[Token] “Bitcoin Buying Paused, Cash Piled Up”: Strategy Adopts a Defensive Play Amid mNAV Slide and MSCI Removal Fears

Strategy Chooses Common-Stock Sale Over Bitcoin Buys Last Week
With Fears of a Large Bitcoin Selloff Growing, Strategy Moves to Boost Liquidity
MSCI Index-Removal Worries Spread—Saylor Still Signals “More Buying”

Strategy, the bitcoin treasury company led by Executive Chairman Michael Saylor, paused bitcoin purchases over the past week and increased its cash holdings. As concerns spread that Strategy could move toward large-scale bitcoin sales amid a decline in its mNAV (multiple to Net Asset Value), the company appears to be trying to calm market sentiment by strengthening its ability to meet obligations. However, with unresolved headwinds still in place—including the possibility of being removed from MSCI (Morgan Stanley Capital International) indices—investor anxiety has been slow to ease.

Strategy Pauses Crypto Purchases

According to crypto outlet CoinGape on the 22nd (local time), Strategy said in an SEC filing that it did not buy any bitcoin between Dec. 15 and 21. Strategy currently holds a total of 671,268 bitcoins. Its total purchase cost is $50.33 billion, and its average purchase price is about $74,972 per bitcoin. Instead of buying bitcoin during the period, Strategy raised $748 million by selling common stock, lifting its cash balance to $2.19 billion.

Strategy previously said it also sold shares in the New York market last week to secure $1.44 billion in cash. The company said the move was aimed at paying debt interest and preferred dividends without having to sell its bitcoin holdings during a sharp bitcoin downturn. At the time, Strategy CEO Phong Le said, “This reserve will be the primary source for paying our preferred dividends and debt interest,” adding that “the funds we have secured so far are sufficient to cover all dividends and interest for the next 21 months.”

Strategy said it plans to expand the reserve further to secure at least 24 months of liquidity. Chairman Michael Saylor likened it to a “battery.” The idea is to store the energy produced by bitcoin—described as a powerful but highly volatile “reactor”—in the form of a dollar reserve “battery,” so the company can provide shareholders with stable returns (dividends) regardless of market swings. The move is also seen as a signal that Strategy aims to eliminate longstanding market concerns about margin calls.

“Will Bitcoin Flood the Market?” Anxiety Builds

Some in the industry say Strategy’s latest moves look more like a short-term defensive step. With fears spreading that a sharp bitcoin price drop could force Strategy to sell part of its holdings, the view is that the company is trying to calm sentiment by bolstering liquidity through equity sales. Previously, CEO Phong Le said that if mNAV falls below 1 and external fundraising becomes difficult, the company could sell bitcoin—adding that it would be close to a last resort. At the time, Strategy said it has “three engines”—the bitcoin spot market, the derivatives market, and the equity market—and argued that when its stock is undervalued, tapping the bitcoin market can be in shareholders’ interests.

mNAV is a metric showing how much premium or discount Strategy’s market value trades at relative to the value of the bitcoin it holds. If mNAV is above 1, the stock is valued above the underlying asset value, meaning the dilution burden on existing shareholders is relatively smaller even if the company raises capital through new share issuance. If mNAV falls below 1, however, the stock trades below net asset value, making additional equity issuance more burdensome for existing shareholders and sharply raising the difficulty of raising capital. Strategy’s mNAV reportedly fell below 1 for the first time in three years last month and has continued to hover around that level.

The company’s remarks—framed as an explanation of its principles under a worst-case scenario—shocked the market. When Strategy first began buying bitcoin in 2020, it had stated in filings with the U.S. Securities and Exchange Commission (SEC) that it could sell bitcoin for business reasons. Even so, the market had largely trusted that Strategy would adhere to an “always hold” approach. With that assumed baseline now shaken, investor anxiety has intensified.

Risk of Removal From Major MSCI Indexes

Strategy’s challenges extend beyond a falling mNAV. In recent weeks, global investment banks have warned that Strategy could be removed from major MSCI indexes early next year. The view is that changes to MSCI’s eligibility rules could strip Strategy of index inclusion. In October, MSCI announced it would begin a consultation on a proposal to exclude companies whose assets are more than 50% exposed to crypto assets such as bitcoin, noting that “digital asset treasury management companies may be similar to investment funds that are not eligible for index inclusion.” The consultation runs through Dec. 31, and a final decision is expected on Jan. 15 next year.

J.P. Morgan recently went further, predicting that Strategy could drop out of benchmark indexes such as the “MSCI USA” and the “Nasdaq 100.” The bank said a sharp decline in the price of bitcoin—which Strategy has accumulated as part of its strategy—has amplified market concerns about the company’s profitability. J.P. Morgan estimated that removal from MSCI indexes could trigger as much as $2.8 billion in passive outflows, and warned of additional risks of outflows tied to potential actions by other index providers.

Even amid these concerns, Strategy is leaving the door open to further bitcoin purchases. On the 21st, Saylor posted on his X (formerly Twitter) account, “Green Dots Beget Orange Dots.” He has repeatedly used cryptic phrases involving “green dots” and “orange dots” in the past, often followed by bitcoin purchases. Many investors are again interpreting “green dots” as “raising funds” and “orange dots” as “buying bitcoin,” reading the post as a hint that the money has been secured and a new round of purchases may be imminent.