Bitwise Chief Funding Officer Matt Hougan is pushing again towards one of many loudest bearish narratives round bitcoin treasury firm Technique (MSTR, previously MicroStrategy): that it could possibly be compelled right into a liquidation of its roughly $60 billion bitcoin stack. In his newest CIO memo, Hougan writes bluntly that “Michael Saylor and Technique promoting bitcoin just isn’t one in all” the true dangers in crypto.
Will Technique Promote Its Bitcoin?
The quick set off for market nervousness is MSCI’s session on whether or not to take away so-called digital asset treasury firms (DATs) like Technique from its investable indexes. Almost $17 trillion in belongings tracks these benchmarks, and JPMorgan estimates index funds may need to promote as much as $2.8 billion of MSTR whether it is excluded.
MSCI’s rationale is structural: it views many DATs as nearer to holding firms or funds than working firms, and its investable universes already exclude holding constructions equivalent to REITs.
Hougan, a self-described “deep index geek” who beforehand spent a decade enhancing the Journal of Indexes, says he can “see this going both approach.” Michael Saylor and others are arguing that Technique stays very a lot an working software program firm with “complicated monetary engineering round bitcoin,” and Hougan agrees that this can be a affordable characterization. However he notes that DATs are divisive, MSCI is at present leaning towards excluding them, and he “would guess there’s at the very least a 75% probability Technique will get booted” when MSCI broadcasts its choice on January 15.
He argues, nonetheless, that even a elimination is unlikely to be catastrophic for the inventory. Giant, mechanical index flows are sometimes anticipated and “priced in effectively forward of time.” Hougan factors out that when MSTR was added to the Nasdaq-100 final December, funds monitoring the index had to purchase about $2.1 billion of inventory, but “its value barely moved.”
He believes a few of the draw back in MSTR since October 10 already displays traders discounting a possible MSCI elimination, and that “at this level, I don’t suppose you’ll see substantial swings both approach.” Over the long run, he insists, “the worth of MSTR is predicated on how effectively it executes its technique, not on whether or not index funds are compelled to personal it.”
The extra dramatic declare is the so-called MSTR “doom loop”: MSCI exclusion results in heavy promoting, the inventory trades far under NAV, and Technique is someway compelled to promote its bitcoin. Right here Hougan is unequivocal: “The argument feels logical. Sadly for the bears, it’s simply flat flawed. There may be nothing about MSTR’s value dropping under NAV that can pressure it to promote.”
He breaks the issue right down to precise stability sheet constraints. Technique, he says, has two key obligations: about $800 million per yr in curiosity funds and the necessity to refinance or redeem particular debt devices as they mature.
Smaller DATs Are The Larger Downside
On curiosity, the corporate at present has roughly $1.4 billion in money, sufficient to “make its dividend funds simply for a yr and a half” with out touching its bitcoin or needing heroic capital markets entry. On principal, the primary main maturity doesn’t arrive till February 2027, and that tranche is “solely about $1 billion—chump change” in contrast with the roughly $60 billion in bitcoin the corporate holds.
Governance additional reduces the chance of compelled promoting. Michael Saylor controls round 42% of Technique’s voting shares and is, in Hougan’s phrases, an individual with extraordinary “conviction on bitcoin’s long-term worth.” He notes that Saylor “didn’t promote the final time MSTR inventory traded at a reduction, in 2022.”
Hougan concedes {that a} compelled liquidation could be structurally vital for bitcoin, roughly equal to 2 years of spot ETF inflows dumped again into the market. He merely doesn’t see a reputable path from MSCI index mechanics and fairness volatility to that final result “with no debt due till 2027 and sufficient money to cowl curiosity funds for the foreseeable future.” On the time of writing, he notes, bitcoin trades round $92,000, about 27% under its highs however nonetheless 24% above Technique’s common acquisition value of $74,436 per coin. “A lot for the doom.”
Hougan ends by stressing that there are actual points to fret about in crypto—slow-moving market construction laws, fragile and “poorly run” smaller DATs, and a probable slowdown in DAT bitcoin purchases in 2026. However on Technique particularly, his conclusion is direct: he “wouldn’t fear in regards to the impression of MSCI’s choice on the inventory value” and sees “no believable near-term mechanism that may pressure it to promote its bitcoin. It’s not going to occur.”
At press time, BTC traded at $92,086.
Featured picture created with DALL.E, chart from TradingView.com
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