Bitwise's Chief Investment Officer Matt Hougan stated that even if MicroStrategy's stock price drops, the company will not be forced to sell Bitcoin, and the notion that it might 'sell coins to survive' is fundamentally incorrect.
MSTR will not be forced to sell coins
Matt Hougan emphasized in comments released on Tuesday that even if MSTR's market price falls below its net asset value (NAV) in Bitcoin, it would not trigger any forced selling mechanisms, especially under Chairman Michael Saylor's steadfast belief in Bitcoin.
If MSTR is forced to sell $60 billion worth of Bitcoin all at once, it would indeed have a huge impact on the market—equivalent to two years of net inflows for Bitcoin ETFs.
However, Matt Hougan stated that since MSTR's debt doesn't mature until 2027 and it has enough cash on hand to cover foreseeable future interest expenses, he believes this scenario will not happen.
Market concerns regarding MSTR potentially selling Bitcoin stem from last week's remarks by CEO Phong Le. He mentioned that if the company's market value falls below the value of its Bitcoin holdings and financing channels are exhausted, to maintain the company's 'earnings per share of Bitcoin,' it may resort to selling some Bitcoin as a last resort.
Hougan: MSTR has the ability to weather this wave.
Matt Hougan stated that MSTR's situation is far from requiring the sale of Bitcoin, especially with Bitcoin currently trading around $92,000, which is still 24% higher than the company's average cost basis of $74,436.
He added that even if MSTR's stock price falls below its net asset value, the company's finances still have considerable buffer space—there is no short-term pressure that would force it to sell Bitcoin. Hougan explained:
MSTR's debt-related obligations are divided into two parts: annual interest payments of about $800 million, and conversions or extensions required at specific debt maturities. Interest payments do not constitute a short-term issue. The company has $1.4 billion in cash, enough to easily cover a year and a half of interest.
The index's exclusion has limited actual impact.
Over the past 30 days, MSTR's stock price has dropped by 24.69%, closing at $186.01 last Friday. The market believes some of the selling pressure comes from MSCI's statement released in October, which said it 'may exclude companies with over 50% of their balance sheet in crypto assets from its index.'
If it really happens, funds tracking that index would be forced to sell MSTR, creating additional selling pressure. However, Matt Hougan believes that the sentiment and actual impact of this index adjustment on MSTR's stock price 'will not be as significant as the outside world imagines.'
My experience observing the addition and removal of index components over the years is that the actual impact is usually smaller than you think, and the market often reflects everything in the price well before the announcement. Last December, when MSTR was included in the Nasdaq-100, funds tracking that index had to buy $2.1 billion worth of stock, but the stock price hardly moved.
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