At the moment, the situation in the cryptocurrency markets looks like this.

Many cryptocurrencies have dropped in value by tens of percent in the last 24 hours, with their overall losses for the week being much higher. This has left many in the blockchain community wondering what is happening with MicroStrategy.

What will MicroStrategy do?

At the moment, MicroStrategy is first in terms of crypto on its balance sheet among public companies. This has its own risks, Sailor admitted on Twitter. Here’s his rejoinder.

MicroStrategy has taken out a $205 million loan and must provide $410 million in collateral. MicroStrategy has 115,109 BTC to pledge. If the price of BTC falls below $3,562, the company can post another pledge.


Judging by this response, the company's management has no plans to get rid of its coins even in the event of even bigger problems in the digital asset market. At the very least, if there are now mentions of Bitcoin at $3,000-$4,000, it means that the giant's representatives have also been thinking about such a scenario.

Note that replicas with these first coin price levels look suspicious, as Bitcoin at $27,000 has already collapsed 30 percent in a week. The prospect of a collapse in multiples from current levels sounds unbelievable.

According to Decrypt’s sources, the average Bitcoin purchase price is hovering around $30,700. That said, Bitcoin has also dipped as low as $26,700 today.

This means that MicroStrategy has started to incur unrealised losses from its large investment in the major cryptocurrency. However, this fact does not embarrass Seylor in any way and he is not going to sell the coins. That’s because the entrepreneur believes in the inevitable rise in their value.

This is interesting: MicroStrategy's major shareholders have sold some of the company's shares. The reason is its investment in Bitcoin.

The situation of free (yellow) and borrowed (orange and red) coins in the loan collateral looks like in the screenshot below. Note that the loan collateral here is divided into two categories – for MicroStrategy itself and its subsidiary MacroStrategy.

Falling below $5,000 for Bitcoin doesn’t look too realistic just yet. MicroStrategy’s technical director Fong Li made a very interesting statement the day before about what’s going on.

Essentially the price of Bitcoin has to halve – to about $21,000 – before we have a margin call [that is, problems with the position and the need to take some action with it].

This quote has not been clarified by Saylor himself, but we can interpret it as follows: if Bitcoin falls below $21,000, MicroStrategy could have serious problems. And to solve them, the company will have to draw down some of its crypto reserves. This could have a domino effect – the more BTC MicroStrategy sells, the more the market will depreciate. Let’s hope that Sailor stays true to its promise not to get rid of BTC in any way.

This is interesting:
Almost half of Bitcoin holders are now in the red. The cryptocurrency continues to fall

Let’s move on from the pessimistic news to the more uplifting news. Cryptocurrency exchange Coinbase CEO Brian Armstrong has expressed his optimism about the business and the industry as a whole, even despite his company’s very disappointing Q1 2022 reporting results. Here is one of Armstrong’s quotes cited by Cointelegraph.

We have so many customers coming through our doors that we have to do everything we can to make things work. So periods of decline are often a welcome change in the sense that we get to focus on creating the next level of innovation that will benefit us in the next [bullish] cycle.

Armstrong noted that the company is “greedy when others are scared”, meaning it is acquiring talent and focusing on projects and infrastructure for the future. About this year’s disappointing first quarter, he responded with the following quote.

The markets are falling. We are seeing a decline in technology stocks and risk assets, Coinbase, and cryptocurrencies are no exception. The good news is that as a cryptocurrency company we have been through many different cycles, including major falls, which makes us well equipped to deal with such conditions.

And here's the exchange report itself: for the first quarter of 2022, Coinbase's revenue fell 27 per cent to $1.17 billion, down from $1.6 billion in the first quarter of 2021. Meanwhile, for the fourth quarter of 2021, revenue was $2.5 billion. The number of user transactions per month also fell by more than 19 per cent to 9.2 million units from 11.4 million units last quarter. Coinbase shares have already fallen more than 16 per cent and continue to fall.


Apparently, MicroStrategy representatives are not going to get rid of their own bitcoins, which have been accumulated over a long period of time. Moreover, flush of coins would affect reputation of the giant, because its leaders are positioning themselves as almost the main admirers of BTC for a long time. One would like to believe that the sale of the company's cryptocurrency stock will not happen - otherwise the market situation is even hard to imagine.


Be that as it may, this is not the first rough patch in Bitcoin’s history. Look for even more interesting things in our Millionaire Cryptochat.

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