The latest crypto massacre has pulled Bitcoin below $22,382.89 as of this writing. Meanwhile, MicroStrategy (MSTR) too suffered a drop of 26.72% on Monday’s premarket, reaching a 20-month low of $149.
On Friday, MSTR, which was trading at $203.36 on the day’s end, dropped to $147 after the market opened. However, it traced its recovery to $155.50 since the pressure of its stock trading at a discount to the firm’s Bitcoin holdings increased on the software manufacturer.
Following the trend, crypto exchange Coinbase (COIN) stock fell by a hefty 21.5% to $46.06 on premarket, before climbing up to $51.87 when going to press, down 11.66%.
Besides, several other Bitcoin-adjacent companies too were seen suffering while the shares of mining operators were the worst-hit.
Marathon Digital slipped by 18.17% in premarket. Bit Digital and Riot Blockchain, dropping by 14.89%, followed it.
Block Inc. (SQ) also fell to $66.59 in premarket, down by 7.35%, and continues to drop, exchanging hands at $63.63 at the time of writing.
Although not so harsh, the shares of PayPal (PYPL) and Robinhood (HOOD) too suffered losses of 7.62% and 5.95%, respectively.
MicroStrategy was creating headlines for its Bitcoin accumulation strategy, however, the company is facing a margin call on a $205 million Bitcoin-backed loan with Silvergate Bank that was held to buy more crypto in March, with an average purchasing price of $30,700 over the last two years.
This is claimed by CFO Phong Le, who revealed these figures during the company’s first-quarter earnings last month.
During that time, Le stated that the margin call occurs [at] 50% LTV as far as where Bitcoin needs to fall. Le added that they took out the loan at a 25% loan-to-value (LTV). Further adding, he said, before they had a margin call, “Bitcoin needs to be around $21,000.”
MicroStrategy might be forced to sell some of the Bitcoin if the price drops to $21,000, even though Michael Saylor, the CEO of Microstrategy, keeps saying that he’d never sell any crypto.
Nancy J. Allen is a crypto enthusiast and believes that cryptocurrencies inspire people to be their own banks and step aside from traditional monetary exchange systems. She is also intrigued by blockchain technology and its functioning.
Source: https://www.thecoinrepublic.com/2022/06/14/crypto-crash-results-in-bitcoin-exposed-stocks-such-as-coinbase-microstrategy-dipping/