Strategy’s ability to keep buying, or avoid selling, partly hinges on its multiple to net asset value (mNAV), which compares the firm’s enterprise value to the value of its Bitcoin holdings.
An mNAV above 1 means the stock trades at a premium to its BTC, allowing the company to issue shares via at-the-market offerings to fund further purchases.
Will Strategy buy or sell BTC?Despite the bearish sentiment, analysts remain skeptical that Strategy will liquidate holdings.
"I don't think the drop in the Bitcoin prices changes anything for Strategy," Nic Puckrin, digital asset analyst and co-founder of Coin Bureau, told Decrypt.
He argued that the firm’s co-founder and chair, Michael Saylor, has “always been prepared for a downturn, as any Bitcoin investor with experience would be,” adding that, “He's not facing any forced liquidations, and the first tranche of the convertible bonds isn't due until early next year."
“In the near term, I do not expect Strategy to buy more BTC because the BTC spot price-to-average Strategy's purchase price ratio is 1, which could be dilutive,” Aurelie Barthere, Principal Research Analyst at Nansen, told Decrypt.
The Rules of Bitcoin 1. Buy Bitcoin 2. Don't Sell the Bitcoin
“Will Strategy sell BTC? It will depend on whether they have set aside a cash reserve to meet their cash obligations, mainly for preferred stock dividends,” Barthere added.
“While their long-term accumulation thesis remains intact, any decision to sell would likely reflect opportunistic pricing or capital reallocation needsnot a fundamental shift in their conviction,” Marcin Kazmierczak, co-founder of RedStone, told Decrypt.
The key variable, Kazmierczak said, isn’t whether the firm could sell, but “whether the risk-reward at current levels justifies their allocation strategy.”
Decrypt has reached out to Strategy for comment.
