Although the CEO of MicroStrategy remains optimistic despite the current dire state of the cryptocurrency market, these times have proven to be the most distressing for all stakeholders, including the software company.
Michael Saylor, CEO of MicroStrategy, tweeted on June 14 to allay concerns that his company’s Bitcoin holdings may be about to cost them dearly. Saylor claims that the firm can withstand future BTC price declines, even if the cryptocurrency drops below $3,500.
The ongoing market chaos has prompted the crypto bull to publicly announce that his software company is not at risk of liquidation. MicroStrategy’s financial books seem to support his argument.
Suggested Reading | Crypto Firms Are Telling Employees to Pack, But Binance Is Hiring – Here’s Why
MicroStrategy is the biggest publicly listed independent business intelligence software firm in the US. Image: CryptoPotato.
The crypto market’s decline, which began in April, dragged on over the weekend, losing 13 percent of its value in the past 24 hours. Since Friday, the value of major cryptocurrencies Bitcoin and Ether have decreased by 15% and 26%, respectively.
Bitcoin is currently trading at $20,253, down 35.1% over the past week, while Ethereum is trading at $1,029, down 43.2% over the same period, according to Coingecko data released on Wednesday.
MicroStrategy saw it coming and didn’t flinch
Saylor stated that his company was prepared for the volatility of Bitcoin when it initially selected a crypto strategy and had the ability to withstand it.
MicroStrategy’s 129,218 BTC inventory now stands at a net loss of $1.06 billion, according to tracking resource Bitcoin Treasuries. This represents around two-thirds of the total market value of the token.
Saylor has maintained that MicroStrategy is taking a long-term stance on its Bitcoin assets in reaction to market turmoil.
“When the company chose a #Bitcoin strategy, it expected volatility and built its balance sheet so it could continue to #HODL through hardship,” Saylor said, alluding to the “HODL” meme, which refers to “holding” coins during hard conditions. of market.
Suggested Reading | MicroStrategy’s Bitcoin Gamble Backfires, Holding Near $1 Billion Loss: Now What?
Crypto total market cap at $846 billion on the daily chart | Source: TradingView.com
Loan Condition: Start Margin Call
MicroStrategy acquired a huge Bitcoin hoard and borrowed $205 million from crypto bank Silvergate Capital using 19,466 Bitcoins as collateral. The terms of the loan require Saylor’s company to initiate a margin call if Bitcoin drops below $21,000.
Saylor noted that they started with $5 billion in unpledged collateral and borrowed $200 million, resulting in a loan-to-value ratio of 4 percent. He noted that if the price of Bitcoin falls 95 percent from its current level, “we would have to put in additional collateral.”
MicroStrategy is the largest publicly traded independent business intelligence software firm in the US. In August 2020, it began investing in cryptocurrencies as a treasury reserve asset, citing the sinking US currency and macroeconomic problems. global.
Featured image from Crypto News, chart from TradingView.com