MicroStrategy’s stock ($MSTR) has plunged by more than 11%, marking its lowest value since November 20. The company’s stock has now dropped 55% from its peak of $473.83, sparking concerns among investors and traders alike.
This sharp decline in the stock price has raised questions about the company’s financial strategy, particularly its heavy reliance on Bitcoin. MicroStrategy currently holds 499,096 Bitcoins, acquired through an investment of $43.7 billion, with an average price of $66,350 per Bitcoin.
The drop in Bitcoin’s price to $86,136 has intensified worries about how the company will manage its cryptocurrency holdings. According to The Kobeissi Letter, if Bitcoin’s price falls below $66,000, the company might be forced to sell its Bitcoin assets. Despite these concerns, MicroStrategy has not sold any Bitcoin since it began acquiring the cryptocurrency in August 2020, even during periods of market downturns.
MicroStrategy also carries $8.2 billion in debt against its Bitcoin holdings, offering some financial cushion as most of its convertible notes are not due until 2027. While the company faces challenges, many analysts remain optimistic about Bitcoin’s long-term potential, pointing to continued institutional interest and the possibility of new price records. The current market dynamics, with government and institutional Bitcoin reserves, are seen as a foundation for sustained demand, potentially supporting higher prices in the future.
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