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Microstrategy, the biggest Bitcoin business holder, has long embodied the most daring institutional bet on cryptocurrency. The co-founder and president of the unwavering belief of Bitcoin defines the company’s strategy For years. However, this strategy is now confronted with a challenge after a recent dry deposit alluded to the possibility that microstrategy is forced to liquidate some of its Bitcoins operations under financial pressure and the Recent bitcoin price crash. The implications could wave beyond the company’s assessment and affect the wider Bitcoin market.
Mounting debt, negative cash flow and Bitcoin Lifeline
Microstrategy has revealed several important financial vulnerabilities In a recent 8-K form deposited with the dry. At the time of deposit, the company Reported detainee 528,185 BTC, acquired at an average purchase price of $ 67,458 per Bitcoin, at a total cost of around 35.63 billion dollars. However, despite the massive size of its Bitcoin treasure, Microstrategy admitted that its basic corporate software activity has not generated positive operational cash flows. The company is Also in love 8.22 billion dollars in debt and faced with an annual burden on contractual interests of $ 35.1 million.
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Although it has issued more than $ 1.6 billion in privileged shares linked to substantial annual dividend obligations of $ 146.2 million, these liabilities are not fulfilled. Instead, microstrategy explicitly stressed that it expects to rely on the financing of debt or actions to meet its obligations, and these efforts can become seriously tense if the Bitcoin price decreases sharply. The report warns that if the market value of its assets decreases considerably, it could negatively affect the capacity of the company to collect funds. In such a situation, the company could be forced to sell bitcoin at a loss.
As the report was tabled, BTC was only negotiated 13% above the company’s average purchase price. Because Bitcoin is the majority of microstrategy assets, its assessment is intimately linked to the price of cryptography. As such, a decrease below this level could create a chain reaction of the decrease in equity prices and ultimately force the sales pressure even on the price of Bitcoin itself.
Response from Michael Saylor: stay the course
Michael Saylor, co-founder and former CEO of Microstrategy, is one of the Bitcoin’s greatest supporters And had an influence on the adoption by the company of a Bitcoin strategy. Taken on the X social media platform after the reports of the report broke out, Saylor is simply tweeted: “Hodl”, a popular mantra among cryptographic purists who signals a long -term conviction.
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The position had more than 1.4 million views on the platform and resonated with many bullish supporters, as seen in the comments section. He followed that with another tweet: “Bitcoin is the best idea. There is no second best.”
At the time of writing this document, BTC is negotiated at $ 81,900, up 6% the last 24 hours. Even if Microstrategy had to sell any Bitcoin at this stage, it would not be the first sale of his assets. Back on December 22, 2022, Microstrategy sold 704 BTC for $ 11.8 million in similar circumstances.
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