MSTR (Strategy) will not be forced to buy Bitcoin in order to remain afloat, if the share price of its company drops. Those who claim otherwise are liars. “just flat wrong,” Matt Hougan is the chief investment officer of Bitwise.
“There is nothing about MSTR’s price dropping below NAV [net asset value] that will force it to sell,” Hougan has argued that a note Michael Saylor pointed out his firm belief in Bitcoin on Tuesday (BTC).
“It would indeed be very bad for the Bitcoin market if MSTR had to sell its $60 billion of Bitcoin in one go — that’s akin to two years of Bitcoin ETF inflows,” Hougan said. “But with no debt due until 2027 and enough cash to cover interest payments for the foreseeable future, I just don’t see it happening.”
Concerns that Strategy might sell its huge Bitcoin haul grew after Phong Le said that the CEO of the company, Phong Le last week, that it could offload Some of the stash is a “last resort” If Strategy’s Bitcoins’ value fell below the market price, then it would be a loss.
Le explained that if Strategy ran out of financing options, it was justified to sell some Bitcoins to safeguard the company’s finances. “Bitcoin yield per share.”
A strategy also faces a lengthy crypto market slumpAlong with the potential removal from MSCI’s stock index,
Hougan believes that strategy can help you weather the storm.
Hougan claimed that Strategy isn’t in a dire situation to sell Bitcoins, since the currency is trading at around $92,000. “24% above the average price at which Strategy acquired its stash ($74,436).”
The company’s accounts show that it has plenty of room to maneuver, even if the stock falls below its NAV.
“MSTR has two relevant obligations on its debt: It needs to pay about $800 million a year in interest and it needs to convert or roll over specific debt instruments as they come due,” He said.
“The interest payments are not a near-term concern. The company has $1.4 billion in cash, meaning it can make its dividend payments easily for a year and a half,” He added.
Related: Can the biggest Bitcoin whales really decide when the market turns green or red?
MSTR’s price has dropped by 24.69% in the last 30 days. It closed Friday trading at $186.01.
Morgan Stanley Capital International’s announcement from October, stating that they would be discontinuing the product line in the near future may have contributed to the downward trend. may exclude from its indices digital asset treasury companies The balance sheet of a company with crypto assets exceeding 50%.
This would put even greater pressure on MSTR, as index tracking funds will be forced to sell.
Hougan does not believe this will have an impact on the sentiment towards Strategy, or its stock price. He argues that in past years, these occurrences were less significant than anticipated.
“My experience from watching index additions and deletions over the years is that the effect is typically smaller than you think and priced in well ahead of time,” He said. “When MSTR was added to the Nasdaq-100 Index last December, funds tracking the index had to buy $2.1 billion of the stock. Its price barely moved.”
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Source: cointelegraph.com
