CEO of business intelligence company Microstrategy, Michael Saylor has quelled all rumors that the company was on the verge of liquidation in an interview this week.
Michael also revealed that the firm has purchased an undisclosed amount of Bitcoin this week and that they were in a good position to purchase more coins while weathering the ongoing economic storm that has already rendered some companies insolvent.
In March Microstrategy took a huge loan of $204.7 million to fund its purchase of Bitcoin. The loan was taken from Silvergate bank, its repayment structure was spread over three years and the collateral was about $820 million in Bitcoin which was roughly about 12% of Microstrategy’s Bitcoin holdings at that time.
In the face of the Terra-Luna collapse, the market dwindled massively with every investor taking hits of different sizes. The resulting downtrend in the price of Bitcoin significantly reduced the Bitcoin stash value of the firm.
This soon began to form the base of rumors that the company we’re facing liquidation concerns if Bitcoin broke the $21,000 support.
Michael dispelled these rumors when he told Christopher Jaszczynski of the popular MMCrypto YouTube channel that even when Bitcoin was cut in half, Microstrategy was still 10 times collateralized against it. This is like having collateral worth a million dollars and borrowing $40,000 against it.
He stated that there would only be a significant reason for concern if Bitcoin hit below 95% of the price at which Microstrategy bought it with the loan in March. Even at that, he still claims the company would still pledge some additional collateral at that point as they have other cash flows and assets that will be readily used to support that investment if it gets to that point.
Michael then further defended the company’s stance of acquiring Bitcoin insisting that they were looking at it for the long-term. He strongly reiterated that it would be a mistake to stop acquiring Bitcoin as the crypto-billionaire encouraged other crypto investors to keep HODLing. Microstrategy’s recent purchase of 480 BTC now brings the company’s aggregate holdings to 129,699 BTC. BTC is currently trading at $19,262 which brings the total holding valuation to $2.5 Billion.
Featured image source: Wccftech
