Bitwise CIO: Strategy Will Not Sell Its Bitcoin Holdings

On December 4, according to The Block, Bitwise Chief Investment Officer Matt Hougan refuted claims that Strategy (formerly MicroStrategy) might be forced to sell its Bitcoin holdings. He called this premise “completely wrong,” pointing out that neither index adjustments nor market pressures require the company to sell its Bitcoin. In a report, Hougan responded to a large number of recent inquiries he received, mainly focused on two questions: whether Strategy would be removed from the MSCI index, and whether such an adjustment would force the company to liquidate its multi-billion-dollar Bitcoin holdings. Hougan acknowledged that MSCI is indeed considering excluding digital asset treasury companies from its investable indices and plans to make a decision on January 15. JPMorgan recently estimated that if Strategy is removed, it could trigger up to $2.8 billion in passive outflows from its stock. Hougan also estimated the probability of Strategy being removed at around 75%. However, Hougan pointed out that historical experience shows that index inclusions and exclusions have much less impact on prices than investors generally fear. He mentioned that when Strategy was included in the Nasdaq 100 index last year, about $2.1 billion in passive funds were forced to buy its stock, but “the stock price barely budged.” He added that the decline in Strategy’s stock price since October 10 is likely the market pricing in the possibility of removal in advance, and he does not expect to see “significant two-way volatility” in the future.