With Bitcoin approaching $30,000 againit is not only the portfolio of cryptocurrency investors that has been losing money, the institutions that bet on Bitcoin are also losing the market value of their shares, as is the case with MicroStrategy.
The technology company that bet on Bitcoin as one of its main sources of store of value is losing value along with the cryptocurrency market.
Shares of MicroStrategy (MSTR) fell around 23% earlier this week to $227 per share, which could be a direct reaction to the company’s lower inventory.
“MicroStrategy inventory is down 58% in those 12 months compared to a 30% drop for Bitcoin. The cryptocurrency is particularly weak, down 10% in the last 24 hours.”
The collapse of the company’s inventory underscores the lack of confidence in the “dangerous property” market. Furthermore, this also demonstrates the impacts of bitcoin crash and the effects of the increase in interest carried out by the Federal Reserve, which ends up tightening the financial coverage, impacting the debt and loans on MicroStrategy’s balance sheet.
Led by Michael Saylor, an avid Bitcoin supporter, MicroStrategy has amassed $2.4 billion in debt and loans, backing Bitcoin’s bond issue and using the proceeds to buy more cryptocurrencies.
MicroStrategy He said he’s nowhere near getting into a margin situation or needing to use his collateral. The company said it had around 95,643 bitcoins that had not yet been placed as collateral in its inventory.
For the company to face a margin situation, Bitcoin needs to be close to $21,000, as MicroStrategy CFO Phong Le mentioned.
“We now have the extra that we think will contribute to the case that we now have a range for downside volatility,” he said.
However, this did not make the company bearish on Bitcoinas it was still taking advantage of the recession to buy more digital currency.
Saylor is a big supporter of bitcoin and likely echoes the idea that the digital currency will regain traction and possibly be added to MicroStrategy’s inventory once again.
For many, this is just another part of the cryptocurrency cycle that always experiences ups and downs. Historically, this has proven to be true.