From All in to perpetual, an analysis of MicroStrategy's $1.44 billion cash reserves.

Written by: Umbrella, Deep Tide TechFlow

As the publicly traded company holding the most BTC globally, Strategy (MicroStrategy) announced on December 1, 2025, that it has raised funds by selling Class A common stock, establishing a reserve fund worth $1.44 billion.

The official statement indicated that this move aims to support the payment of preferred stock dividends and interest on outstanding debt for the next 21 to 24 months, in order to reinforce the commitment to credit investors and shareholders.

This company, regarded as the “BTC shadow ETF”, has had an extremely simple and aggressive core strategy over the past few years: to finance as cheaply as possible and convert the funds into Bitcoin at the first opportunity.

Under Michael Saylor's grand narrative of “Cash is Trash,” the fiat currency on the Strategy balance sheet typically only retains the minimum necessary to meet daily operational needs.

This is clearly contrary to its recent statement. Against the backdrop of BTC prices falling from recent highs and increased market volatility, the Strategy move has once again caused panic in the market. What kind of impact will it have on the market when the largest BTC holders are not buying and even selling BTC?

Strategic Turn

The most significant meaning of this event is that it marks the first time that Strategy has publicly acknowledged the possibility of selling its holdings of BTC.

The company's founder and executive chairman Michael Saylor has long been hailed as a staunch advocate for Bitcoin, with his core strategy being “buy and hold forever.” However, the company's CEO Phong Le clearly stated in a podcast that if the company's mNAV indicator (the ratio of enterprise value to the value of its held cryptocurrency assets) falls below 1, and the company cannot raise funds through other means, then it will sell Bitcoin to replenish its dollar reserves.

This attitude breaks the market's impression of the strategy “All-in on BTC”, being interpreted by the market as a major turning point in the company's strategy and raising doubts about the sustainability of its business model.

Market Reaction

The strategic adjustment this time immediately triggered a severe negative chain reaction in the market.

After the CEO hinted at a possible sale of BTC, the stock price of Strategy plummeted by 12.2% during intraday trading, reflecting investors' panic over its strategic shift.

After the announcement was released, the price of BTC fell more than 4% simultaneously. This decline may not be entirely caused by MicroStrategy's actions, but the significant purchase price pausing aggressive buying is clearly a dangerous signal that the market has captured.

The expectation of major funds shifting to a wait-and-see approach has amplified the market's risk-averse correction.

Compared to the “surface crises” like stock prices and BTC prices, the deeper crisis comes from the statements of investment institutions.

Data shows that in the third quarter of 2025, several top investment institutions, including Capital International, Vanguard, and BlackRock, have actively reduced their exposure to MSTR, with a total reduction of approximately $5.4 billion.

This data indicates that as more direct and compliant investment channels such as the BTC spot ETF emerge, Wall Street is gradually abandoning the old investment logic of “MSTR as a proxy for BTC.”

Among the many DAT companies, mNAV is a key indicator for understanding their business models.

In a bull market, the market is willing to pay a high premium for MSTR (mNAV significantly exceeding 1, peaking at 2.5), allowing it to create value through the flywheel model of “issuing shares → buying Bitcoin → stock price rising due to premium.”

However, as the market has cooled, its mNAV premium has basically disappeared, falling to around 1.

This means that issuing new shares to buy coins has become a zero-sum game that does not help enhance shareholder value, and its core growth engine may have already stalled.

The Fragmentation of the Eternal Motion Narrative

From a short-term and rational financial perspective, the market's bearish view on Strategy is not unfounded.

This cash reserve of $1.44 billion effectively announces the collapse of the narrative that once fascinated the entire world, the “buying BTC perpetual motion machine.” The logic of “issuing stocks to buy BTC,” which the market was previously infatuated with, is based on the optimistic assumption that stock prices will always be higher than the conversion price of convertible bonds.

Strategy currently carries up to $8.2 billion in convertible bonds, and S&P Global has explicitly rated its credit as “B-” junk status, warning of potential liquidity crises.

The core of the crisis lies in the fact that once stock prices remain sluggish, bondholders will refuse to convert their bonds into shares (as this would lead to greater losses) and will instead demand full cash repayment of the principal at maturity. In particular, one of the bonds worth $1.01 billion may face redemption as early as 2027, which creates clear and rigid medium-term cash flow repayment pressure.

In this context, the establishment of reserves is not merely to pay interest, but also to respond to potential “runs”. However, with the mNAV premium currently at zero, this funding mainly comes from the dilution of existing shareholders' equity.

In other words, the company is overdrawn on shareholder value to fill the gap of past debts.

If debt pressure is a chronic illness, then being removed from the MSCI index could be a potentially fatal acute condition.

As Strategy has been aggressively increasing its positions in the past two years, the proportion of BTC in its total assets has surged to over 77%, far exceeding the 50% red line set by index providers like MSCI.

Related reading: “Countdown of $8.8 billion outflow, MSTR is becoming the outcast of global index funds”

This has triggered a fatal classification issue, and MSCI is considering reclassifying it from an “operating company” to an “investment fund.” This administrative reclassification could lead to catastrophic ripple effects.

Once classified as a fund, MSTR will be removed from major stock indices, triggering a forced liquidation of trillions of dollars that track these indices.

According to estimates by JPMorgan, this mechanism could trigger a passive sell-off of up to $8.8 billion. For MSTR, which has an average daily trading volume of only a few billion dollars, such a level of selling is akin to creating a liquidity black hole, likely leading to a steep plunge in stock prices, with no fundamental buying interest to support it.

Expensive but necessary premiums

In the crypto market, an industry that follows the “cycle” principle, if we extend the time dimension, a strategy that seems like a “self-destructive” defensive measure may actually be the expensive but necessary premium paid to ultimately achieve victory.

“Staying at the table is the most important.”

This has been proven during the transitions of several bull and bear cycles in the past, where the culprit that led investors to 'zero' was not the drop in coin prices, but the reckless 'all-in' betting that ignored risks, ultimately resulting in being forced off the table due to a sudden event, leaving no hope for a comeback.

From this perspective, the $1.44 billion cash reserve established by Strategy this time is also to ensure that it can remain at the table at the lowest possible cost.

By sacrificing short-term shareholder rights and market premiums, we exchange for the initiative over the next two years. This is also a form of strategic wisdom. Before the storm arrives, we first lower the sails to weather the storm. When the next cycle of liquidity flooding comes and the weather is clear again, holding 650,000 BTC, the Strategy remains the irreplaceable “leading stock in the crypto circle.”

The ultimate victory does not belong to those who live more brilliantly, but to those who live longer.

In addition to allowing oneself to live longer, the more profound significance of this action by Strategy lies in exploring a feasible compliance path for all DAT companies.

If Strategy continues its previous “all-in” behavior, it is highly likely to face a situation of collapse, and the annual narrative of “public companies holding virtual currencies” will be completely disproven, which may bring about an unprecedented negative storm in the cryptocurrency world.

Conversely, if it can successfully find a balance between the high volatility of BTC and the financial stability of publicly listed companies by introducing a “reserve system” from traditional finance, then it will no longer just be a company hoarding coins, but will embark on a completely new path.

This transformation is, in fact, a statement from Strategy to the S&P, MSCI, and traditional Wall Street funds: not only is there fervent belief, but also the capability for professional risk control in extreme environments.

This mature strategy may be the ticket for it to be accepted by mainstream indices in the future, allowing for lower-cost financing.

The Strategy ship carries countless hopes and funds of the cryptocurrency industry. Rather than focusing on how fast it can sail in clear weather, it is more important to consider whether it has the stability to weather the storm.

This $1.44 billion reserve is not only a correction of the past unilateral betting strategy but also a pledge in the face of future uncertainties.

In the short term, this transformation is fraught with growing pains: the disappearance of mNAV premiums, passive dilution of equity, and the temporary halt of the growth flywheel are all costs of growth that must be paid.

But in the long run, this is also a hurdle that Strategy and countless DAT companies in the future must go through.

To touch heaven, you must first make sure your feet are firmly planted on solid ground.