Bitcoin Liquidation is Not Necessary Even if the Price of BTC Drops to USD3,562, Microstrategy Debunks Call Rumours
The CEO of Microstrategy, a NASDAQ-listed company, has debunked the current rumour that the firm is on the verge of a margin call for its Bitcoin-backed loan and will be forced to liquidate some coins. If the price of Bitcoin plummets down to below USD3,562, the CEO says the company would still not liquidate its coins but other collateral.
Microstrategy Yet to Receive a Margin Call
The CEO of Microstrategy, Michael Saylor, has refuted claims that his firm is about to start liquidating its Bitcoins to meet a margin call for its BTC-backed loans. The rumour intensified as the price of Bitcoins continued on a downtrend.
“When Microstrategy adopted a Bitcoin strategy, it anticipated volatility and structured its balance sheet so that it could continue to hold through adversity,” reported Saylor.
According to the Microstrategy’s presentations of the Q1 of 2022, the company took a 3-year loan of USD205 million from Silvergate Bank with 19,466 BTC serving as its collateral. On 10th May, Saylor indicated that they needed USD410 million as collateral for the loan.
Now, Microstrategy is holding a total of 115,109 BTC. The company also has an additional 14,109 BTC via its subsidiary, bringing up the group’s total to 129,218 Bitcoins.
The rumour commenced after Phong Le, the company’s president, indicated that a “margin call” would be triggered. In a typical case, a margin call would be met through the provision of additional capital or liquidating the loan collateral. Bitcoin sank below USD21K on Wednesday, but Microstrategy said it is yet to receive a margin call.
According to Saylor, the company can always contribute additional BTC to help maintain the required loan-to-value ratio. He added that Microstrategy’s 115,109 Bitcoins are ample to cover the required USD410 million even if the price crashed down to USD3,562. But even in such a situation, he emphasised that they had other assets to turn to as collateral.
