CryptoQuant: Strategy Builds $1.44 Billion Safety Net Against Potential Bitcoin Bear Market

Summary: Michael Saylor's Bitcoin-centric company, Strategy, has allotted $1.44 billion to create a robust safety net amid a declining market sentiment. This strategic move aims to ensure liquidity for future financial obligations, highlighting a conservative approach during uncertain times.

Key Takeaways

Significant Reserve Fund: Strategy has established a $1.44 billion cash reserve to manage dividend and debt responsibilities.
Expectations of Market Challenges: The creation of this reserve comes as CryptoQuant reports suggest that Strategy anticipates a challenging Bitcoin market ahead.
Dual-Reserve Strategy: Strategy is now leveraging both cash and Bitcoin reserves to minimize forced sales during market downturns.
Reduced Bitcoin Purchases: Recent data indicates a notable drop in Bitcoin acquisition, which could impact overall market demand.
Positive Outlook Amid Weakness: Mizuho Securities maintains an optimistic view of Strategy’s stock, underscoring the stability this cash reserve provides.

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Strategy’s Major USD Buffer

In response to increasing Bitcoin volatility, Strategy has established a significant cash reserve of $1.44 billion. This reserve, generated through a recent share issuance, is intended to enhance liquidity and ensure coverage for upcoming financial commitments such as dividends. Currently, it covers at least one year of dividend payments, with plans to extend it to provide a safety net for up to two years’ worth of obligations.

CryptoQuant, an on-chain analytics firm, interpreted this move as a sign that Strategy anticipates potential market struggles ahead. The goal of a 24-month reserve suggests expectations of weaker price action or even a decline in Bitcoin's value over an extended period. Additionally, CryptoQuant noted that raising equity in current capital markets could be more challenging, indicating a shift to a more cautious strategy as the company braces for possible market turbulence.

Shift to a Dual-Reserve Strategy

With the introduction of the cash buffer, Strategy has transitioned to operating with both cash and Bitcoin reserves. This dual-reserve approach, emphasized by CryptoQuant, significantly mitigates the risk of having to sell Bitcoin during significant market downturns. It reflects a substantial change from Strategy’s previous methods, which primarily relied on equity and convertible debt to acquire more Bitcoin from 2020 until late 2025. The updated strategy signals a shift towards prioritizing stability over aggressive growth.

Impact on Bitcoin Market Demand

The noticeable slowdown in Bitcoin accumulation by Strategy may have broader implications for the cryptocurrency market. CryptoQuant suggests that decreased purchases can undermine a crucial demand channel that has previously supported bull market trends. However, with a larger cash reserve and new hedging tools in place to reduce liquidation risks, there's potential for maintaining long-term market stability.

According to CryptoQuant, Strategy recognizes the need for flexibility in its approach to safeguarding its Bitcoin holdings. This includes maintaining cash buffers, utilizing derivatives when necessary, and considering selective asset sales only under extreme conditions.

Strategy’s Bitcoin Buying Activity Declines

This strategic repositioning is evident in Strategy’s recent Bitcoin acquisition trends. CryptoQuant reported a drastic decrease in monthly purchases, plummeting from 134,000 BTC in November 2024 to merely 9,100 BTC in November 2025. Additionally, the firm has only acquired 135 BTC in December, marking a significant withdrawal from prior buying rates. This slowdown correlates with a notable decrease in Bitcoin value during the same period.

MicroStrategy Bitcoin Accumulation

For context, Bitcoin reached an all-time high of $126,080 on October 6. Since then, it has dropped by over 25%, currently trading around $93,051, reflecting a 17% decline over the last three months, based on CoinGecko data.

Increasing Bearish Indicators in the Market

CryptoQuant has observed that several key on-chain and technical indicators are flashing bearish signals. Its Bull Score Index has plummeted to zero, a level last recorded in early 2022, emphasizing the severity of the ongoing downturn. Julio Moreno, the firm’s research leader, predicts that Bitcoin could range between $70,000 and $55,000 next year if pessimistic trends persist. While Strategy's cash reserve increases the likelihood of Bitcoin sales, Moreno views this as a last resort, anticipating that derivatives would be the first line of defense to protect the company's cryptocurrency assets.

Mizuho's Positive Outlook for Strategy's Stock

Despite the prevailing market weakness, Mizuho Securities has reaffirmed its 'Outperform' rating for Strategy’s stock (MSTR), maintaining a price target of $484. The bank shared this assessment following the announcement of the firm's reserve and after conducting an investor Q&A with CFO Andrew Kang. Kang clarified that the USD reserve serves solely as a liquidity measure, not an indication of imminent Bitcoin sales. He mentioned that the company plans to bolster the reserve when its multiple-to-net-asset value (mNAV) exceeds 1, positioning themselves to capitalize on advantageous conditions.

Furthermore, Kang stated that Strategy has the capacity to sustain operations for over three years at the current Bitcoin price of approximately $93,000. Mizuho indicated that any sales of Bitcoin would only be considered if the company’s valuation remains depressed for an extended duration. Ultimately, the reserve equips Strategy with the ability to endure a protracted downturn without the urgency of liquidating its assets.

Disclaimer: This article is for informational purposes only and should not be taken as financial advice. The views expressed are the author's personal opinions and do not necessarily reflect those of The Crypto Basic. Readers are encouraged to conduct thorough research before making any investment decisions. The Crypto Basic is not responsible for any financial losses.