MicroStrategy Incorporated (NASDAQ:MSTR) faces a possible Bitcoin margin call at $21,000 as a bearish market downtrend resumes.
What Happened: As the price of Bitcoin (CRYPTO: BTC) continues to fall, MicroStrategy has an unrealized loss of over $1 billion. Now trading at $22,189, Bitcoin has suffered a severe crash this week, causing major losses to investors globally.
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According to CoinDesk, Microstrategy began buying Bitcoin at around $12,000 in August 2020. Since then, CEO Michael Saylor has continued to purchase the cryptocurrency, increasing Microstrategy’s current holdings to 129,918 Bitcoin. Having invested around $4 billion, Microstrategy’s holdings are valued at under $3 billion. As a result of the bearish market conditions and the sector’s falling market cap, shares of Microstrategy were down 24.32% on June 13.
Why It's Important: In March 2022, MicroStrategy took on a multibillion-dollar loan to purchase Bitcoin.
Then, according to Bitcoin Magazine, MicroStrategy collateralized its Bitcoin to obtain a $205-million loan from Silvergate Bank to facilitate further Bitcoin purchases.
Phong Le, MicroStrategy's chief financial officer, has stated that in an event of a margin call, the company would have to present further collateral.
In a Tuesday tweet, Saylor said the the company is prepared for the price of Bitcoin to fall below $3,562, given its loan, collateral sizing and future collateral options.
The Last Word: As market uncertainty prevails, prices continue to plunge, yet Saylor remains unwavering in his belief in the long-term potential and returns of Bitcoin.