Microstrategy’s investment loss widens as Bitcoin price falls below $25,000 in the last 24 hours.
Microstrategy’s Bitcoin (BTC) holding has lost $713 million, or 18%, as the BTC price has fallen below $25k in the last 24 hours. The company, led by Bitcoin evangelist Michael Saylor, hasn’t sold any of its Bitcoin yet, but it faces a margin call if the price of Bitcoin falls below $21,000.
MicroStrategy’s CFO Phone Le previously stated that if a margin call was issued, the company would have to either put up more collateral for the loan or sell some of its bitcoin holdings.
MicroStrategy has 129,218 BTCs worth nearly $3.97 billion at an average price of $30,700. However, the value has dropped to $3.25 billion after the price of Bitcoin (BTC) fell below $25k today. Several factors contribute to the possibility of a drop to $21k. Rising inflation, a market-wide selloff in response to pressure, the stETH-ETH depeg, and other factors are causing the BTC price to fall.
MicroStrategy borrowed billions of dollars to purchase Bitcoin. Recently, the company obtained a $205 million bitcoin-collateralized loan from Silvergate Bato to purchase more bitcoins. If the price of Bitcoin reaches $21,000, the company will be in a bad situation. Investors are concerned about the company’s billions of dollars in debt, its slowing software business, and its exposure to an extremely volatile asset.
The firm’s stock price has dropped 64% in 2022, with the price currently trading at $203.36. As a result, MicroStrategy’s underlying software business is insufficiently profitable to service that debt.
However, MicroStrategy CEO Michael Saylor is bullish on Bitcoin’s future, praising it as a store of value and inflation hedge. Saylor has no plans to sell his Bitcoin holdings.
Bitcoin’s (BTC) price has dropped about 13% in the last 24 hours, with the current price trading at $24,200. It has also dropped 25% in the last seven days. It shows that the likelihood of additional decline is fairly significant as whales and institutional investors continue to dump their Bitcoin holdings.
Investors in MicroStrategy may be anticipating a margin call as the company’s financial risk rises. The sale of MicroStrategy’s Bitcoin holdings will have a significant impact on the already faltering crypto market.
