Crypto Crash: Decoding the Possibility Of Microstrategy Liquidating bitcoins With Margin Call on the Horizon?
The immediate trigger for the crypto crash appears to be a massive sell-off by investors amid heightened inflation fears. The global Crypto markets crashed heavily following the announcement that U.S. inflation hit a record 8.6%.
The world’s largest crypto, Bitcoin tumbled over 10% to $24,548, the lowest in 18 months. while almost all altcoins are bleeding prices With Ethereum price on the verge to drop $1k.
With this crypto turmoil, a business intelligence firm MicroStrategy is now experiencing a loss of nearly $850million on its Bitcoin investment. The firm has accumulated more than 129,000 BTC on its company’s balance sheet in August 2020.
In the month of may, Microstrategy stock (MSTR) dropped to a 20-month low and hit $140.20. However, a recovery was seen and closed the may month trading at $251.00. Additionally, the company’s Bitcoin position dropped as Bitcoin Price Crashed below $25K.
Will MicroStrategy Sell Bitcoins?
Since MicroStrategy is on the verge of its first margin call, investors are not overly concerned about its massive liquidity backing. Investors are confident that the firm has enough capital to maintain its current position and open a new one.
Phon Le, MicroStrategy’s new chief financial officer, described the company’s bitcoin collateral strategy during the company’s May 3 earnings call. The new CFO told investors that the company would not need to put additional funds into their positions.
In December 2020 and June 2021, MicroStrategy borrowed three loans to cover its Bitcoin investment. In an interview, Michael Saylor remarked that bitcoin is better than gold, and if it doesn’t go to zero, it will go to a million dollars.Source