Bitwise Chief Investment Officer Matt Hougan has publicly rejected speculation that Strategy (formerly MicroStrategy) might be compelled to sell its extensive bitcoin holdings, stating that neither index exclusion nor market forces require such action.
Market concerns over index exclusion
Hougan addressed investor anxiety over the possibility of Strategy being removed from MSCI indexes, as the index provider reviews its inclusion criteria for digital asset treasury companies.
While JPMorgan estimated that an MSCI exclusion could trigger up to $2.8 billion in passive selling of Strategy shares, Hougan put the probability of removal at 75% but argued:
“History suggests index inclusions and deletions have far less impact than investors fear.”
He pointed to Strategy’s prior Nasdaq-100 inclusion, which resulted in little price movement despite significant required fund purchases.
Recent declines in Strategy stock, he said, are likely already reflecting the risk of index removal.
No forced selling trigger
Addressing fears of a downward spiral if Strategy stock trades below net asset value (NAV), Hougan asserted that the company faces no imminent obligation to liquidate bitcoin.
Even with debt obligations of roughly $800 million in annual interest and maturities not due until 2027, Strategy has built a $1.44 billion USD reserve to cover at least twelve months of dividends and interest payments.
Saylor’s conviction and insider dynamics
Hougan also dismissed the notion that insiders might pressure the company to sell bitcoin if the stock continues to slide.
With Michael Saylor controlling 42% of voting shares and demonstrating strong conviction in bitcoin, Hougan remarked:
“You’d be hard pressed to find a human being with more conviction on bitcoin’s long-term value.”
Near-term outlook
With bitcoin trading approximately 25% above Strategy’s average acquisition price and substantial cash reserves in place, Hougan concluded that there is:
“no plausible near-term mechanism that would force it to sell its bitcoin.”
