Could Strategy Be Forced To Sell Its Bitcoin? Bitwise CIO Says No
Bitwise Chief Investment Officer Matt Hougan is pushing again in opposition to one of many loudest bearish narratives round bitcoin treasury firm Strategy (MSTR, previously MicroStrategy): that it could possibly be pressured right into a liquidation of its roughly $60 billion bitcoin stack. In his newest CIO memo, Hougan writes bluntly that “Michael Saylor and Strategy promoting bitcoin will not be considered one of” the true dangers in crypto.
Will Strategy Sell Its Bitcoin?
The quick set off for market anxiousness is MSCI’s session on whether or not to take away so-called digital asset treasury firms (DATs) like Strategy from its investable indexes. Nearly $17 trillion in property tracks these benchmarks, and JPMorgan estimates index funds may need to promote as much as $2.8 billion of MSTR whether it is excluded.
MSCI’s rationale is structural: it views many DATs as nearer to holding firms or funds than working firms, and its investable universes already exclude holding constructions reminiscent of REITs.
Hougan, a self-described “deep index geek” who beforehand spent a decade enhancing the Journal of Indexes, says he can “see this going both method.” Michael Saylor and others are arguing that Strategy stays very a lot an working software program firm with “advanced monetary engineering round bitcoin,” and Hougan agrees that it is a affordable characterization. But he notes that DATs are divisive, MSCI is currently leaning toward excluding them, and he “would guess there may be not less than a 75% likelihood Strategy will get booted” when MSCI proclaims its resolution on January 15.
He argues, nonetheless, that even a elimination is unlikely to be catastrophic for the inventory. Large, mechanical index flows are sometimes anticipated and “priced in nicely forward of time.” Hougan factors out that when MSTR was added to the Nasdaq-100 final December, funds monitoring the index had to purchase about $2.1 billion of inventory, but “its value barely moved.”
He believes a number of the draw back in MSTR since October 10 already displays buyers discounting a possible MSCI elimination, and that “at this level, I don’t suppose you’ll see substantial swings both method.” Over the long run, he insists, “the worth of MSTR is predicated on how nicely it executes its technique, not on whether or not index funds are pressured to personal it.”
The extra dramatic declare is the so-called MSTR “doom loop”: MSCI exclusion results in heavy promoting, the inventory trades far under NAV, and Strategy is one way or the other pressured to promote its bitcoin. Here Hougan is unequivocal: “The argument feels logical. Unfortunately for the bears, it’s simply flat incorrect. There is nothing about MSTR’s value dropping under NAV that can pressure it to promote.”
He breaks the issue right down to precise stability sheet constraints. Strategy, he says, has two key obligations: about $800 million per 12 months in curiosity funds and the necessity to refinance or redeem particular debt devices as they mature.
Smaller DATs Are The Bigger Problem
On curiosity, the corporate presently has approximately $1.4 billion in cash, sufficient to “make its dividend funds simply for a 12 months and a half” with out touching its bitcoin or needing heroic capital markets entry. On principal, the primary main maturity doesn’t arrive till February 2027, and that tranche is “solely about $1 billion—chump change” in contrast with the roughly $60 billion in bitcoin the corporate holds.
Governance additional reduces the chance of pressured promoting. Michael Saylor controls round 42% of Strategy’s voting shares and is, in Hougan’s phrases, an individual with extraordinary “conviction on bitcoin’s long-term worth.” He notes that Saylor “didn’t promote the final time MSTR inventory traded at a reduction, in 2022.”
Hougan concedes {that a} pressured liquidation can be structurally vital for bitcoin, roughly equal to 2 years of spot ETF inflows dumped again into the market. He merely doesn’t see a reputable path from MSCI index mechanics and fairness volatility to that consequence “with no debt due till 2027 and sufficient money to cowl curiosity funds for the foreseeable future.” At the time of writing, he notes, bitcoin trades round $92,000, about 27% under its highs however nonetheless 24% above Strategy’s common acquisition value of $74,436 per coin. “So a lot for the doom.”
Hougan ends by stressing that there are actual points to fret about in crypto—slow-moving market construction laws, fragile and “poorly run” smaller DATs, and a probable slowdown in DAT bitcoin purchases in 2026. But on Strategy particularly, his conclusion is direct: he “wouldn’t fear concerning the impression of MSCI’s resolution on the inventory value” and sees “no believable near-term mechanism that might pressure it to promote its bitcoin. It’s not going to occur.”
At press time, BTC traded at $92,086.
