Strategy’s massive 650,000 BTC stash has turned it into a “pressure valve” for the crypto market, says Bitmine Immersion chairman Tom Lee.

Strategy (MSTR) has increasingly become the preferred risk-management tool for crypto investors, a dynamic that has contributed to the stock’s 43% decline over the past month, according to Tom Lee, chairman and CEO of Bitmine Immersion.

“Strategy is probably the most important stock to watch right now,” Lee told CNBC on Thursday. “It’s effectively the bitcoin proxy, and it’s the most liquid name in the space.”

With few effective ways to hedge losses directly within crypto markets, institutional traders are shorting Strategy shares instead. The company’s enormous 650,000-bitcoin treasury links its stock price directly to the performance of BTC$90,892.05, making it one of the cleanest indirect hedges available.

“In crypto, when investors try to hedge their exposure in bitcoin or ethereum, there are very few tools deep enough to absorb that activity,” Lee said. “So they short the most liquid proxies—and that’s MicroStrategy.”

He added that crypto-native hedging markets, such as bitcoin and ether (ETH$3,003.74) derivatives, still lack the depth needed for large institutional players. “Anyone with a sizable bitcoin long position has almost no ability to hedge effectively using crypto derivatives,” he noted.

Strategy solves that problem. “Its option chain is so liquid that traders can hedge all of their crypto exposure through Strategy instead,” Lee said.

As a result, he argued, the stock “is essentially absorbing all the hedging pressure the crypto industry is trying to offload to protect their long positions.”

Lee also highlighted the lasting fallout from the Oct. 10 market crash, which erased $20 billion in value and severely disrupted liquidity. “It crippled market makers,” he said, describing them as crypto’s equivalent of a central bank. Liquidity remains thin across altcoins, mining stocks and bitcoin-proxy names like Strategy.

The company has been one of the hardest-hit assets during the current downturn, a trend Lee attributes to its function as a release valve for broader market stress.

He warned that crypto’s underlying market structure remains fragile, and Strategy’s emerging role as the sector’s primary hedge underscores deeper systemic weaknesses.