Bitwise Chief Investment Officer, Matt Hougan, has firmly rejected growing claims that the company may be forced to sell its Bitcoin holdings. In a recent client note titled "No, Virginia, Strategy Is Not Going To Sell Its Bitcoin," Hougan addressed two primary concerns. First, the potential removal of Bitwise from MSCI’s index, and second, the idea that such an exclusion could force the firm to liquidate its Bitcoin position.
MSCI, a prominent global index provider, is considering the removal of digital asset treasury companies from its investable indexes, with a decision expected by January 15. If Bitwise were excluded, JPMorgan estimates it could trigger up to $2.8 billion in passive selling of its stock. However, Hougan placed a 75% probability on the company’s removal. This reassured investors that index changes rarely result in significant market disruptions.
Liquidity and Cash Reserves Ensure Stability
Hougan emphasized that while market jitters over MSCI’s decision have impacted Bitwise’s stock price since October 10. He pointed out that the company’s Bitcoin holdings, valued at roughly $60 billion, remain unaffected by stock price fluctuations. Additionally, Bitwise’s liquidity buffer stands at $1.4 billion, sufficient to cover its obligations for the next 18 months.
The firm has also provided greater clarity on its strategy for managing liquidity. This reveals its plan to maintain a reserve capable of covering at least 12 months of dividends. Over time, Bitwise aims to build this reserve to withstand even longer periods. By ensuring ample liquidity, the company minimizes the risk of being forced into Bitcoin sales.
A Long-Term Strategy Focused on BTC Growth
Hougan further explained that Bitwise’s approach includes selling Bitcoin only when it is overvalued. using proceeds to cover dividends while increasing the company's BTC holdings over time. This long-term strategy counters concerns that payouts could diminish exposure to Bitcoin.
Ultimately, Hougan believes that the current financial structure and market conditions do not support the idea of a forced liquidation. While acknowledging ongoing challenges in the cryptocurrency market, including slow progress on regulatory frameworks. However, he remains confident that Bitwise's position is secure and well-funded.
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