Bitcoin is slumping again. Its biggest corporate owner admits it may have to sell if things get worse.

By Barbara Kollmeyer

Strategy says it's creating a U.S. dollar reserve to pay dividends and cope with volatility

The CEO of the world's biggest bitcoin treasury, Strategy, has laid out a scenario in which the company would consider selling some of its bitcoin holdings.

The biggest corporate holder of bitcoin has announced a U.S. dollar dividend reserve of more than $1 billion, days after its top executive laid out what might force the company to sell some of its $56 billion in bitcoin holdings.

Strategy (MSTR) announced Monday that it will establish a $1.44 billion reserve "to support the payment of dividends on its preferred stock and interest on its outstanding indebtedness." The reserve was funded by sales of its class A common stock, and Strategy plans to keep sufficient reserves to fund its dividends for at least 12 months.

The bitcoin treasury company said that based on an assumed year-end bitcoin price range of $85,000 to $110,000, the company would report, for the full year, between a loss of $5.5 billion and a profit of $6.3 billion.

Since bitcoin peaked on Oct. 6, the cryptocurrency has lost 31%, while Strategy's stock has tumbled 53%. However, the correlation between bitcoin and the stock has increased during the selloff, with the correlation coefficient rising to 0.97 (a correlation of 1.00 means they always move in the same direction) compared with a year-to-date correlation of 0.55. Bitcoin was down by more than 5% on Monday to $86,262.

The latest update from Strategy comes just days after CEO Phong Le said in a podcast that the company would have to sell bitcoin if its multiple to net asset value - a valuation metric known as mNAV that divides the company's market capitalization by the market value of the bitcoin it holds - fell below 1.

"So now, as we're looking at bitcoin winter, as we see our mNAV compressing, my hope is our mNAV doesn't go below 1. But if we did and we didn't have other access to capital, we would sell bitcoin," he told a podcast interview that published Friday. "That would be a last resort."

The mNAV for the company formerly known as MicroStrategy, whose shares are down 38% this year, currently stands at 1.19 but reached as high as 2.5 in 2024 and around 1.7 in June. An mNAV above 1 means Strategy trades at a premium to its bitcoin holdings.

Read: Chanos declares victory in his bet vs. Strategy's Saylor

"We don't really want to be the company that's selling bitcoin," Le said. "We have the most bitcoin. Us selling bitcoin wouldn't be good for the ecosystem. It wouldn't be good for the narrative."

The CEO said he remains optimistic on bitcoin going forward, saying that as long as the crypto can double the performance of the S&P 500 SPX -gaining, say, 30% a year compared with the index's 14% - then "we're going to win."

"I think for the foreseeable future, we're still talking 50% to 40% annualized returns over a four- to five-year period," he said. "It's an amazing technology, it has an amazing store value asset, it's nonsovereign, it has a limited supply."

Bitcoin weakness on Monday came as 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.

-Barbara Kollmeyer

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12-01-25 1008ET