The CEO of MicroStrategy intends to hold Bitcoin ‘throughout tribulation’
Michael Saylor is not panicked by the combination of Bitcoin price decline and MicroStrategy stock price pressure.
MicroStrategy’s CEO says that the company can withstand more Bitcoin (BTC) price losses, even if BTC falls below $3,500.
In a June 14 tweet, Michael Saylor tried to alleviate concerns that his company’s BTC exposure may soon become costly.
Saylor remains calm as MSTR continues to fall
MicroStrategy, the company with the biggest corporate Bitcoin treasury, has felt the sting of this year’s BTC price falls, at least on paper.
According to the tracking portal Bitcoin Treasuries, the company’s 129,218 BTC stack is presently held at a net loss of $1.06 billion, or around two-thirds of its overall market capitalization.
This week, speculations of a possible default on a $205 million loan that was used to acquire these reserves escalated. Specifically, a BTC/USD declined below $21,000 would trigger a margin call, and if MicroStrategy did not react with more money, it may lose its stake.
In the end, BTC/USD plunged to lows of $20,800, but the firm did not flinch, and Saylor remains as calm and optimistic as ever over its Bitcoin strategy.
“When MicroStrategy chose a Bitcoin strategy, it expected volatility and built its balance sheet such that it could continue to HODL in the face of hardship,” he tweeted.
Saylor linked to a prior tweet from shortly after May’s decline to $23,800, a 10-month low at the time. In it, he discussed contingency preparations, noting that even if all available BTC were pledged as security for the loan — meaning a BTC price of less than $3,600, the March 2020 low — the pool of accessible funds would not be exhausted. In a later interview discussing the matter, he told mainstream media, “That’s just FUD.”
“We began with $5 billion in unpledged collateral and borrowed $200 million against it, resulting in a 4 percent loan-to-value ratio. If Bitcoin plunged 95% from that level, we would need to publish further cols “ateral.” He also described the margin call problem as “a non-issue.”
However, not all market participants are hopeful. MicroStrategy’s share price this week demonstrates the risks of Bitcoin exposure from the viewpoint of legacy markets, with MSTR trading down 26.5 percent in the last month and 73.4 percent year-to-date, according to TradingView data.