Key Highlights
- Strategy shares fell over 5% as Bitcoin dropped to $85,766, adding to investor concerns amid rising volatility in the crypto market.
- Strategy’s mNAV sits at 1.2, and if it falls below 1, the company may be forced to sell Bitcoin to keep up with dividend payments.
- CEO Phong Le said selling Bitcoin would only happen as a last resort, noting the math supports it but the company doesn’t want to be known for selling.
Investors are increasingly worried that Strategy Inc. may be forced to sell part of its roughly $56 billion Bitcoin (BTC) holdings if prices continue to fall.
Shares of the Virginia-based company, known for its massive cryptocurrency portfolio, dropped more than 5% in early Monday trading, according to Yahoo Finance. Meanwhile, Bitcoin slid about 6% intraday to $85,766. At the time of writing, it was trading around $86,895 with a 0.34% gain in the last 24 hours.
The concern centers on Strategy’s mNAV, a measure that compares the company’s overall value to the value of its Bitcoin holdings. On Monday, mNAV stood at about 1.2, and if it drops below 1, the company could be compelled to sell Bitcoin to maintain dividend payments.
CEO Phong Le addressed the situation on a podcast, noting that selling Bitcoin would be a last resort. “There’s the mathematical side of me that says that would be absolutely the right thing to do, and there’s the emotional side of me, the market side of me, that says we don’t really want to be the company that’s selling Bitcoin,” Le said.
How Strategy manages its Bitcoin
Strategy, formerly MicroStrategy, used to be a primarily software development firm. Now it is known for BTC holdings, as over the years, the company has purchased Bitcoin using cash, equity, and preferred stock offerings.
Its total holdings are 650,000 BTC, purchased at an average price of around $74,436 per coin, totaling over $48 billion. The company continues to buy Bitcoin even during market dips.
To strengthen its financial position, Strategy recently established a $1.44 billion U.S. dollar reserve to cover dividends on preferred stock and interest on its debts. The reserve was funded by selling 8.2 million Class A shares under an at-the-market program, raising nearly $1.5 billion. CEO Phong Le said the reserve currently covers 21 months of dividends, with plans to extend it to 24 months.
What’s next for Bitcoin and investors
The company also updated its Bitcoin forecast, now expecting BTC to finish 2025 at between $85,000 and $110,000. Bitcoin’s performance is now expected to yield 22% to 26%, with total gains of $8.4 billion to $12.8 billion.
Strategy’s management of its Bitcoin and U.S. dollar reserve shows how it balances cryptocurrency assets with financial responsibilities.
Investors are meanwhile closely monitoring the company because its buying and selling can affect market sentiment. After a recent halt in purchases, Chairman Michael Saylor also hinted on social media that the company may resume adding to its Bitcoin holdings.
Also Read: Bitcoin Slides to $85K as Asian Stocks Shake Global Markets
