CNBC's MacKenzie Sigalos reports on Strategy building its cash reserve and pausing its Bitcoin purchases.

Strategy, a company previously known for its aggressive Bitcoin accumulation, has shifted its approach by building a $2.2 billion US dollar reserve and pausing Bitcoin purchases. This move comes after a year in which the company's stock fell nearly 50%, and as it faces a possible exclusion from MSCI indexes, which could trigger significant outflows.

The company currently holds over 671,000 Bitcoin at an average cost of $75,000 per coin, but its Bitcoin yield turned negative this quarter. Chairman Michael Saylor has defended the company's business model, but the premium on its shares has diminished, and the market awaits MSCI's decision on index inclusion.

Strategy builds cash reserve and pauses Bitcoin purchases

to that kind of Bitcoin trade. Mackenzie Sagalos joins us now with all the details on the strategy trade. Mackenzie. Hey, good morning, Dom. So it has been a rough year for strategy. The stock is down nearly 50% year to date, and the company that built its identity around aggressive Bitcoin buying is now pivoting to something that it's never prioritized before, cash. So this week, strategy disclosed that it's grown its US dollar reserve to $2.2 billion, selling shares to fund it, specifically to cover preferred dividends and debt interest. Now, that reserve didn't exist a month ago. And what's also notable here is what they didn't do in that same window of time. They did not buy Bitcoin. And historically, when prices dip, the company adds to its Bitcoin stake, but this time they chose liquidity. Strategy holds more than 671,000 Bitcoin at an average acquisition cost of roughly $75,000 according to its latest filing. Now, with Bitcoin near $89,000 today, there's still a cushion, but it's a lot thinner than it used to be. And their Bitcoin yield, that actually went negative this quarter. Now, the overhang here is January 15th. MSCI is deciding whether to kick strategy out of its indexes, arguing that these digital asset treasury companies look more like investment funds than operating businesses. JP Morgan estimates that index exclusion could trigger about $2.8 billion in passive outflows and up to almost $9 billion if other index providers follow suit. Strategy chairman Michael Saylor pushed back on X, saying that the company is not a fund and pointed to their software business and the billions in digital credit securities they've issued this year, but the market is not buying it. The premium investors used to pay for strategy shares has largely evaporated. So bottom line here, strategy has gone from Bitcoin's most aggressive buyer to a company that is managing liquidity and now waiting to see if it still belongs in the indexes that helped make it a household name.

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