The corporation with the largest Bitcoin portfolio recently declared a U.S. dollar dividend reserve exceeding $1 billion. This announcement comes just days after its leading executive outlined potential circumstances that could compel the company to liquidate a portion of its $56 billion Bitcoin investment.
On Monday, Strategy revealed that it willSet aside $1.44 billion as a reserve.The reserve was intended to cover dividend payments for its preferred stock and interest payments on its existing debt. It was established using proceeds from the sale of its class A common stock. Strategy aims to maintain enough reserves to pay dividends for a minimum of one year.
The bitcoin-focused firm stated that, presuming bitcoin’s price closes the year between $85,000 and $110,000, their annual financial results would show either a $5.5 billion loss or a $6.3 billion profit.
1. Bitcoin’s value has decreased by 31% since its high point on October 6, while Strategy’s stock has plummeted by 53%. 2. Interestingly, the connection between bitcoin and the stock has strengthened as they’ve both declined, with the correlation coefficient jumping to 0.97 (perfect positive correlation is 1.00) from a year-to-date figure of 0.55. 3. On Monday, Bitcoin experienced a drop of over 5%, reaching $86,262.
Strategy’s newest announcement follows CEO Phong Le’s recent podcast statement that the firm would be compelled to liquidate its bitcoin holdings should its mNAV, a valuation ratio comparing the company’s market capitalization to the market value of its bitcoin assets, drop below 1.
“Now that we’re facing a bitcoin downturn and observing our mNAV shrinking, I’m hoping our mNAV stays above 1. However, if it were to drop below that level and we lacked alternative funding, we would have to sell our bitcoin holdings,” he stated.told a podcast interviewReleased on Friday, the statement indicated, “That’s a measure of absolute necessity.”
The mNAV, a metric for the company previously called MicroStrategy (whose stock has fallen by 38% this year), is currently 1.19. It peaked at 2.5 in 2024 and was approximately 1.7 in June. An mNAV exceeding 1 indicates that Strategy’s stock price is higher than the value of its bitcoin assets.
Read: Chanos announces he won his wager against Strategy’s Saylor.
Le stated, “Our aim isn’t to be a bitcoin vendor. We possess the largest bitcoin holdings, and us selling them would negatively impact both the bitcoin community and its overall perception.”
The CEO expressed continued confidence in Bitcoin’s future, stating that if the cryptocurrency outperforms the S&P 500 by a factor of two—for example, achieving an annual gain of 30% compared to the index’s 14%—then “we’re going to win.”
He stated that he anticipates annual returns of 40% to 50% for the next four to five years. He cited the technology’s groundbreaking nature, its excellent store of value, its independence from government control, and its limited availability as reasons for his optimism.
Bitcoin’s price dipped on Monday due to…U.S. stocks were under pressure as they kicked off the last trading month of the year. The two asset classes have been increasingly correlated this year, driving unease for investors when bitcoin runs into selling pressure, as it has in recent weeks.
Read: Why bitcoin’s brutal drop from an October record high is now a crucial barometer for the broader market
Tomi Kilgore contributed.
