MicroStrategy, crypto firm shares plunge with Bitcoin’s freefall
MicroStrategy is leading Marathon, Riot and Coinbase in a cryptocurrency-exposed stock selloff, closing down over 25% on Monday, as the firm’s Bitcoin holdings dropped by around US$1 billion.
See related article: MicroStrategy posts Q1 revenue loss amid falling Bitcoin price
Fast facts
MicroStrategy became entangled with Bitcoin after founder Michael Saylor added record amounts to the company’s portfolio since 2020.
Over the last two years, the software maker amassed nearly 130,000 Bitcoins as of the end of March, according to the company’s last quarterly report.
The recent cryptocurrency boom helped MicroStrategy recover from dot-com bubble losses of the early 2000s, but the company faces a new threat as Bitcoin is trading down more than 50% in the past six months, according to CoinGecko data.
Saylor, who has told investors to mortgage their houses and buy Bitcoin, maintained that Bitcoin is a hedge against inflation in an interview with CNBC last week.
The software firm may need to pledge additional collateral on a $205 million loan it took out this March in the case of an even deeper drop in Bitcoin prices.
In May, MicroStrategy CFO Phong Le said that if Bitcoin fell to around $21,000, there was the potential for a margin call on outstanding loans, while Saylor said the company could still post collateral if Bitcoin drops below US$3,562.
Bitcoin was trading around US$21,200 at publishing time, according to CoinGecko.
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