Given the current bearish sentiments in the market, Nasdaq-listed business intelligence and software firm MicroStrategy Incorporated is sitting on a significant loss in relation to its Bitcoin (BTC).
The corporation appears to be one of the most prominent Wall Street firms that pioneered securing its balance with Bitcoin, which it did for the first time around August 2020.
MicroStrategy has collected a total of 129,218 Bitcoin units since that time, with its most recent acquisition of 4,167 Bitcoins in early April for around $190.5 million(R3B). The firm’s total digital currency holdings were purchased at an average cost of $30,700(R494k). With the current price of the leading digital currency – $29,472.45(R475k) – the firm’s Bitcoin assets are valued at $3.808 billion(R61B) at the time of writing.
The corporation paid around $3.97 billion(R64B) for the coins, leaving paper losses of approximately $162 million(R2.6B). MicroStrategy has faced a lot of criticisms for this strategy to increase profitability, with critics claiming that the volatility of the digital currency negates any technological advancements supporting it.
MicroStrategy investors are reacting in lockstep with the company’s Bitcoin profitability forecast, as the shares have lost a considerable chunk of their value year to date.
However, MicroStrategy (MSTR) Founder and CEO Michael Saylor earlier addressed the company’s responsibility and its Bitocin-backed loans on Twitter, noting that “if the price of #BTC goes below $3,562(R57K) the company could post some other collateral.” The market expects Saylor will not sell Bitcoin despite the current drop.
A similar destiny is befalling most Bitcoin-related enterprises, particularly those trading on public exchanges, as the crypto-negative ecosystem’s outlook generates minimal demand, affecting these firms’ operations. MicroStrategy is a Bitcoin investor who has a significant investment in the cryptocurrency, having borrowed $205 million(R3.3B) from Silvergate Bank in March to purchase more BTC units.
The firm’s losses on Bitcoin are decreasing in tandem with the volatility. According to Michael Saylor’s prior statements, there are techniques to limit losses if it falls below specific threshold levels.