Bitcoin’s Sudden Decline Sparks Fears Across Global Markets
Bitcoin’s dramatic fall from its record high of $126,000 to the $80,000 range within just over a month has shaken investor confidence and placed intense scrutiny on Strategy, the world’s largest corporate Bitcoin holder. Market anxiety surged as analysts warned that further declines could destabilize the company and trigger broader chaos across the cryptocurrency sector.
Strategy chairman Michael Saylor and the executive team addressed these concerns through an emergency company update and podcast, outlining new measures designed to reinforce liquidity and reassure shareholders during a period of severe market uncertainty.
Dollar Reserves Form the Core of Strategy’s Crisis Plan
Central to the new strategy is a substantial “cash breakwater” aimed at preventing forced Bitcoin liquidations. Strategy revealed it has secured $1.44 billion in cash through stock market activities, including a paid-in capital increase. The company emphasized that these funds serve not merely as holdings but as a protective mechanism against market volatility.
CEO Phong Le explained that the reserves can fully cover preferred stock dividends and debt interest for the next 21 months. He added that Strategy’s goal is to further strengthen its position by extending that coverage to at least 24 months, reinforcing long-term payment capacity.
Saylor Signals Conditional Bitcoin Sales for the First Time
The most surprising revelation during the briefing was Saylor’s acknowledgement of a possible scenario in which Strategy could sell Bitcoin. Although he once vowed to hold “until I die,” he clarified that sales may occur only if the company’s mNAV — a measure comparing market capitalization to Bitcoin holdings — falls below 1.
Saylor argued that issuing shares when the stock trades below the value of held Bitcoin would harm existing shareholders. In such a circumstance, selling Bitcoin or derivatives would be the more responsible choice. His comments, while rational in context, initially unsettled investors who had long viewed Strategy as an unwavering Bitcoin accumulator.
Despite an intraday stock drop of 12.2%, markets later stabilized as investors recognized the conditional sales policy as a last-resort measure to prevent dilution and maintain financial stability.
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Performance Expectations Adjusted After the Market Collapse
Strategy also revised its financial outlook following Bitcoin’s rapid downturn. Previously forecasting a year-end price of $150,000, the company now aligns expectations with Wall Street’s average range of $85,000 to $110,000. This dramatic shift significantly alters projected earnings.
If Bitcoin ends the year at $85,000, Strategy anticipates a net loss of roughly $5.5 billion. If the price recovers to $110,000, the company could instead report profits of approximately $6.3 billion. Correspondingly, Strategy lowered its annual Bitcoin return target from 30% to a range of 22% to 26%, depending on cash-holding requirements and equity-market conditions.
Strategy Continues Aggressive Bitcoin Purchases Despite Volatility
Even while acknowledging the possibility of sales, Strategy simultaneously accelerated its acquisition efforts. On the same day as the briefing, the company purchased an additional 130 Bitcoins. This follows a major buy of 8,178 Bitcoins after last month’s sharp price drop.
Saylor emphasized that although small-scale sales may occur to cover dividends, net accumulation will continue. On December 8, Strategy announced a $1 billion investment to acquire another 10,624 Bitcoins, boosting its total holdings beyond 660,000. The company’s stock rose 2.63% after the announcement, reflecting renewed investor confidence.
MSCI Index Decision Looms as a Critical Market Catalyst
The next major test for Strategy comes on January 15, when MSCI will determine whether to retain or remove the company from key indexes. Analysts warn that exclusion could trigger capital outflows of up to $2.8 billion, adding further pressure to both Strategy’s stock and Bitcoin’s short-term price trajectory.
However, many believe the potential impact may be limited due to the company’s strong cash reserves and already-adjusted market expectations. Conversely, retaining Strategy within MSCI indexes could support a Bitcoin rebound back toward pre-crash levels and potentially pave the way for new all-time highs.
