MicroStrategy CEO drops margin calls as Bitcoin nears $21,000

Michael Saylor took to Twitter to assure investors that MicroStrategy’s balance sheet is well positioned to avoid a margin call in its bitcoin-backed loan.

  • Michael Saylor said his company had anticipated potential bitcoin volatility and was ready to “HODL through adversity.”
  • MicroStrategy took out a $205 million bitcoin-backed loan from Silvergate Bank in March 2022 and risks getting margin called if bitcoin falls below $21,000.
  • Saylor previously tweeted that the company has 115,109 BTC along with other available assets to post as collateral to avoid liquidation.

MicroStrategy, a software analytics company and the largest bitcoin holding company, dominated the news on Tuesday due to its risk of getting margin called in its $205 million bitcoin-backed loan.

The company’s risk became apparent when bitcoin briefly fell below the lending margin call figure of $21,000 overnight. However, its CEO took to Twitter to assure investors that the company is in a good position to not have to sell its bitcoin.

“When MicroStrategy adopted a #Bitcoin strategy, it anticipated volatility and structured its balance sheet so it could continue to #HODL in adversity,” Saylor said. said.

Saylor tweeted a previous May 10 announcement that further detailed the terms of the loan as well as the company’s plan.

“MicroStrategy has a $205 million term loan and needs to keep $410 million as collateral. $MSTR [MicroStrategy] has 115,109 BTC that he can pledge,” Saylor explained. “If the price of #BTC falls below $3,562, the company may issue further guarantees.”

Silvergate Bank’s loan requires $410 million in collateral, which the company would miss if the price of bitcoin fell below $21,000 – forcing MicroStrategy to add additional collateral to maintain the terms of the loan.

As Saylor explained, MicroStrategy has enough bitcoin to post as collateral to fund the loan up to a BTC price of $3,562. Should bitcoin fall below this price, the company intends to further collateralize with other assets.

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