MicroStrategy Won't Be Forced to Sell Bitcoin Holdings Despite Market Pressures, Bitwise CIO Says

No Near-Term Pressure to Liquidate Bitcoin

MicroStrategy will not be forced to sell its massive Bitcoin holdings even if the company's stock price drops below its net asset value (NAV), according to Matt Hougan, Chief Investment Officer at Bitwise. The reassurance comes amid market concerns about potential liquidation of the company's approximately $60 billion Bitcoin treasury.

"There is nothing about MSTR's price dropping below NAV that will force it to sell," Hougan stated in a note on Tuesday ^[1], pointing to chairman Michael Saylor's steadfast conviction in Bitcoin as a key factor in the company's strategy.

Hougan emphasized that MicroStrategy, now known as Strategy, maintains significant financial cushion. Bitcoin is currently trading around $92,000, which is "24% above the average price at which Strategy acquired its stash ($74,436)" ^[1], providing substantial room for market fluctuations.

Financial Obligations Remain Manageable

The company's balance sheet shows no immediate pressure that would necessitate Bitcoin sales. Strategy has two primary financial obligations: annual interest payments of approximately $800 million and debt instruments that need to be converted or rolled over as they mature ^[2].

With $1.4 billion in cash reserves, the company can comfortably handle its interest payments for at least a year and a half ^[2]. More importantly, Strategy's first major debt instrument doesn't come due until February 2027, amounting to only about $1 billion—a figure Hougan described as "chump change" for a company holding $60 billion in Bitcoin ^[2].

Index Delisting Concerns Overblown

Market anxiety intensified following MSCI's October 10 announcement that it was considering removing digital asset treasury (DAT) companies from its investable indexes, with a final decision expected next month ^[2]. JPMorgan estimates such a delisting could trigger sales of up to $2.8 billion in MSTR stock, with potential total sales reaching $9 billion if other index providers follow suit ^[2].

However, Hougan dismissed these concerns based on historical precedent. "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 ^[1].

When MicroStrategy was added to the Nasdaq 100 Index last December, tracking funds purchased $2.1 billion in MSTR stock, yet the company's stock price "barely moved" ^[2]. Hougan argued that long-term value depends on execution of strategy rather than forced ownership by index funds.

Saylor's Unwavering Conviction

Concerns about potential Bitcoin sales emerged after Strategy CEO Phong Le suggested last week that the company could offload some holdings as a "last resort" if its market value fell below the value of its Bitcoin treasury ^[1].

Yet Hougan expressed doubt that insider pressure would force such a move. Michael Saylor controls 42% of voting shares, and "you'd be hard pressed to find a human being with more conviction on bitcoin's long-term value," Hougan noted ^[2]. Critically, Saylor did not sell during the last period when MSTR stock traded at a discount in 2022 ^[2].

Market Impact Considerations

Hougan acknowledged the potential market disruption if Strategy were forced to liquidate. "It would indeed be very bad for the Bitcoin market if MSTR had to sell its $60 billion of Bitcoin in one go—that's akin to two years of Bitcoin ETF inflows," he said ^[1]. However, he maintains that the mathematical reality of Strategy's financial position makes such a scenario highly unlikely.