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Bitcoin News Update: Strategy's $1.44 Billion Reserve Seeks to Prevent Bitcoin Liquidation During Market Fluctuations

Bitcoin News Update: Strategy's $1.44 Billion Reserve Seeks to Prevent Bitcoin Liquidation During Market Fluctuations

Bitget-RWA2025/12/02 06:10
By:Bitget-RWA

- Strategy established a $1.44B reserve to avoid Bitcoin sales amid volatility, funded by stock offerings to cover 12+ months of dividends. - The firm added 130 BTC ($11.7M), holding 650,000 BTC (3.1% of total supply), emphasizing Bitcoin's role in its business model while prioritizing stability. - CEO Phong Le and co-founder Michael Saylor stressed the reserve reduces sell-pressures, though critics highlight risks in volatile markets and Bitcoin's underperformance vs. gold . - Market reactions mixed: MSTR

Strategy Establishes $1.44 Billion Reserve to Reassure Investors Amid Bitcoin Volatility

Strategy, recognized as the largest corporate holder of Bitcoin globally, has set aside a $1.44 billion cash reserve to ensure it can meet dividend and interest commitments. This initiative is intended to ease investor worries about the possibility of Bitcoin sales during recent market declines.

The reserve, sourced from an at-the-market equity offering, is structured to cover at least a year’s worth of dividend payments, with ambitions to extend this coverage to two years. This development comes on the heels of Strategy’s latest acquisition of 130 additional Bitcoins for $11.7 million, pushing its total Bitcoin holdings to 650,000 BTC—equivalent to 3.1% of all Bitcoin in circulation.

Strategy Bitcoin Reserve

Balancing Bitcoin Holdings with Financial Stability

This move is part of Strategy’s broader plan to maintain a stable financial footing while pursuing a Bitcoin-focused business model. CEO Phong Le highlighted that the reserve significantly lowers the chances that the company will need to sell its Bitcoin, though the option remains if the market-adjusted net asset value (mNAV) falls below 1.0. Co-founder Michael Saylor reassured stakeholders that Bitcoin’s price swings will not affect their dividends, and noted that the company could sell some of its appreciated Bitcoin to fund payouts while still increasing its overall holdings.

The announcement comes as Bitcoin’s value has dropped nearly 32% since its peak in October, with prices hovering around $85,500 as of December 1.

Industry Reactions and Ongoing Debate

Strategy’s approach has sparked both praise and criticism. The company’s use of equity and debt financing has enabled it to amass significant Bitcoin reserves without facing immediate refinancing pressures. However, some observers point out the difficulties of preserving value in such a volatile market. Crypto analyst Shane Molidor observed that large corporate Bitcoin purchases can cause dramatic price movements, especially in less liquid markets. He referenced previous cases involving Tesla and MicroStrategy, where even small announcements had outsized effects on Bitcoin’s price during periods of low liquidity. Although today’s deeper markets have lessened these impacts, smaller cryptocurrencies still face risks from speculative trading cycles.

Bitcoin vs. Gold as a Reserve Asset

The move also highlights the ongoing discussion about Bitcoin’s suitability as a reserve asset. Despite Strategy’s aggressive accumulation, gold has outperformed Bitcoin in 2025, with gold rising 58% while Bitcoin has fallen by 12%. Mark Connors from Risk Dimensions attributes gold’s continued dominance to its established infrastructure and longstanding trust among institutions. He noted that central banks and major investors still favor gold for its reliability in trade and settlements, emphasizing that Bitcoin remains too new for widespread institutional adoption.

Market Response and Future Outlook

Investor response to Strategy’s reserve announcement has been mixed. Shares of MSTR dropped more than 6% after the news, reflecting broader uncertainty in the crypto sector. The company also revised its 2025 outlook, forecasting outcomes ranging from a $7 billion loss to a $9.5 billion profit, depending on Bitcoin’s price at year-end. Despite these uncertainties, analysts believe a large-scale Bitcoin sale by Strategy is unlikely, with prediction markets estimating only a 6% probability of such an event before the year concludes.

As Strategy navigates ongoing market turbulence, its dual focus on maintaining robust Bitcoin reserves and ensuring liquidity puts it in a strong position to manage short-term volatility. With Bitcoin’s future price movements still unpredictable, the company’s evolving treasury strategy underscores the changing landscape of corporate finance in the cryptocurrency era.

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Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.

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