Even if the price of Bitcoin drops below $5,000, MicroStrategy does not plan to sell its reserves of more than 125,000 BTC.
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Not even in the face of the worst price collapse for the Bitcoin the biggest and most popular cryptocurrency in the world. It is a decentralized digital currency that enables users to make trustless peer-to-peer transactions. , MicroStrategy would consider selling its holdings of the flagship cryptocurrency, suggested its CEO, Michael Saylor.
The defender of Bitcoin and founder of the business intelligence software company, took to Twitter on Tuesday to address a place where cryptocurrency can be sent to and from, in the form of a string of letters and numbers. some of the fears circulating that his company would face settlement risks for its loans in Bitcoin in the face of the price collapse seen in the cryptocurrency cryptocurrencies are digital currencies that use cryptographic technologies to secure their operation. market.
“ MicroStrategy has a $205 million term loan and needs to hold $410 million as collateral collateral is any asset that a lender accepts as a form of security to ensure that the borrower repays a loan. “he explained. Saylor added that the company can dispose of 115,109 bitcoins as collateral, or more than $3 billion at current prices, out of its total hoard of nearly 130,000 BTC.
Citing a presentation to investors for the first quarter of 2022, the businessman said that Bitcoin would have to fall to a low near USD $3,500 for the company to run out of enough coins to secure its collateral. However, even in that scenario, MicroStrategy could look for another asset as collateral, Saylor said.
If the price of BTC falls below USD $3,562, the company could offer some other collateral.
MicroStrategy has a $205M term loan and needs to maintain $410M as collateral. $MSTR has 115,109 BTC that it can pledge. If the price of #BTC falls below $3,562 the company could post some other collateral. See slides 11-12 in Q1 2022 presentation. #HODL https://t.co/9WHsIB6Usx
— Michael Saylor⚡️ (@saylor) May 10, 2022
As he points out CoinDesk the CEO’s comment suggests that there is no price level low enough for Bitcoin that would force the company to forcibly liquidate its cryptocurrency hoard.
HODL a type of passive investment strategy where you hold an investment for a long period of time, regardless of any changes in the price or markets. The term first became famous due to a typo made in a Bitcoin forum, and the term is now commonly expanded to stand for “Hold On for Dear Life.” Bitcoin Forever
End of March, MicroStrategy obtained a loan for USD $205 million crypto-friendly bank Silvergate to buy Bitcoin . As reported by DiarioBitcoin the loan was secured by $820 million in Bitcoin which at the time represented about 15% of the total BTC reserves held by the company.
The company soon after made a purchase of Bitcoin for $190 million taking advantage of a price correction a correction is a pullback of an asset’s price of at least 10% to adjust for over-valuation. in the market, thereby further raising its hoard of the cryptocurrency. According to the latest report, filed in April, MicroStrategy maintains a total of 129,218 bitcoins valued at just over USD $4 billion at the time of going to press.
The steep decline in the cryptocurrency market an area or arena, online or offline, in which commercial dealings are conducted. this week, which led to Bitcoin below USD $30,000, its lowest level since mid-2021, set off alarm bells about the possibility that MicroStrategy will face a margin call from your lender, Silvergate .
It should be noted that a margin call refers specifically to a lender’s demand that an investor deposit additional money or securities into the account an account is essentially a whose purpose is to track the financial activities of a specific asset/ to reach the required minimum value, as explained by Investopedia .
However, Saylor’s comments on Tuesday, as well as the slides he shared, indicate that, for now, the company has an overwhelming number of Bitcoin free of encumbrances available as additional collateral.
The CEO’s most recent statements are in line with his previously expressed intentions to maintain Bitcoin long-term. Last month, Saylor called the acquisition strategy of bitcoins as “ successful ” and denied rumors about selling. He has also defended the flagship cryptocurrency as the best risk asset to invest investing is when you put money in a financial scheme with the intent of making a gain. in today .
- MicroStrategy plans to continue its pro Bitcoin strategy and is open to other revenue generating opportunities.
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- Michael Saylor says MicroStrategy could open up Bitcoin lending to derive profits
Article by Hannah Estefania Perez / DiarioBitcoin
Image from Unsplash edited in Canva
