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.