The month of June continued with a bloodbath in the crypto markets. Bitcoin has plummeted by more than 30% this month, and the big players in the crypto ecosystem are feeling the effect. One of such big players is MicroStrategy, a business intelligence software vendor.
MicroStrategy is the world’s leading crypto investment company, holding over 129,000 BTC at the moment. The company purchased its BTC holdings at an average price of $30,700, birthing an unrealized loss of 29%. Before Bitcoin’s draw down to the $20K region, numerous sources claimed MicroStrategy’s total BTC holdings would be liquidated at the $21K price level. However, that did not happen.
Why MicroStrategy Survived Liquidation
MicroStrategy has only about 33,575 BTC out of its 129,218 BTC as loans. This represents just 25% of its cumulative Bitcoin holdings. Last month, Michael Saylor revealed that the company has enough Bitcoin left to support its borrowed BTC from liquidation.
Saylor stated that its $205 million BTC loan needed to be sustained by a $410 million collateral. The company has 115,109 BTC that it can pledge to prevent its borrowed BTC from getting a liquidation call. With the volume of Bitcoin on hand, the nearest liquidation price for the company will be around $3,562 per BTC.
Should the crypto markets worsen and Bitcoin fall below $3,562, the company can post some other collateral to sustain its position. Despite the unfavorable market conditions, BTC at $3500 still seems very unlikely, and many crypto enthusiasts believe we will never see Bitcoin at that price level again.
Bitcoin currently trades for around $21,000. The volatile asset is almost 70% adrift its all-time high of $69K. This price level was tapped into last year in November, but Bitcoin has failed to keep up with that momentum. Amidst the panic amongst crypto traders, Michael Saylor and MicroStrategy are not concerned about short-term price actions. The Bitcoin maximalist strongly believes the market will recover and Bitcoin will hit the $1 million mark in the coming years.
