Michael Saylor assured investors there will be no margin call on BTC loan

MicroStrategy CEO announced that as long as the company can bring additional collateral to maintain the required loan-to-value ratio, its position won’t be liquidated.

The software firm MicroStrategy, known as the largest corporate investor of bitcoin, said it didn’t receive a margin call on its $205m bitcoin-backed loan taken from Silvergate Bank in March. The announcement comes amidst speculations that the company could face such a scenario if Bitcoin were to drop below the $21,000.

Michael Saylor started adding crypto to MicroStrategy’s balance sheet in 2020, hoping for it to serve as a store of value uncorrelated to the broad market. However, his strategy has been put to a test after Bitcoin briefly fell to $20,800 on Tuesday and is currently trading a tad above $21,000. As per the date of March 31, MicroStrategy held 129,218 bitcoins, each purchased at an average price of $30,700, according to a company filing. With current prices, MicroStrategy’s nearly $4b reserves would be worth just $2.7b, translating to the unrealized loss of $1.3b.

In 1999, MicroStrategy once lost $6b after the dotcom bubble burst, wiping out $11b off the company’s stock market value in one day. As Saylor seems to repeat the same mistake, economist Peter Schiff slammed him on Twitter for leaving a hole in MicroStrategy’s balance sheet.