Strategy won't have to dump Bitcoin — Bitwise

In recent days, the cryptocurrency world has been actively discussing the situation surrounding Strategy, a company that manages significant Bitcoin assets. Bitwise Chief Investment Officer Matt Hougan stated that the company won't have to sell its Bitcoin (BTC) holdings even if its stock price falls. He described those who claim otherwise as "simply delusional."

Resilience to a Price Drop

Hougan emphasized that a decline in MSTR's stock price below its net asset value (NAV) would not necessitate a reduction in the company's Bitcoin position. He noted that the hypothetical scenario in which Strategy would have to sell its entire Bitcoin holdings, valued at approximately $60 billion, is extremely negative and unlikely.

>>> "With no maturities until 2027 and sufficient cash to cover interest payments for the foreseeable future, I simply don't see that happening," Hougan stated. <<<<

CEO Concerns and Comments

However, despite Hougan's confidence, Strategy CEO Phong Le's comments raised some concerns. Le raised the possibility of selling some of his Bitcoin holdings as a "last resort" if the company's market capitalization falls below the valuation of its crypto assets. This statement sparked a flurry of discussion among investors and analysts.

According to Le, when the mNAV premium disappears, selling some coins could be an acceptable step to fulfill shareholders' obligations, especially if the issuance of new securities leads to greater dilution. In this case, the Bitcoin earnings per share metric would improve.

Capitalization and Risks

Strategy's market capitalization has fallen by more than 50% since the beginning of the year, jeopardizing its inclusion in indices such as the MSCI USA and Nasdaq 100. If this happens, the company could face weakening liquidity in its securities, increased financing costs, and a decline in investor appeal.

According to JPMorgan, Strategy has approximately $9 billion in fund investments, $2.8 billion of which are in MSCI USA-tracking funds. This underscores the importance of maintaining its position in indices for the company.

Weathering the Storm

Despite the current difficulties, Hougan believes Strategy's situation is "not that dire." He is confident the company has sufficient financial strength to weather current market fluctuations and preserve its Bitcoin holdings.

In Conclusion

In conclusion, while the situation surrounding Strategy raises some concerns, experts like Matt Hougan are confident in the company's ability to overcome these challenges and maintain its position in the cryptocurrency market.