As Bitcoin price volatility continues, investors’ attention has once again turned to Strategy (formerly MicroStrategy), the world’s largest institutional BTC treasury holder.
The company wields significant market influence due to its substantial Bitcoin holdings on its balance sheet. A potential sell-off is seen as a risk that could push BTC prices down further. However, according to JPMorgan analysts, this scenario may not materialize if a critical ratio is maintained.
JPMorgan reported on Wednesday that Strategy could protect itself from having to sell Bitcoin by maintaining an enterprise value-to-Bitcoin ratio above 1.0. This ratio is calculated by dividing a company’s market capitalization, debt, preferred shares, and dividends by the value of BTC on its balance sheet.
According to the report, this ratio currently stands at 1.13. Analyst Nikolaos Panigirtzoglou commented, “As long as this ratio remains above 1.0 and Strategy doesn’t have to sell BTC, the market will gain confidence and could signal that the worst is behind Bitcoin.”
Strategy shares have plummeted, losing nearly 42% of their value over the past three months. This decline has sparked market panic that the company might be forced to sell Bitcoin. The expectation that a sell-off could accelerate the Bitcoin price decline is making investors nervous.
Bitcoin, meanwhile, fell below $85,000 earlier this week, hitting its lowest level since March. It has recovered to around $92,917 at the time of writing, having fallen nearly 30% below its all-time high of $126,000 in early October.
Another factor contributing to investor unease is the dramatic slowdown in Strategy’s Bitcoin purchases. While the company purchased 9,062 BTC last month, this figure is far below the 134,480 BTC it purchased during the same period last year.
MSCI is also reportedly considering removing the company from its index next year. Such a decision could lead to an outflow of up to $8.8 billion from Strategy, according to JPMorgan.
Despite the concerns, analysts are highlighting Strategy’s $1.4 billion reserve fund for dividend and interest payments. This safety cushion could prevent the company from forcing a forced sale even if the price of Bitcoin falls further.
The market is keeping an eye on the future of Saylor’s BTC strategy. As long as the strategy maintains its critical ratio, the pressure on Bitcoin could ease, and the bottom of the current downtrend may have formed, according to JPMorgan analysts.
*This is not investment advice.
Source: https://en.bitcoinsistemi.com/the-key-to-bitcoin-lies-in-michael-saylors-hands-heres-what-jpmorgan-says-is-needed-to-prevent-disaster/
