Key Points

• As they have done in the past, Strategy shares can outperform Bitcoin.

• Access to capital markets can dry up, harming Wall Street sentiment toward the company.

• Besides buying Bitcoin directly, risk-seeking investors can initiate a tiny position in Strategy.

• 10 stocks we like better than Strategy ›

The world has never seen a corporate transition quite like that of Strategy (NASDAQ: MSTR). The enterprise software and data analytics business has morphed into the world's leading Bitcoin (CRYPTO: BTC) treasury company, meaning its main business in buying and holding the cryptocurrency. The prominent digital asset is exactly what defines Strategy's story now: Its holdings are currently valued at $64.5 billion, 92% of the total enterprise value.

During the past month, this cryptocurrency stock has climbed 53% (as of Sept. 18). The momentum is noteworthy, riding on the back of Bitcoin's 25% climb. However, Strategy shares remain extremely volatile, and they trade 58% below their all-time record.

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Investors who are interested in this business should take the time to understand the bull and bear case for one of Wall Street's most polarizing stocks.

The capital flywheel keeps going

Strategy's bull case firmly argues that the company's share price will grow at a faster clip than Bitcoin over the long term. This is a levered play on the digital asset. The business has issued debt in the past, and it continues to raise capital by selling common equity and preferred shares.

The objective is to engage in various capital-markets activities to take advantage of fiat currency, which is constantly being debased, by raising capital. Management then aims to direct this money toward buying Bitcoin, a scarce asset. This playbook can run into trouble if capital markets dry up or if the crypto is in a down cycle.

However, Strategy has maintained its dividend obligations even though Bitcoin is 36% off its peak from last October. The company's dividend payments totaled $629 million in the first six months of 2026, and so far, it hasn't run into any trouble handling this. It has sold some Bitcoin to ensure it has the resources to avoid defaulting.

During the five-year period leading up to its all-time high, Bitcoin's price jumped 1,060%. At the same time, Strategy shares were up 2,300%. Should the digital asset's price keep rising at a strong clip during the coming years and decades, which is what it has done historically, the company's shares can be a monster winner as it keeps accumulating more Bitcoin on its balance sheet.

A prolonged down cycle harms market sentiment

Strategy's bear case focuses on the complexity of its financial engineering. As mentioned, the corporate world has never seen this kind of business model before. At a high level, its shareholders are constantly being diluted as the company goes all in on a novel digital asset that is less than two decades old.

If Bitcoin's price falls dramatically and stays down for an extended period, Strategy shares will likely be under immense pressure as well. And this means that it can no longer raise equity capital at reasonable terms.

Consequently, this will force the business to tap its U.S. dollar cash reserve, currently at $5.1 billion, to pay dividends on preferred shares. Once this lifeline runs out, Strategy will be in serious trouble. It might have to issue debt on onerous terms, basically digging itself into a deeper hole that it must eventually climb out of.

And even if the digital coin is in a bull market, maybe the investment community will start to sour on Bitcoin treasury companies because of the various financial instruments that are layered on. Market sentiment can shift negatively in an unpredictable manner. This can make it extremely challenging for Strategy's market capitalization to retain a premium to the underlying Bitcoin it owns, leading to a persistent discount.

Are you a Bitcoin believer?

Before you even consider buying Strategy stock, it's a requirement that you're bullish on Bitcoin's long-term prospects. But if you are a believer in the top crypto, the purest way to gain exposure is simply to buy it directly. If you don't want to climb the technical learning curve of setting up a dedicated wallet or managing your private keys, then there are many spot Bitcoin exchange-traded funds out there.

Investors who fully comprehend what Strategy is doing and how it operates, while also having optimism that the leadership can execute its game plan over the long term, might be willing to take on more risk. Initiating a 1% or 2% starter position in the stock is a good place to begin.

The downside is limited. And there is still sizable possible upside to capture if things go right.

Should you buy stock in Strategy right now?

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Neil Patel has positions in Strategy. The Motley Fool has positions in and recommends Bitcoin. The Motley Fool has a disclosure policy.