Strategy& is shifting to a defensive strategy, prioritizing its approximately $2.2 billion cash buffer for preferred stock dividends and debt interest, rather than buying more Bitcoin .
The context is that new analysis shows Strategy&'s share price remains low and the Bitcoin premium is falling, while the decision on whether it will be removed from the MSCI index in January is approaching.
- Strategy&'s stock price is low, Bitcoin's premium is falling.
- A decision on whether a company will be excluded from MSCI will be made in January.
- A cash buffer of approximately $2.2 billion will be prioritized for dividend payments and interest payments on debt.
The $2.2 billion buffer fund and its intended use.
Strategy& has just established a cash buffer of approximately $2.2 billion to mitigate risks from its Bitcoin betting strategy.
This money is expected to be used to pay preferred stock dividends and interest, rather than being allocated to further Bitcoin purchases. Prioritizing cash flow for financial obligations suggests the company is slowing down its expansion of its cryptocurrency position in the short term.
This move has been described as a defensive strategy, aimed at increasing resilience to volatility associated with Bitcoin and reducing liquidation pressure during unfavorable market conditions.
Pressure from stocks, Bitcoin premium, and MSCI risks.
The latest analysis shows that Strategy& shares remain low and the Bitcoin premium is declining, as the MSCI January decision deadline approaches.
The decline in the Bitcoin premium could weaken valuation expectations associated with the company's Bitcoin exposure strategy, further contributing to downward pressure on the share price. In this context, the support from cash gives Strategy& more flexibility in balancing the cost of Capital, debt obligations, and cryptocurrency market volatility.
The decision on whether Strategy& will be removed from the MSCI index in January is approaching, becoming a crucial variable for market sentiment and the positioning of stocks within the index baskets.
