according to the materials of the site - CryptoFrontNews
There are many concerns in the cryptocurrency market, but selling Bitcoin Strategy is not among them. Bitwise's Chief Information Officer Matt Hougan stated that companies do not need to rid themselves of their assets, even despite market tension and pressure related to index revisions.
Matt Hogan stated that Strategy has not faced a situation that would force it to sell bitcoins. In his memo, he mentioned that concerns about forced liquidation do not match the company's financial position. He added that the current tension is caused by discussions regarding index revisions and the overall weakness of the market.
Moreover, MSCI reported a possible exclusion of Strategy from its investment indices. The provider stated that companies managing crypto assets are more like holding companies than operating companies. Strategy disagreed with this viewpoint and pointed to its programming division and financial structure based on bitcoins. Hogan explained that MSCI's final decision will depend on its methodology.
He referred to estimates suggesting that index funds may need to sell shares of Strategy worth up to $2.8 billion in the event of exclusion from the index. Nevertheless, he noted that past events related to the index caused a smaller market reaction than expected, as seen during Strategy's inclusion in the Nasdaq-100. He also said that recent price pressure may already reflect these expectations. He added that Strategy's shares often follow the overall market direction and bitcoin price trends, rather than just the index movement.
Hogan addressed concerns that Strategy may need to liquidate bitcoin to manage its debt. He stated that the company has cash reserves of $1.4 billion, which covers interest payments for approximately 18 months. He added that the principal debt is due only in 2027, alleviating short-term pressure.
Additionally, Strategy has a reserve of $60 billion in bitcoins, which is trading above the average acquisition cost. Hogan stated that past downturns have never pushed the company to sell, even during a more significant stress period in 2022. He also noted that the voting structure provides Michael Saylor with strong control, reducing the likelihood of forced changes.
In his memo, he added that current concerns are based on incorrect assumptions about cash flows. Bitcoin is trading near levels significantly above Strategy's long-term cost basis. He stated that the company has ample opportunities to maintain its strategy despite volatility, indicating that selling bitcoin today is not a concern for Strategy.
