Strategy's Bitcoin Holdings Unaffected by Share Price Drop, Says Bitwise CIO

According to Cointelegraph, Bitwise chief investment officer Matt Hougan has dismissed concerns that Strategy (MSTR) would be compelled to sell its Bitcoin holdings if its share price declines. Hougan emphasized that the company's financial stability remains intact, despite market speculations suggesting otherwise. He highlighted that Strategy's chairman, Michael Saylor, maintains a strong belief in Bitcoin (BTC), and the company is not under immediate financial pressure to liquidate its assets. Strategy's CEO, Phong Le, had previously mentioned the possibility of selling some Bitcoin as a "last resort" if the company's market value fell below its Bitcoin holdings. However, Hougan reassured that with no debt maturing until 2027 and sufficient cash reserves to cover interest payments, the likelihood of such a scenario is minimal. He noted that selling $60 billion worth of Bitcoin would significantly impact the market, equating it to two years of Bitcoin ETF inflows. Despite facing a prolonged crypto market downturn and potential delisting from the MSCI stock market index, Hougan believes Strategy can endure the challenges. He pointed out that Bitcoin's current trading price is 24% above the average acquisition cost for Strategy, providing the company with a buffer even if its stock value dips below its net asset value (NAV). Hougan also mentioned that Strategy's financial obligations, including $800 million in annual interest payments, are manageable given its $1.4 billion cash reserve. Over the past month, Strategy's stock has declined by 24.69%, closing at $186.01 on Friday. This decline may be partly attributed to MSCI's announcement in October, which suggested the potential exclusion of digital asset treasury companies with over 50% crypto assets from its index. Such a move could compel index-tracking funds to sell, exerting additional pressure on Strategy's stock price. Hougan remains optimistic, arguing that historical data shows index changes often have a smaller impact than anticipated. He cited the example of Strategy's addition to the Nasdaq-100 Index last December, which required funds to purchase $2.1 billion of the stock with minimal effect on its price. Hougan's insights suggest that Strategy's current financial position and market dynamics may not significantly alter investor sentiment or the company's share price.