By Steven M. Sears
If you believe that Bitcoin and other cryptocurrencies are permanent parts of financial markets, the recent weakness is a buying opportunity.
The crypto complex is under extreme pressure, and investor sentiment is verging on apocalyptic. The apparent cause of the distress is surreal.
The Bank of Japan reportedly might raise interest rates, which impacts crypto because many traders are said to borrow in yen to buy crypto. Borrowing in one country with low rates to buy risk assets in another country is common among sophisticated investors, such as bank trading desks and hedge funds, but it's surprising to see the strategy cited for crypto's weakness. If rates rise in Japan, investors will presumably sell crypto to cover their yen loans.
While this dynamic plays out, aggressive investors who want to wager that fear turns to greed if Bitcoin prices keep declining can focus on Strategy and Coinbase Global. The trade's warning label: It's hard to know if buyers will step into the maw at sharply lower prices, or around current levels.
The easiest way to add exposure to Strategy or Coinbase is by buying stock. In volatile situations, "scale" into positions, which means buy stock at different prices. If you want to buy 1,500 shares, buy 500 shares at market, another 500 at 5% lower, and another 500 at 10% lower.
An arguably smarter way to establish positions during the selloff, however, is in the options market. Here, investors can get paid just for agreeing to buy stocks at lower prices. And because Strategy and Coinbase options are priced with intense fear premiums, anyone who buys puts to hedge these stocks is paying top dollar. Aggressive investors who want to own the stocks can take advantage of that fact and sell puts to panicked investors.
Consider Strategy as a template for monetizing fear during the crypto decline. With the stock around $182, aggressive traders can sell the January $158 put for about $9.60, and the January $150 put for about $7.50.
If the stock rebounds, the put premium can be kept. If the stock is below the strike price at expiration, investors must buy the stock. During the past 52 weeks, Strategy has ranged from $166.01 to $457.22.
Puts increase in value when stock prices decline. But selling puts on stocks you want to own is a time-honored way to buy stocks at lower prices. Because the implied volatility of weak stocks is often elevated -- and crypto equities are outrageously high -- put sellers get paid a lot of money for taking on the risk.
We chose Strategy and Coinbase for simple reasons.
Michael Saylor, who runs Strategy, likely knows more than most people about Bitcoin. His company owns about 650,000 Bitcoin.
Coinbase is a top crypto exchange. Exchanges typically benefit from volatility as fear and greed drive trading volumes, which generates money for exchanges.
The stocks have something else in common: They are technically broken. The stocks are trading below their 20-, 50-, 100-, and 200-day simple moving averages. Stocks below 200-day moving averages are considered to be "dead money." So far this year, Strategy is down about 37%. Coinbase is up about 6%.
Selling puts on either stock is out of synchronicity with market sentiment. The trade expresses a view that the technical damage will be fixed if prices reach a level that attracts buyers.
If you're a believer in crypto, the options market will pay you to jump into the center of the crypto storm.
Email: editors@barrons.com
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December 03, 2025 03:00 ET (08:00 GMT)
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