MicroStrategy’s Bitcoin Holdings and Liquidation Threshold
MicroStrategy, the largest corporate holder of Bitcoin, currently holds an impressive 152,333 BTC, valued at over $4.6 billion. Many crypto traders and investors wonder if the company has a liquidation threshold and if it will ever need to sell its BTC. According to a report by broker Bernstein, here are the key points to consider:
– MicroStrategy plans to raise long-term debt, which may put pressure on the company to liquidate its Bitcoin holdings. However, this would only happen in the event of extreme price corrections, particularly around its debt expiry in mid-2025.
– The report highlights that the corporate structure could be affected by “spring forward” clauses, potentially bringing forward the debt to 2025/26 due to liquidity covenants attached to the 2028 debt.
– If Bitcoin’s price continues to rise, it would strengthen MicroStrategy’s balance sheet.
– Similarly, if MSTR shares also increase, it would improve the company’s ability to repay its debt.
– MicroStrategy last purchased BTC in June, adding 12,333 BTC to its holdings, bringing the total to 152,333 BTC.
Hot Take
MicroStrategy’s large BTC holdings and potential liquidation threshold raise interesting questions about the company’s strategy and financial position. While the report suggests possible pressure to sell BTC, the strengthening of its balance sheet through price increases could work in MicroStrategy’s favor. It will be intriguing to see how the company navigates its debt repayment and the impact of Bitcoin’s future price movements on its overall financial health.