Bitwise CIO Says Strategy Will Not Be Forced to Sell Bitcoin Holdings

TLDR

Table of Contents

Strategy owns 650,000 BTC and holds a $1.44B cash reserve with first debt due in Feb. 2027.
JPMorgan sees $2.8B passive selling risk if MSCI removes Strategy stock.
Strategy recently bought 130 BTC worth $11.7M at an average price of $89,960.
Hougan says a stock discount to BTC value doesn’t require Strategy to sell Bitcoin.

Bitwise’s Chief Investment Officer, Matt Hougan, addressed recent concerns about Strategy’s Bitcoin holdings, saying fears of forced selling are unfounded. In a client memo, Hougan stated no mechanism compels Strategy to liquidate its BTC due to index changes or share price fluctuations.

MSCI Decision and Market Concerns

Bitwise CIO Matt Hougan addressed investor concerns in a new client memo. He dismissed claims that Strategy would be forced to sell its Bitcoin holdings if removed from MSCI’s indexes. MSCI is reviewing whether to exclude companies that hold digital assets, such as Bitcoin, in their treasuries. A decision is expected on January 15.

Hougan wrote, “No, Virginia, Strategy Is Not Going To Sell Its Bitcoin,” addressing the fears of a forced unwind. JPMorgan estimates a potential $2.8 billion in passive stock selling could occur if MSCI removes Strategy. However, Hougan argues that such index changes often do not lead to drastic stock moves. He noted Strategy’s inclusion in the Nasdaq-100 caused little price change despite $2.1 billion in inflows.

He estimated a 75% chance of removal but added that market expectations already reflect that risk. He also said a possible discount to the firm’s net Bitcoin asset value does not create a forced sale scenario.

Strategy’s BTC Reserves and Financial Standing

Strategy holds 650,000 BTC and recently added 130 more for about $11.7 million. Its average purchase price for the latest acquisition was $89,960 per Bitcoin. The firm has a $1.44 billion cash reserve and does not face any near-term debt maturities.

The first significant debt is due in February 2027, totaling about $1 billion. Hougan called this amount small in comparison to the company’s Bitcoin holdings, valued at approximately $60 billion.

The company has also announced a plan to maintain a reserve fund that could cover at least 12 months of dividend payments. Management aims to grow that reserve to sustain operations for 24 months or more.

Market Volatility and Strategy’s Stock Valuation

Crypto markets have shown volatility in recent weeks. Bitcoin dropped below $85,000 but has since started to recover. Stocks such as Coinbase and Strategy have also declined. MSTR is trading 60% below its 52-week high of $457.

Despite market concerns, new accounting standards allow Strategy to record unrealized gains. Forecasts for FY25 EPS now stand at $78.04, up from previous expectations of a $15.73 loss. For FY26, EPS is projected at $51.60, a shift from earlier estimates of a $0.40 loss.

Annual sales for Strategy remain below $500 million, and only modest growth is expected over the next two years. Even with a strong Bitcoin position, the firm’s earnings remain dependent on BTC’s price.

Coinbase and Broader Crypto Landscape

Coinbase’s earnings outlook is also strong, though projections show rising costs. Its FY25 EPS is expected at $8.01, increasing 5% in the past 60 days. FY26 EPS is forecast at $5.87, up slightly from prior estimates.

Analysts still rate both Coinbase and Strategy as a “Hold” (Zacks Rank #3). Despite the earnings growth, they note that further opportunities may appear as the crypto market stabilizes.

Hougan concluded that no structural or financial conditions currently exist that require Strategy to liquidate any part of its Bitcoin holdings. He emphasized that the firm’s liquidity position remains stable.