Traders at binary options website Polymarket made a 10x profit this morning after rumors that Michael Saylor Strategy (formerly MicroStrategy) had sold some of their Bitcoin (BTC).
Although Strategy started the day with low odds of 3% to sell Bitcoin by January 1, 2026, traders panicked during Nasdaq pre-market trading hours and accepted bets at odds of up to 45%.
At the same time, MSTR stock had fallen to pre-market lows around $193. By the time trading opened at 9:30 a.m. in New York, the stock had climbed above $200.
The source of the rumor was a disingenuous claim based on a screenshot from blockchain analysis website Arkham Intelligence.
Arkham simply displayed BTC transfers in red font, which readers interpreted as a negative. To make matters worse, they believed that Strategy's transfers to cryptocurrency exchanges somehow represented sales.
Saylor quickly clarified that Strategy was not selling Bitcoin and that the transfer was simply a transfer to an exchange, not a sale on an exchange.
The concerns about sales come at an emotional peak for the crypto sector, which has seen its market capitalization decline by $1 trillion over the past five weeks. Since the beginning of the year, BTC has been flat, with gains decreasing from $126,000 to $97,000.
Strategies that underperform Bitcoin itself
The strategy has fared even worse, down 29% since the beginning of the year. As Protoss previously covered, Strategy’s market capitalization is lower than the value of its BTC holdings.
The company's common stock MSTR has underperformed BTC for 28 months.
Read more: How Jim Chenos beat Michael Saylor: Short MSTR, long BTC
Tracking Strategy's purchases and sales will become easier if Saylor agrees to release the company's wallet list and proof of reserves. Unfortunately, he has repeatedly rejected such requests from shareholders, primarily citing security concerns.
As the price of BTC and MSTR fell, Saylor posted an AI rendering of a life raft leaving a burning ship with a cry of “HODL”.
After he revealed that Strategy was not selling any BTC, the odds at which Polymarket traders accepted bets fell to pre-panic levels.
Traders have returned to 4% confidence that the company will sell BTC this year.
As with most binary options websites, such as so-called prediction markets, odds ratios do not necessarily indicate the probability that an event will actually occur.
Generally speaking, the binary options industry has a storied history of financial misconduct and intermittent regulatory compliance. Additionally, markets are generally thinly traded and therefore easier to manipulate.
This particular market had a trading volume of only $1 million.
