For the first time, it may "sell coins," and "Bitcoin concept stock leader" MSTR once plummeted 12% during the session

As the publicly traded company with the largest Bitcoin holdings globally, MicroStrategy announced on Monday, December 1, that it has raised funds through the sale of stock to establish a $1.44 billion "dollar reserve."

This move aims to address the severe volatility in the cryptocurrency market and to secure payments for its dividends and debt interest. Previously, the price of Bitcoin had fallen from a high of over $126,000 in early October to about $85,000 within a month.

Company executives stated that if its metric for measuring the relationship between enterprise value and cryptocurrency holdings, "mNAV," falls below 1, and the company cannot finance through other means, it will sell Bitcoin to replenish its dollar reserves. This statement is seen as a significant turning point in the company's strategy, breaking away from the "buy and hold forever" philosophy long advocated by its founder Michael Saylor.

Due to the company's first indication of the possibility of selling Bitcoin, its stock price plummeted by as much as 12.2% during trading on Monday, ultimately closing down 3.3%. The sell-off by investors reflects deep concerns about the sustainability of its business model during the "Bitcoin winter."

Dollar Reserve: Insurance Against the "Bitcoin Winter"

In the face of headwinds in the crypto market, MicroStrategy is taking steps to strengthen its financial position. According to reports from the Financial Times and other media, this $1.44 billion reserve is funded by the proceeds from the company's stock sale. The company's goal is to maintain a dollar reserve sufficient to cover "at least 12 months of dividends," eventually expanding to cover "24 months or longer."

It is reported that the funds were raised through the issuance of 8.2 million shares last week, enough to cover the company's total interest expenses for the next 21 months. Currently, MicroStrategy's annual interest and preferred stock dividend expenses are about $800 million. This move aims to ensure that even if the capital markets lose interest in its stock and bonds, the company will not be forced to sell Bitcoin in the short term.

Company CEO Phong Le candidly stated in a recent podcast episode of "What Bitcoin Did" that this move is to prepare for the "Bitcoin winter." Meanwhile, company founder Michael Saylor stated that the reserve will "allow us to better navigate short-term market fluctuations."

The Myth of "Never Selling" Shattered?

The core change in this strategic adjustment is that MicroStrategy has acknowledged for the first time the possibility of selling Bitcoin. This potential selling condition is linked to the company's self-created "mNAV" metric, which compares the company's enterprise value (market capitalization plus debt minus cash) with the value of its cryptocurrency assets.

CEO Phong Le clearly stated: "I hope our mNAV does not fall below 1. But if we really get to that point and have no other financing channels, we will sell Bitcoin." This statement is significant. For a long time, Michael Saylor has presented himself as a staunch advocate for Bitcoin, transforming MicroStrategy from a small software company into the world's largest corporate holder of Bitcoin, with a core strategy of continuously buying and holding for the long term.

Currently, the company holds approximately 650,000 Bitcoins, valued at about $56 billion, accounting for 3.1% of the total global Bitcoin supply. Its enterprise value is approximately $67 billion. If the mNAV falls below 1, it means the company's market valuation (after excluding debt) is lower than the value of its held Bitcoins, which would severely undermine the foundation of its business model.

Imminent Debt Pressure

Behind the establishment of the dollar reserve is the enormous debt pressure facing MicroStrategy. The company has financed its Bitcoin purchases through various means, including issuing stocks, convertible bonds, and preferred shares, and currently carries $8.2 billion in convertible bonds.

If the company's stock price continues to languish, holders of these bonds may choose to demand cash repayment of the principal rather than converting them into stock, which would create significant cash flow pressure for the company. The rating agency S&P Global specifically pointed out the "liquidity risk" posed by its convertible bonds when it assigned MicroStrategy a "B-" credit rating on October 27.

S&P warned: "We see a risk that the company's convertible bonds could mature while Bitcoin prices are under severe pressure, which could lead the company to liquidate its Bitcoins at depressed prices or undertake a debt restructuring that we might view as a default."

The specific pressures are already imminent. Data shows that holders of a $1.01 billion bond can demand repayment of the principal on September 15, 2027. Additionally, there are over $5.6 billion in "out-of-the-money" convertible bonds that may need to be redeemed in cash by 2028, posing a long-term financial stability risk for the company.

Trader Interpretation: Cautious Hedging or Prelude to Sell-off?

Although the CEO of MicroStrategy emphasized that Bitcoin would only be sold under extreme conditions, traders have clearly begun to "overinterpret" in this sensitive market environment.

Despite the company's insistence that its long-term accumulation strategy remains unchanged, traders are concerned that the latest comments introduce a potential sell-off pathway. This concern quickly translated into action, leading to heightened risk-averse sentiment.

Regarding CEO Phong Le's mention that "selling Bitcoin is mathematically reasonable when the stock price is below the value of the underlying asset and financing is constrained," market reactions have been polarized:

Pessimists read between the lines: Many cryptocurrency traders speculate that these seemingly understated comments could signal that the world's largest corporate holder is preparing to sell some Bitcoin. One user sarcastically remarked on social media X, "Can't wait to see them sell at the bottom." Another commenter stated, "Sounds like typical corporate PR talk, but they better not sell at the wrong time." Rationalists believe this is an inevitable move: there are also views that the company's CEO Phong Le simply candidly acknowledged the constraints faced by any publicly listed company when its market value is below its asset value. An investor pointed out, "The focus is not on whether they might sell, but on how firm their commitment is before that option becomes a reality."

To reassure the market, MicroStrategy subsequently stated on the X platform that even if the price of Bitcoin falls back to around the average purchase price of $74,000, its held assets would still cover the outstanding convertible debt several times over; it even claimed that even if it drops to $25,000, its asset coverage ratio would still be more than twice its liabilities. Founder Michael Saylor also continued to show confidence, announcing on Monday that the company had purchased another 130 BTC for $11.7 million.

Market Reaction and Earnings Warning

MicroStrategy's latest moves and the concerns over its strategic shift quickly triggered a negative reaction in the market. On Monday, its stock price hit a low of $156 during intraday trading, and although it rebounded by the close, it was still down 64% from its 52-week high in mid-July. The stock has accumulated a nearly 41% decline this year. Meanwhile, the price of Bitcoin also suffered, dropping over 4% to around $86,370.

In addition to the company's own strategic adjustments, the severe fluctuations in the macro market also became the "last straw" that crushed the stock price. On Monday, the market exhibited a clear risk-averse tone, partly due to the hawkish stance of the Bank of Japan leading to a squeeze in yen financing, and partly due to the turmoil within the cryptocurrency sector itself.

Relevant charts illustrate the current extreme market sentiment:

• Shrinking purchasing power of Bitcoin: A year ago, one Bitcoin could purchase 3,500 ounces of silver; now, the same unit of Bitcoin can only purchase 1,450 ounces of silver, marking the lowest point since October 2023. This sharp decline in ratio intuitively reflects the weakness of crypto assets relative to traditional safe-haven assets like silver.

• Targeting in the options market: Data from SpotGamma indicates that MicroStrategy (MSTR) is facing a typical situation of "over-leveraged targets being attacked." A large number of put options are concentrated below $170. This negative gamma effect means that if the price of Bitcoin falls further, the hedging actions of market makers could accelerate the decline of MSTR, Coinbase, and other crypto-related stocks, potentially dragging down major stock indices.

• Macroeconomic headwinds: As expectations for interest rate hikes by the Bank of Japan rise, carry trades face liquidation pressure, with cryptocurrencies, the most speculative asset class, being the hardest hit. Bitcoin briefly sought support around $84,000 during the day, experiencing its worst single-day performance since March 3; Ethereum even fell below the $3,000 mark.

In addition to pressure on stock prices, the company's performance expectations have also raised red flags. MicroStrategy expects that if Bitcoin prices close between $85,000 and $110,000 by the end of this year, the company's annual performance could range from a net loss of $5.5 billion to a net profit of $6.3 billion. This sharply contrasts with the company's forecast of "achieving a net profit of $24 billion by 2025" released in its financial report on October 30