Bitwise CIO: Stop worrying—MicroStrategy won't sell its Bitcoin
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Bitwise CIO: Stop worrying—MicroStrategy won't sell its Bitcoin
Belief in Bitcoin comes at a cost: remaining calm and patient when the market fluctuates.
Navigating Web3 tides with focused insightsAuthor: Matt Hougan, Chief Investment Officer at Bitwise
Translation: Luffy, Foresight News
Recently, my inbox has been flooded with questions about publicly traded Bitcoin reserve company MicroStrategy (Strategy), specifically centered around two main concerns:
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Will MicroStrategy be removed from the MSCI index, leading to forced selling of its stock?
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Will MicroStrategy be forced to sell its Bitcoin holdings?
Let’s analyze each in turn.
MSCI Index and MicroStrategy
On October 10, MSCI announced it was considering removing crypto asset treasury companies (DATs) like MicroStrategy from its investable indices. This is significant because nearly $17 trillion in assets are benchmarked to these indices. According to JPMorgan analysis, if MicroStrategy is removed, index funds might be forced to sell up to $2.8 billion worth of MSTR shares.
You may wonder: why would MSCI do this? Their view is that companies like MicroStrategy resemble holding companies rather than operating businesses. MSCI's investable indices already exclude holding entities such as real estate investment trusts (REITs), and since most crypto asset treasury companies exist solely to buy and hold digital assets, MSCI believes they don’t belong in these indices. After consulting with clients, MSCI will announce its final decision on January 15.
I can't predict MSCI’s final ruling. As a long-time researcher in the indexing space—having served as editor of the academic journal *The Index Journal* for ten years—I believe there are two plausible outcomes. Michael Saylor and others have strongly countered, arguing that MicroStrategy is a genuine operating company with a solid software business and sophisticated financial engineering built around Bitcoin. That argument holds water, and I personally agree with their characterization. But it’s not certain—some institutions could reasonably take the opposite view. Given the controversial nature of crypto asset treasury firms and MSCI’s current inclination toward removal, I estimate at least a 75% chance MicroStrategy gets excluded.
However, I don’t believe exclusion would significantly impact its stock. While $2.8 billion in forced selling sounds large, from years of observing index inclusion and exclusion events, I’ve learned the actual market impact tends to be smaller than expected and is often priced in ahead of time. For example, when MicroStrategy was added to the Nasdaq-100 index last December, tracking funds were required to buy $2.1 billion in MSTR shares—but the stock barely moved.
I believe the slight dip in MSTR’s share price since October 10 partly reflects the market already pricing in the possibility of index removal. At this stage, significant volatility is unlikely.
In the long run, MSTR’s value depends on the success of its strategy—not whether index funds are forced to hold its shares.
MicroStrategy and Bitcoin Holdings
The other concern is whether MicroStrategy might sell its Bitcoin. The bearish logic goes like this:
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MicroStrategy is removed from the MSCI index;
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Its stock price crashes, trading far below net asset value (NAV);
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It is ultimately forced to sell Bitcoin.
This narrative sounds plausible, but unfortunately, it doesn’t hold up. A drop in MSTR’s share price below NAV does not trigger any obligation to sell Bitcoin—you can verify the terms yourself.
MicroStrategy has only two key debt obligations: annual interest payments of about $800 million, and the requirement to convert or refinance certain debt instruments upon maturity.
Interest payments aren’t an immediate concern. The company currently holds $1.4 billion in cash, more than enough to cover over a year and a half of interest expenses.
Likewise, debt conversion isn’t an urgent issue. The first tranche of debt doesn’t mature until February 2027, amounting to roughly $1 billion—a small fraction relative to MicroStrategy’s $60 billion Bitcoin holdings.
If MSTR’s stock continues to decline, will insiders pressure the company to sell Bitcoin? Extremely unlikely. Michael Saylor controls 42% of voting power, and it’s hard to imagine anyone more committed to Bitcoin’s long-term value. Even when MSTR traded at a discount in 2022, he didn’t sell.
I understand why bears love promoting MicroStrategy’s “doomsday” scenario. If the company were forced to dump $60 billion in Bitcoin at once, it would devastate the entire Bitcoin market—an amount equivalent to two years of inflows into Bitcoin ETFs. But given that MicroStrategy has no debt maturing before 2027 and sufficient cash to cover foreseeable interest costs, such an extreme outcome simply won’t happen. We should also consider the bigger picture: at the time of writing, Bitcoin trades around $92,000—down 27% from its all-time high, but still 24% above MicroStrategy’s average purchase price of $74,436. The so-called “doomsday” is pure fiction.
Conclusion
If you’re going to worry about something in the crypto industry, there are indeed valid concerns. For instance, I’m slightly concerned about the pace of congressional progress on market structure legislation, though I expect it to accelerate as government operations normalize. I’m also wary that smaller, poorly managed crypto asset treasury companies might fail. And I anticipate that crypto treasuries won’t make large-scale Bitcoin purchases in 2026, meaning the market may lose an important near-term source of demand.
But regarding MicroStrategy:
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Don’t worry about the impact of MSCI’s decision on MicroStrategy’s stock—the real effect will be far smaller than most expect and is likely already priced in;
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There is no credible mechanism in the short term that would force it to sell Bitcoin. It won’t happen.
Strong conviction in Bitcoin comes at a cost: staying calm and patient during market turbulence. No one understands this better than Saylor and MicroStrategy, because they also know the price of impatience. In the long run, this steadfastness will be richly rewarded.
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