MicroStrategy, the American business intelligence and software firm, has seen its stock plummet by over 55% from its November high, raising concerns about the fate of its vast Bitcoin holdings. As Bitcoin continues to face downward pressure, there are growing fears that the company’s 500,000 BTC could be at risk of liquidation.
The firm, led by Michael Saylor, has adopted a strategy of using its stock as collateral to bet on Bitcoin’s price, a move that has exposed it to significant volatility. MicroStrategy currently holds approximately 499,096 BTC, worth $43.7 billion, and its average cost per Bitcoin stands at $66,350, following a recent $2 billion debt offering. With Bitcoin’s current price hovering around $89,445, the company’s position looks secure. However, should the price fall below its average cost, it may be forced to sell Bitcoin to meet its debt obligations.
The Kobeissi Letter, an investment analysis firm, suggests that while a BTC price drop to $86,000 or lower is concerning, it is unlikely that the company will need to liquidate its holdings anytime soon. The firm’s business model involves using convertible notes to raise funds, purchasing more Bitcoin, and driving the price higher, which has allowed it to remain resilient in the face of price fluctuations. Despite Bitcoin’s recent 8% dip, MicroStrategy has yet to sell any of its holdings, and its Bitcoin strategy has remained largely intact.
For MicroStrategy to be forced to liquidate its BTC, Bitcoin’s price would need to fall below $66,000 and stay below that threshold. With the company’s debt maturity dates extending until 2027, there is ample time for the market to recover before any critical liquidation risk arises. MicroStrategy’s ability to sustain its position through strategic financing and long-term Bitcoin acquisitions insulates it from short-term volatility.
While analysts like BitMEX co-founder Arthur Hayes have warned of potential price drops, the outlook for Bitcoin remains positive. Institutional adoption is growing, with companies like Rezolve Ai committing $1 billion to Bitcoin, and nation-states exploring similar strategies. This institutional demand could help Bitcoin reach new highs, offering further stability for companies like MicroStrategy that have bet heavily on the cryptocurrency.
For now, MicroStrategy’s Bitcoin holdings appear safe, with the company strategically positioned to weather the storm until Bitcoin’s market value rebounds.
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