How will the fall of Bitcoin affect MicroStrategy's business? Company manager's response
MicroStrategy CEO Michael Saylor has long been a vocal supporter of Bitcoin . This is quite expected, because his company has 129,218 BTC on its balance sheet , or about $4.1 billion in crypto. Against the backdrop of the current collapse of the crypto market, interest in Sailor's person has flared up with renewed vigor, as many want to know how MicroStrategy is going to "survive" a potential long period of the fall of the crypto market. Michael has an answer for that. We tell.
At the moment, the situation in the cryptocurrency markets looks like this.
Many cryptocurrencies have fallen in price by tens of percent over the past day, and their overall losses over the week are much higher. In this regard, many representatives of the blockchain community thought about what is happening with MicroStrategy.
What will MicroStrategy do?
At the moment, MicroStrategy is the first in terms of the amount of crypto on the balance sheet among public companies. This has its risks, Sailor admitted on Twitter . Here is his retort.
MicroStrategy has taken out a $205 million loan and has to provide $410 million in collateral. MicroStrategy has 115,109 BTC to mortgage. If the price of BTC falls below $3,562, the company may place another collateral.
Judging by this answer, the company’s management does not plan to get rid of its coins even in the event of even larger problems in the digital asset market. At a minimum, if now there are mentions of Bitcoin for 3-4 thousand dollars, then the representatives of the giant, including, thought out such a scenario.
Note that replicas with such price levels of the first coin look suspicious, since Bitcoin at 27 thousand has already fallen by 30 percent in a week. The prospects for a collapse at times from the current level sound incredible.
According to Decrypt sources , the average purchase price of MicroStrategy bitcoins is hovering around $30,700. At the same time, today Bitcoin also fell to $26,700.
This means that MicroStrategy has started to suffer an unrealized loss from its large investment in the main cryptocurrency. However, this fact does not bother Sailor in any way and he is not going to sell coins . And all because the entrepreneur believes in the inevitable increase in their value.
This is interesting: Large shareholders of MicroStrategy sold part of the company's shares. The reason is her investment in Bitcoin.
The situation for free (yellow) and borrowed (orange and red) coins in providing a loan looks like in the screenshot below. Note that the loan security here is divided into two categories - for MicroStrategy itself and its subsidiary MacroStrategy.
A fall below $5,000 for Bitcoin does not yet look too realistic. Fong Lee, CTO of MicroStrategy, made a very interesting statement on what is happening the day before.
Essentially, the price of bitcoin has to halve — to about $21,000 — before we have a margin call
This quote has not been clarified by Sailor himself, but we can interpret it as follows: if Bitcoin falls below $21,000, MicroStrategy could be in serious trouble. And in order to solve them, the company will still have to use part of its crypto reserves. And here a domino effect may arise - the more BTC MicroStrategy sells, the more the market will sink. Let's hope that Sailor still stays true to his promise not to get rid of BTC in any case.
Let's move from pessimistic news to more encouraging. Coinbase CEO Brian Armstrong expressed his optimism about the business and the industry as a whole, despite his company's very poor results in the first quarter of 2022. Here is one of Armstrong's quotes that Cointelegraph cites .
Markets are falling. We are seeing a decline in the market for technology stocks and risk assets, Coinbase, and cryptocurrencies are no exception. The good news is that, as a cryptocurrency company, we have experienced many different cycles, including major downturns, which makes us well-equipped to operate in such an environment.
And here’s the exchange’s report itself: For the first quarter of 2022, Coinbase’s revenue decreased by 27 percent to $1.17 billion, compared to $1.6 billion in the first quarter of 2021. At the same time, for the fourth quarter of 2021, profit amounted to $ 2.5 billion. The number of user transactions per month also dropped by more than 19 percent to 9.2 million from 11.4 million last quarter. Coinbase shares have already fallen more than 16 percent and continue to fall.
Apparently, representatives of MicroStrategy are not going to get rid of their own bitcoins, which have been accumulated over a long period of time. In addition, the drain of coins would seriously affect the reputation of the giant, since its management has long positioned itself as almost the main fans of BTC. I would like to believe that the sale of the company's cryptocurrency reserves will not happen - otherwise it is even difficult to imagine the situation on the market.
Be that as it may, this is not the first difficult period in the history of Bitcoin. Look for even more interesting things in our millionaire crypto chat .
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