hares of Bitcoin-buying company Microstrategy, whose CEO is well-known Michael Saylor, scored a panic sell-off amid cascading declines in the cryptocurrency market. Negative sentiment around risky assets has seen the company that enjoyed recognition and huge share price gains return to summer 2020 valuations. Is Microstrategy really in danger of liquidating its position on Bitcoin? Just yesterday, the NASDAQ-listed company's stock price was down nearly 25%:
- Microstrategy is facing a massive 'Margin Calla' that could force the company to sell all of its Bitcoin holdings which in turn would result in nearly 130,000 BTC being dumped into the market and a potential 'flash crash';
- The Saylor-led company, whose stock price soared during the dot-com bubble in 1999, lost nearly $11 billion in 1 trading session amid revelations of untruthful reports on its financial health;
- Michael Saylor decided to have the company buy back BTC in 2020. The position not long ago was still worth nearly $4 billion, now it is about $2.9 billion. The unrealized loss is already over $1 billion;
- The company holds nearly 130,000 BTC averaging around $30,700. Bitcoin's decline to levels near $21,000 has resulted in the liquidation of the company's BTC positions worth nearly $103 million according to CryptoWhale data;
- According to 'cryptocurrency whale' wallet data tracker CryptoWhale, the company transferred Bitcoin to an external wallet for the first time in its history. Nearly 2089 Bitcoins worth close to $50 million were transferred;
- From the new wallet the company could potentially conduct sales defending its difficult financial situation however the news of the sale is still just rumors, Microstrategy's sale of BTC has not been confirmed. The transfer of 2089 BTC still represents only a fraction of the 130,000 BTC held by the company.
- Michael Saylor has recently confirmed that the company does not intend to sell Bitcoin despite massive declines, emphasized Bitcoin's role as a key hedge against rampant inflation, and recommended calm to investors. The company has said in the past that it would defend the price of Bitcoin from falling below $21,000 but has clearly encountered problems in getting the job done. Bitcoin's price slipped below $21,000 overnight.
Microstrategy (MSTR.US) shares are losing another 3% today after the market opened. The table shows the losses of companies that reported buying Bitcoin and El Salvador, which became the first country to buy digital assets. Microstrategy's loss at is three times that of Tesla, which reported buying BTC in the winter of 2021. Bitcoin is currently trading at $22,000, the companies losses are deepening. Source: Bloomberg
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