5 Ways to Increase Acceptability of Cryptocurrency: From Skepticism to Mainstream Adoption
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2022-05-11 | Selina Mathew
MicroStrategy might pledge some additional collateral in addition to the 115,109 BTC, according to Michael Saylor.
MicroStrategy CEO Michael Saylor hinted that the company's bitcoin will not be sold.
He noted that the business has 115,109 BTC available as security for its bitcoin-backed loan and might put up further collateral if needed.
Last month, MicroStrategy took out a loan to buy additional bitcoin.
MicroStrategy CEO Michael Saylor took to Twitter on Tuesday morning to allay worries that his company's bitcoin-backed loans may face liquidation if the price of bitcoin continued to fall.
"MicroStrategy has a $205 million term loan with $410 million in collateral," Saylor said, referring to his company's investor presentation for Q1 2022.
MicroStrategy holds 129,218 BTC, however 115,109 BTC remain unencumbered and might be used as extra collateral if necessary. This amount of bitcoin would be enough to prevent a margin call if the bitcoin price stayed over $3,562 despite the loan's $410 million collateral demand. Even if that level was breached, Saylor added, the corporation would not sell.
In the same tweet, he stated, "If the price of BTC goes below $3,562, the firm might submit some other collateral."
The software analytics firm took out a $205 million loan in early April to buy additional bitcoin as the price began to fall — its first-ever bitcoin-backed loan. MicroStrategy paid $190.5 million for 4,167 bitcoins at an average price of $45,714 per bitcoin at the time.
The 11.6 percent drop in bitcoin price on Monday aroused concerns about whether Silvergate Bank, the company's lender, would issue a margin call shortly.
During the fall, MicroStrategy's bitcoin investment momentarily went underwater as the price broke through the company's average purchase price of $30,700 per BTC. According to TradingView statistics, the business ended the day in the loss as Bitcoin closed at $30,075.
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