The biggest corporate bitcoin holder, Microstrategy, with 129,218 bitcoin in custody, is down by $1 billion in unrealized losses.
They bought the stash for $4 billion. It is now worth just under $3 billion. What’s worse, a loan they’ve taken out is close to being margin called, except they’ll just add more collateral.
“Bitcoin needs to cut in half or around $21,000 before we’d have a margin call,” MicroStrategy’s CFO Phong Le said last month. “That said, before it gets to 50%, we could contribute more Bitcoin to the collateral package, so it never gets there, so we don’t ever get into a situation of a margin call.”
Bitcoin has now nearly cut in half in price with it falling to a low of $22,500, currently trading at $23,200.
But this $21,000 liquidation loan concerns just 10% of their total bitcoin related borrowing, a $205 million bitcoin collateralized loan by Silvergate Bank.
They’ve also borrowed from the public, through bonds/notes, $2.4 billion to buy bitcoin. This however costs only $44 million a year in interest.
They probably can cover that from profits with Microstrategy having an actual business that has revenue, $119 million for the first quarter of 2022.
They also have $95 million in cash on their balance sheet, so they can cover the interest on their loans just from savings for the next two years.
Which means they may well hold until bull and since they didn’t sell at $70,000, they probably won’t sell at $20,000.
But, $21,000 is now the Microstrategy liquidation event according to folklore, and facts probably won’t change that too much, with bitcoin’s price currently not far from there at all.
Source: https://www.trustnodes.com/2022/06/13/microstrategy-whiskers-from-liquidation