MicroStrategy Holds Bitcoin At $713 Mln Loss, Time For Margin Call?

Microstrategy’s Bitcoin (BTC) holding is at a $713 million loss, down 18% as the BTC price falls below $25k in the last 24 hours. The company led by Bitcoin evangelist Michael Saylor hasn’t sold any of its Bitcoin yet, but faces a margin call if the BTC price falls to $21k.

MicroStrategy’s CFO Phone Le had earlier stated that the company have to either put up more collateral to the loan or sell some of its bitcoin holdings if it met with a margin call.

Given its exposure to Bitcoin, Microstrategy’s share price has fallen in tandem with the token. On Monday, the MSTR stock plummeted 25% to $152.77- its lowest level since November 2020.

MicroStrategy’s Loss Widens as Bitcoin Plunges Below $25k

MicroStrategy has 129,218 BTCs at an average price of $30,700, worth nearly $3.97 billion. However, the value has dropped to $3.25 billion after Bitcoin (BTC) price plunged below $25k today. The chances of a fall to $21k are quite high as several factors weigh in. The rising inflation, market-wide selloff amid pressure, stETH-ETH depeg, and other factors are causing the BTC price to drag lower.

MicroStrategy has taken billions of loans to buy Bitcoin. Recently, the company took out a $205 million bitcoin-collateralized loan with Silvergate Bank to buy more bitcoins. If the BTC price reaches $21k, the company will be in the worst situation. In fact, investors are somewhat uneasy with its billions of dollars in debt, its slowly declining software business, and its exposure to an extremely volatile asset.

Critics have argued that MicroStrategy’s underlying software business is not profitable enough to service that debt.

However, MicroStrategy’s CEO Michael Saylor has been positive about the future of Bitcoin, praising it for its store of value and inflation hedge. Saylor has no intention to sell the Bitcoin holdings.

Bitcoin (BTC) Price Plunges 13% in a Day

Bitcoin’s (BTC) price has fallen nearly 13% in the last 24 hours, with the current price trading at $24,200. Also, it has fallen 25% in the last seven days. It indicates the possibility of further fall is quite high as whales and institutional investors continue to sell their Bitcoin holdings.

MicroStrategy’s investors may be already looking for the margin call as financial risk rises for the company. The impact of MicroStrategy selling its Bitcoin holdings will be huge on the already struggling crypto market.