The CEO of Nasdaq-listed software company Microstrategy has denied rumors that the company is facing margin calls on its bitcoin-backed loans, forcing it to sell some coins He denies rumors that the company is facing a margin call on its Bitcoin-backed loans, forcing it to sell some coins. If the cryptocurrency’s price “falls below $3,562, the company may post other collateral,” the executive explained.
Microstrategy has not received a margin call
Microstrategy CEO Michael Saylor denied rumors that the company was approaching a situation where it would have to liquidate its bitcoins to meet margin calls on its bitcoin-backed loans.
However, Saylor tweeted on Tuesday.
When MicroStrategy adopted the Bitcoin strategy, we anticipated volatility and structured our balance sheet to continue to hoddle through adversity.
MicroStrategy’s Q1 2022presentationdetails the company’s $205 million three-year term loan from Silvergate Bank for 19,466 bitcoins.
Saylor revealed in a May 10 tweet that Microstrategy “must maintain $410 million in collateral” for the loan.
Microstrategy currently holds 115,109 BTC, which is the largest holding of Bitcoin in the United States. Its subsidiary, Macrostrategy, holds 14,109BTC; BTCand the group holds a total of 129,218 Bitcoins.
The rumor spread after Microstrategy president Phong Le said in May that a “margin call” would occur if the price of bitcoin fell below about $21K. Typically, a margin call could be met by the company providing more capital or liquidating the collateral on the loan.
Bitcoin prices fell below the $21K level this week. However, MicroStrategy told Reuters on Tuesday that it has not received a margin call, stressing:
we can always provide additional bitcoin to maintain the required loan ratio.
Additionally, Saylor explained that Microstrategy’s 115,109 bitcoins could cover up to$410 million in collateral; BTC could cover up to $3,562 of the price. However, the executive elaborated that Microstrategy has other assets that could be posted as collateral if the crypto price drops further.
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