Bitwise: Strategy Will Never Sell Its Held Bitcoin

Author: Matt Hougan, Chief Investment Officer at Bitwise; Translation: Jinse Finance

There are many things to worry about in the cryptocurrency space, but Michael Saylor and Strategy selling Bitcoin is absolutely not one of them.

My inbox is filled with questions about the Bitcoin treasury company Strategy (stock ticker: MSTR, formerly MicroStrategy). Specifically, people mainly want to know two things:

1. Will it be removed from MSCI indexes, forcing the stock to be sold?
2. Will it be forced to sell its Bitcoin holdings?

Let’s address these one by one.

MSCI and Strategy

On October 10, MSCI announced it is considering removing digital asset treasury companies (DATs) like Strategy from its investable indexes. This is a significant move—nearly $17 trillion in global assets are benchmarked to these indexes. JPMorgan estimates that if Strategy is removed from the benchmark index, index funds could be forced to sell up to $2.8 billion worth of MSTR stock.

You may wonder: why would MSCI do this? Their view is that companies like MSTR are closer to holding companies than operating companies. MSCI’s investable indexes generally do not include holding companies like REITs, and since many digital asset treasury companies focus solely on buying and holding crypto assets, MSCI believes they should not be included in the indexes. After consulting with clients, MSCI will announce its final decision on January 15.

I can’t predict MSCI’s final decision. As a veteran of the indexing field (I spent 10 years editing the academic Journal of Indexes), I think both outcomes are possible. Michael Saylor and others have strongly pushed back, arguing that MSTR is fully an operating company, with a robust software business and complex financial engineering around Bitcoin—this view is reasonable and aligns with my understanding of the business. But it’s not a foregone conclusion; some institutions may be inclined to support MSCI’s proposal. Given the controversy around digital asset treasury companies and MSCI’s current inclination to exclude such companies, I estimate there’s at least a 75% chance Strategy will be removed from the index.

However, I do not believe being removed from the index will have a major impact on the stock. A $2.8 billion sell-off seems large, but based on my years of experience observing index constituent adjustments, the real impact of such events is often less than expected, and the market tends to price it in ahead of time. For example, when MSTR was added to the Nasdaq 100 index last December, funds tracking the index needed to buy $2.1 billion of the stock, but its share price barely moved.

I believe the slight decline in MSTR’s share price since October 11 is partly due to the market already pricing in the expectation of being removed from the index. But as things stand, no matter what MSCI ultimately decides, the share price is unlikely to see a sharp swing.

In the long run, MSTR’s value depends on how well it executes its strategy, not whether index funds are forced to hold its stock.

MSTR and Bitcoin

The other issue is whether MSTR will sell its Bitcoin. Specifically, the market’s chain of concern goes like this:

1. MSTR is removed from the MSCI index;
2. The share price crashes, falling far below net asset value (NAV);
3. Thus, MSTR is forced to sell Bitcoin.

This logic seems reasonable, but for the bears, unfortunately, it’s completely wrong. MSTR’s share price falling below NAV does not trigger any forced sale of Bitcoin—you can check the relevant details and do the math yourself.

MSTR’s debt-related obligations mainly have two aspects: paying about $800 million in interest annually, and converting or refinancing specific debt instruments as they mature.

Interest payments are not a near-term concern—the company currently holds $1.4 billion in cash, enough to easily cover a year and a half of interest payments.

Similarly, debt conversions are not an imminent issue. The first debt instrument doesn’t mature until February 2027, and the amount is only about $1 billion, which is a drop in the bucket compared to the $60 billion in Bitcoin the company holds.

If MSTR’s share price keeps dropping, will insiders be pressured to sell Bitcoin? Unlikely. Michael Saylor himself holds 42% of the voting shares, and you’d be hard-pressed to find someone with more conviction in Bitcoin’s long-term value. The last time MSTR traded at a discount in 2022, he didn’t sell any Bitcoin.

I understand why bears are keen to promote the “death spiral” theory for MSTR—if MSTR were forced to sell its $60 billion in Bitcoin at once, it would indeed be disastrous for the Bitcoin market (that’s about the size of two years’ worth of Bitcoin ETF inflows). But considering the company has no debt maturing until 2027 and has enough cash to cover foreseeable interest payments, I don’t think this will happen. Moreover, let’s take a more macro perspective: as of this writing, Bitcoin is around $92,000, down 27% from its all-time high but still 24% above Strategy’s average purchase price of $74,436—the so-called “death” simply doesn’t hold up.

Conclusion

If you want to focus on things in crypto that are truly worth worrying about, you might look at the following: For example, I’m somewhat concerned about the slow progress of market structure legislation in Congress (although I think the pace will pick up as the government gets back to normal); I worry that some smaller, poorly managed digital asset treasury companies may go under; and I think that digital asset treasury companies are unlikely to make large Bitcoin purchases in 2026, which means a major demand source could disappear in the near term.

But as for Strategy:

1. There’s no need to worry about MSCI’s decision impacting its share price—the impact is likely smaller than most expect and has probably already been priced in;
2. There’s absolutely no reasonable mechanism that would force it to sell Bitcoin in the short term—that’s simply not going to happen.

Strong conviction in Bitcoin comes at a price: when the market gets volatile, it requires you to stay calm and patient. No one understands this better than Saylor and Strategy—because they also realize the other side of it: in the long run, that patience is ultimately rewarded.