Bitwise CIO: Stop Worrying, MicroStrategy Won't Sell Bitcoin

Written by: Matt Hougan, Chief Investment Officer at Bitwise

Translated by: Luffy, Foresight News

Recently, my inbox has been flooded with questions about the Bitcoin reserve holding company MicroStrategy. Specifically, people are mainly concerned about two issues:

Will MicroStrategy be removed from MSCI indexes, thereby forcing funds to sell its stock?

Will MicroStrategy be forced to sell its Bitcoin holdings?

Let’s analyze these one by one.

The Relationship Between MSCI Indexes and MicroStrategy

On October 10, MSCI announced it was considering removing companies like MicroStrategy—designated as digital asset treasury (DAT) companies—from its investable indexes. This is significant because nearly $17 trillion in assets are benchmarked to these indexes. JPMorgan estimates that if MicroStrategy is removed, index-tracking funds could be forced to sell up to $2.8 billion worth of MSTR stock.

You might wonder: why is MSCI doing this? Their view is that digital asset treasury companies like MicroStrategy are more akin to holding companies than operating companies. MSCI’s investable indexes already exclude holding companies like REITs, and most digital asset treasury companies primarily buy and hold crypto assets, so MSCI believes they shouldn’t be included in the index. After discussions with clients, MSCI will announce its final decision on January 15.

I can’t predict MSCI’s final ruling. As a veteran in the index research field and former editor of the academic journal “The Journal of Indexes” for ten years, I believe there are two possible outcomes. Michael Saylor and others have argued forcefully that MicroStrategy is a bona fide operating company, with a solid software business and complex financial engineering around Bitcoin. This is a reasonable argument, and I personally agree with its business nature. But nothing is set in stone, and I can also imagine some institutions taking the opposite view. Given the controversy around digital asset treasury companies and MSCI’s current inclination to remove them, I estimate there’s at least a 75% chance MicroStrategy will be removed from the index.

However, I don’t think being removed from the index will have a significant impact on its stock. The $2.8 billion sell-off seems large, but based on my years of observing index inclusions and exclusions, the actual impact is often smaller than expected and is usually priced in ahead of time. For example, when MicroStrategy was added to the Nasdaq 100 Index last December, funds tracking that index had to buy $2.1 billion worth of MSTR stock, but its share price barely moved.

I believe the slight drop in MSTR’s stock price since October 10 is partly because the market has already priced in the expectation of an “index removal.” At this stage, its stock price is unlikely to see significant volatility.

In the long term, MSTR’s value depends on the effectiveness of its strategy execution, not whether index funds are forced to hold its stock.

MicroStrategy’s Bitcoin Holdings

The other question is whether MicroStrategy will dump its Bitcoin. The bears’ logic goes like this:

MicroStrategy is removed from the MSCI index;

Its stock price plunges, falling well below net asset value (NAV);

It is ultimately forced to sell its Bitcoin.

This logic seems plausible, but unfortunately, it doesn’t hold water. MSTR’s price dropping below NAV does not trigger Bitcoin sales; you can check the relevant rules and do the math yourself.

MicroStrategy’s debt only has two key obligations: first, it needs to pay about $800 million in annual interest; second, some debt instruments will need to be converted or rolled over at maturity.

There’s no short-term worry about interest payments. The company currently holds $1.4 billion in cash, more than enough to easily cover a year and a half of interest payments.

Likewise, debt conversion isn’t an immediate concern. The first batch of debt instruments doesn’t mature until February 2027, and the scale is only about $1 billion, which is nothing compared to MicroStrategy’s $6 billion in Bitcoin holdings.

If MSTR’s stock price keeps falling, would insiders pressure the company to sell Bitcoin? Highly unlikely. Michael Saylor himself controls 42% of the voting shares, and you’d be hard pressed to find anyone more committed to the long-term value of Bitcoin. In 2022, when MSTR traded at a discount, he didn’t sell.

I understand why bears like to hype up the “doomsday” scenario for MicroStrategy. If MicroStrategy were ever forced to dump $6 billion in Bitcoin all at once, it would be devastating for the entire Bitcoin market—about equal to two years’ worth of Bitcoin ETF inflows. But given that the company has no debt maturing before 2027 and enough cash to cover foreseeable interest payments, this extreme scenario is simply impossible. We should also look at the big picture: at the time of writing, Bitcoin is priced around $92,000, down 27% from the all-time high, but still 24% above MicroStrategy’s average Bitcoin cost basis ($74,436). The so-called “doomsday” scenario is pure fantasy.

Conclusion

If you want to worry about something in the crypto industry, there are plenty of other things worth watching. For instance, I’m a bit concerned about the speed of Congressional progress on market structure bills, but with government agencies back to normal, I expect progress to accelerate; I also worry that some smaller, poorly managed digital asset treasury companies might go under; and I don’t expect a major new wave of Bitcoin buying from digital asset treasury companies in 2026, which means the market will lose an important source of near-term demand.

But for MicroStrategy:

Don’t worry about the impact of MSCI’s decision on MicroStrategy’s stock price; the actual effect will be much smaller than most expect and is likely already priced in by the market;

There is no reasonable mechanism in the short term that would force it to sell Bitcoin—this simply won’t happen.

Strong conviction in Bitcoin comes at a cost: when markets are volatile, you have to remain calm and patient. No one understands this better than Saylor and MicroStrategy, because they also know what patience really means. In the long run, that persistence will be richly rewarded.