options are also listed on it. Buying IBIT as a proxy for bitcoin in a promising approach for those who want to trade it like a stock in a conventional brokerage account. For those that believe bitcoin will likely find support at the recent lows now that the crypto reserve has been more formally announced, but also acknowledge it could bump into near-term resistance at the prior late January highs, one could buy longer-term calls financed in part by the sale of a nearer-term strangle as follows: Buy Jan. 16 2026 $50 call Sell Apr. 17 2025 $45 put Sell Apr. 17 2025 $60 call DISCLOSURES: (None) All opinions expressed by the CNBC Pro contributors are solely their opinions and do not reflect the opinions of CNBC, NBC UNIVERSAL, their parent company or affiliates, and may have been previously disseminated by them on television, radio, internet or another medium. THE ABOVE CONTENT IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY . THIS CONTENT IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSITUTE FINANCIAL, INVESTMENT, TAX OR LEGAL ADVICE OR A RECOMMENDATION TO BUY ANY SECURITY OR OTHER FINANCIAL ASSET. THE CONTENT IS GENERAL IN NATURE AND DOES NOT REFLECT ANY INDIVIDUAL’S UNIQUE PERSONAL CIRCUMSTANCES. THE ABOVE CONTENT MIGHT NOT BE SUITABLE FOR YOUR PARTICULAR CIRCUMSTANCES. BEFORE MAKING ANY FINANCIAL DECISIONS, YOU SHOULD STRONGLY CONSIDER SEEKING ADVICE FROM YOUR OWN FINANCIAL OR INVESTMENT ADVISOR. Click here for the full disclaimer.
