Strategy funded the reserve through recent stock sales rather than Bitcoin liquidation.
Bitcoin News
Michael Saylor's Bitcoin treasury firm established a $1.44 billion reserve this week in a move that analytics firm CryptoQuant says reveals the company is preparing for a potential bear market.
Strategy built the cash cushion to cover preferred stock dividends and debt interest payments, representing a stark departure from the company's five-year strategy of converting every available dollar into Bitcoin. CryptoQuant called the decision a clear sign that management is bracing for a prolonged downturn.
The dollar reserve is designed to last at least 12 months, with plans to extend coverage to 24 months or beyond. CryptoQuant's Wednesday analysis noted this approach means Strategy won't be forced to sell Bitcoin during market weakness, but it also removes a major buying force that helped drive previous rallies.
Strategy funded the reserve through recent stock sales rather than Bitcoin liquidation. The firm now operates a dual-reserve model that prioritizes survival over aggressive accumulation, marking what CryptoQuant described as a tactical shift with major implications for the broader market.
CryptoQuant stated that Strategy appears to acknowledge a non-trivial probability of a deep or extended Bitcoin drawdown. Establishing a 24-month dollar buffer suggests an expectation that Bitcoin could trade sideways or lower for an extended period, and that capital markets may be less receptive to future stock issuance, according to the report.
Bitcoin purchases by the company have collapsed over the past year. Monthly acquisition volumes dropped from 134,000 Bitcoin last November to just 9,100 Bitcoin this November, with only 135 coins purchased so far in December.
CryptoQuant added that Strategy no longer treats its Bitcoin exposure as untouchable across all market conditions. The company's management is now acknowledging that protecting the Bitcoin stack requires flexibility, including cash buffers, hedging, and selective monetization in distressed scenarios.
CryptoQuant's head of research, Julio Moreno, told The Block that if bearish conditions persist, Bitcoin could trade between $55,000 and $70,000 next year. He added that Strategy's cash reserve raises the probability of eventual sales, though the company would turn to derivatives hedging first before touching its core holdings.
The shift carries material implications for the #Bitcoin market, CryptoQuant stated. Strategy's reduced marginal Bitcoin buying softens a powerful demand channel that amplified previous bull cycles, but the dollar reserve and newly disclosed hedging capability significantly reduce the probability of distress-driven Bitcoin selling, which is ultimately supportive of long-run market stability.
Mizuho Securities maintained its outperform rating on MSTR shares after hosting a Q&A with CFO Andrew Kang. The bank emphasized that the dollar reserve functions as risk management rather than preparation for asset sales, and that Strategy believes it can sustain operations for over three years at current Bitcoin prices around $92,700.
The shift coincides with broader market weakness. CryptoQuant's Bull Score Index recently hit zero for the first time since January 2022, its most bearish reading possible, suggesting nearly every major technical indicator now points to a cryptocurrency bear market.
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