Strategy (MSTR) won’t be forced to liquidate its Bitcoin holdings to stay afloat if its share price falls, and claims suggesting otherwise are “just flat wrong,” according to Bitwise chief investment officer Matt Hougan.
In a note released Tuesday, Hougan stressed that “there is nothing about MSTR’s price dropping below NAV [net asset value] that will force it to sell,” citing chairman Michael Saylor’s unwavering commitment to Bitcoin. He added that a forced sale would be disastrous for the market, as unloading $60 billion worth of Bitcoin at once would equal roughly two years of Bitcoin ETF inflows.
Hougan also noted that MSTR has no debt maturing until 2027 and holds enough cash to cover interest payments well into the future, making a forced sell-off highly unlikely.
Concerns about a potential liquidation resurfaced after CEO Phong Le suggested last week that the company might sell a portion of its Bitcoin stash as a “last resort” if MSTR’s market value were to fall below the value of its Bitcoin holdings.
If Strategy’s market value were to fall far enough and its financing options dried up, CEO Phong Le said it would be reasonable to sell a portion of its Bitcoin holdings to protect the firm’s “Bitcoin yield per share.”
The company is also navigating a prolonged crypto market downturn and the possibility of being removed from the MSCI stock market index.
Hougan: Strategy can ride out the turbulence
Despite the concerns, Bitwise CIO Matt Hougan maintains that Strategy is nowhere near a point where it would need to sell Bitcoin. With Bitcoin trading around $92,000—roughly 24% above Strategy’s average acquisition price of $74,436—the company still sits on sizable gains, he noted.
Hougan emphasized that even if Strategy’s share price dips below its NAV, the firm has ample breathing room. The company faces no immediate pressures that would compel it to liquidate its Bitcoin holdings.
“MSTR has two relevant obligations on its debt: paying about $800 million annually in interest and converting or rolling over certain debt instruments as they come due,” Hougan explained.
“The interest payments are not a near-term concern. The company has $1.4 billion in cash, meaning it can cover those payments easily for the next year and a half,” he added.
MSTR shares have fallen 24.69% over the past 30 days, ending Friday at $186.01. Some of that downward pressure may stem from Morgan Stanley Capital International’s October announcement that it may exclude digital asset treasury companies with more than 50% crypto assets from its indices.
Such a removal would force index-tracking funds to sell, potentially adding further pressure on MSTR. But Hougan doubts the impact would be as severe as some expect.
“My experience from watching index additions and deletions over the years is that the effect is typically smaller than you think and priced in well ahead of time,” he said. “When MSTR was added to the Nasdaq-100 Index last December, funds tracking the index had to buy $2.1 billion of the stock. Its price barely moved.”
