MicroStrategy Could Survive In Serious Bear Market, MicroStrategy CEO Michael Saylor Stated

MicroStrategy Could Survive In A Serious Bear Market

Michael Saylor, the founder and CEO of business intelligence software company MicroStrategy, took to Twitter on Tuesday morning to clarify the company’s commitments regarding its bitcoin-backed loans.

“MicroStrategy has a $205 million term loan and needs to maintain $410 million as collateral,” said Saylor. According to MicroStrategy’s Q1 investor report, 115,109 bitcoins remain unencumbered out of the company’s total of 129,218 bitcoins.

While being the largest Bitcoin holder among publicly traded firms comes with its own set of challenges, Saylor provided his opinions on how MicroStrategy could survive in a severe bear market. Before the firm ran out of bitcoin to pledge for the loan, Bitcoin would have to drop to $3,562, but even at that point, the company could post some other collateral, according to Saylor.

Despite the fact that the cryptocurrency market is collapsing and Bitcoin is hanging around $30,700, which is about Microstrategy’s average cost per Bitcoin, Saylor appears to have no plans to sell the company’s holdings anytime soon.

The sharp drop in the cryptocurrency market – which saw bitcoin go below $30,000 for the first time since July 2021 Friday night – has fueled rumors that MicroStrategy may face a margin call. Indeed, CFO Phong Le stated as much on the company’s results call last week, citing $21,000 as a trigger point.

However, according to Saylor’s tweet and presentation slides, the company now has an abundance of unencumbered bitcoin available as further collateral.

The software company recently stated that its employees will be able to invest in Bitcoin through Fidelity in their 401(k) plans, a proposal that has already sparked “grave concerns” from the US Department of Labor.

DISCLAIMER: The Information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.

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