Strategy will not let go of its Bitcoins according to Bitwise

What if everyone was wrong about Strategy? While speculation is rife about a possible sale of bitcoins by the company led by Michael Saylor, Bitwise investment director Matt Hougan is stepping up to methodically dismantle this panic scenario.

Robust cash flow and no sales imperative

As bitcoin stabilizes and analysts anticipate a year-end rally, Matt Hougan, chief investment officer at Bitwise, strongly opposes the idea that Strategy could be forced to sell its massive bitcoin stock if its stock falls.

“There is nothing about MSTR's price falling below its net asset value that would force the company to sell its bitcoins”did he declared in a note released Tuesday.

Hougan reiterates that the company's financial structure is designed to withstand market turbulence and that Michael Saylor's commitment to bitcoin remains intact. He adds that a negative outcome, a sale of assets, “would be very bad for the market, equivalent to two years of inflows into Bitcoin ETFs”but that such a scenario is for him “simply improbable”.

Several factual indicators confirm the strength of Strategy's balance sheet, excluding the need for liquidation in the near future:

• $1.4 billion in free cash flow;

• No debt maturity before 2027, which leaves significant strategic room;

• Approximately $800 million in interest to be paid per year, which the company can support over a period of at least 18 months without resorting to the sale of bitcoins;

• Strategy's average bitcoin purchase price is $74,436, which is 24% lower than the current price, valued at around $89,000.

These figures support Hougan's argument. Strategy is not under immediate financial pressure. Its position remains consistent with its bitcoin accumulation strategy, driven without compromise by its executive chairman, Michael Saylor.

External pressure on the action, but not on the balance sheet

The recent statement by Strategy CEO Phong Le is behind the renewed tension. He raised the hypothesis of a partial sale of bitcoins as “a solution of last resort”in the event that the company's market capitalization falls below the value of its BTC holdings, and its financing options become insufficient.

“In this case, it would be justified to sell some of our bitcoin to preserve the return per share”he clarified. This sentence, taken out of context, was enough to fuel panic scenarios, even if it does not reflect an immediate or probable intention.

Meanwhile, MSTR stock is down 24.69% over the past 30 days. This drop is partly attributed to an October announcement from MSCI (Morgan Stanley Capital International), according to which the company could be excluded from some of its indices if more than 50% of its assets are composed of crypto.

This would force index funds to sell their positions in MSTR, adding further downward pressure on the stock. For Matt Hougan, these fears are overestimated: “my experience of index movements shows that their impact is often less than anticipated, and largely integrated in advance by the market”he said. He recalls that MSTR's entry into the Nasdaq-100 in December 2023, although representing an inflow of $2.1 billion, did not cause any significant movement on the price.

Faced with persistent rumors, Strategy is releasing an anti-panic indicator: direct communication on its financial solidity. If the market remains nervous, the company wants to reassure about its ability to hold without liquidating its bitcoins. However, the balance remains fragile, and the ecosystem observes each movement with heightened attention.