MicroStrategy by Michael Saylor has been part of the crypto universe for quite some time. The company is known for its bullish view on Bitcoin [BTC] and massive purchases of the asset. MicroStrategy is currently the largest corporate holder of BTC as a balance sheet asset. However, this has raised concerns about the king coin’s position should the company sell its holdings to pay down its debt.
MicroStrategy is reportedly $2.2 billion in debt. The company has pledged 15,000 BTC as repayments are due in 2025. The business analytics company currently owns 140,000 BTC worth around $4 billion at an average price of $29,800. The fear of a potential sell-off stems from the aforementioned amount of BTC the company is bringing with it. However, a recent research paper by Bernstein shatters those worries.
According to the report, the position is not material enough to affect prices but poses sentiment risk during a downturn. MicroStrategy holds about 0.7% of all Bitcoin currently in circulation. This is almost 20% of the daily average trading volume on spot markets. Still, the company will be dependent on the price of BTC. If Bitcoin maintains its hot streak and continues to perform well, MicroStrategy wouldn’t need to sell its holdings after all. Analysts Gautam Chhugani and Manas Agrawal suggest
“High BTC prices mean a stronger balance sheet, higher share prices, and easier debt repayment without selling BTC holdings.”
Currently, MicroStrategy’s stock MSTR is up sharply. It’s up about 140% year-to-date to $350 per share. This is the highest level since September 2022. As noted by analysts, the stock price has mimicked BTC’s YTD gains. So MicroStrategy doesn’t really do that “pose a concentration risk.”
How Has Bitcoin Responded to MicroStrategy Selling in the Past?
On December 22, 2022, MicroStrategy sold over 704 BTC at an average price of $16,776. This was the first time the company sold any of its Bitcoin holdings. As can be seen in the chart below, the price of bitcoin has barely fallen or even risen. As a result, it is safe to say that potential sell-offs by the Michael Saylor-led firm would not seriously affect King Coin.
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