BITCOIN

Buying into a bear market from a bull market, MicroStrategy buys Bitcoin again after nearly three months, with unrealized losses reaching $1.5 billion.

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Buying into a bear market from a bull market, MicroStrategy buys Bitcoin again after nearly three months, with unrealized losses reaching $1.5 billion.

After entering the market when Bitcoin was still at the $45,000 level, MicroStrategy took nearly three months to announce another purchase of Bitcoin. During this period, there were the Terra crash, liquidity crises at Three Arrows Capital and Celsius. MicroStrategy, which remained silent at the time, even made the community question whether they intended to sell at a loss. Despite having the lowest cost basis for holding coins, MicroStrategy's unrealized losses have now reached as high as -$1.5 billion.

MicroStrategy Buys Another 480 Bitcoins

MicroStrategy announced at the end of June that it has purchased an additional 480 bitcoins at an average price of $20,817 each. The total holdings now amount to $2,519,059,405 based on today's value, resulting in an unrealized loss of approximately -$1.49 billion or -37.64%.

According to data, MicroStrategy first planned to invest in "alternative assets" in August 2020, entered the Bitcoin market on August 11, and the board unanimously agreed on September 11 to make Bitcoin its primary reserve asset. Despite multiple occasions where the cost price was breached, the company continued to boldly purchase. As of the current data:

    • Number of Bitcoins held: 129,699 BTC
    • Potential average price: $30,664
    • Potential cost: $3.98 billion
    • Unrealized loss: -$1.49 billion or -37.64%

Clarifying FUD with Action

MicroStrategy previously purchased Bitcoin on April 5 when the price was still around $45,000. When the price fell below the cost price in May, CFO Andrew Kang firmly stated that no BTC would be sold.

Furthermore, after the lending platform Celsius announced a suspension of withdrawals on June 13, Bitcoin fell from the $26,000 level and briefly dropped below the $20,000 mark, leading to rumors in the community that a large Bitcoin transfer was part of MicroStrategy's selling action.

In response, MicroStrategy's CEO emphasized on Twitter: "We believe in Bitcoin."

It took nearly three months for the latest entry, the longest gap between MicroStrategy's purchases, which temporarily eased concerns within the crypto community.

Unless it Drops Below $3,562

According to Michael Saylor's statement in May, at the end of March, MicroStrategy mortgaged Bitcoins to the crypto bank Silvergate and borrowed a $205 million loan, requiring a collateral of $410 million. Therefore, unless Bitcoin drops below $3,562, there is no need to deposit additional collateral.

Note: At that time, MicroStrategy held 115,109 BTC, and if the price falls below $3,562, the value will be less than $410 million.

Michael Saylor's intention with this statement is to emphasize the company's unwillingness to sell Bitcoin and to clarify rumors within the community that MicroStrategy needs to increase collateral to avoid liquidation, despite the company's reserve asset policy currently showing an unrealized loss of nearly -$1.5 billion.