MicroStrategy may need to fund its loan as Bitcoin increases its liquidation price

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Arman Shirinyan

One of the biggest Bitcoin holders in the market is preparing to fund its massive position

MicroStrategy must now fund its collateral to save its Bitcoin positions as the first cryptocurrency plunges below $21,000, creating huge pressure on a massive position.

The software company has invested heavily in the cryptocurrency industry, as it stated during a conference call in May. Their CFO also said that they would need to further fund their position if BTC reaches $21,000. At that time, the committed value was approximately $820 million.

MicroStrategy has become one of the most pro-crypto companies in the world as it has become one of the largest holders of the asset on its corporate balance sheet. CEO Michael Saylor is often touted as one of the most influential people in the crypto industry. He didn’t hold back on Bloody Monday, tweeting “In Bitcoin We Trust.”

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Despite the CEO’s positive sentiment, the company’s stock fell dramatically during business hours, losing 25% of its value in what is considered the biggest one-day drop and drove it at the lowest level since October 2020.

As previously reported by the company’s CFO, their liquidation price remains around $21,000, while Bitcoin has already fallen below the mentioned threshold. At the beginning of May, MicroStrategy held nearly 130,000 Bitcoins with an average purchase price of $30,700.

The selloff in the cryptocurrency market was fueled by unexpected inflation data, which will most likely fuel Fed ferocity and a more intense rate hike. With rising rates, risky assets like cryptocurrency may face massive market pressure as they will no longer be palatable to investors in the short and long term.

At press time, Bitcoin is trading at $23,200.

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