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Is this Michael Saylor’s ‘long term game’ that he thinks not acquiring Bitcoin is a Mistake?


www.thecoinrepublic.com 04 July 2022 16:30, UTC
Reading time: ~2 m

MicroStrategy CEO often remains bullish on bitcoin that he continues to be, even amid market downturn and rumors of the firm’s liquidation

Michael Saylor entered the discussion regarding if his business intelligence provider company’s strategy to stick with bitcoin for the long term is failing given the rumors that MicroStrategy is in danger of liquidation. MicroStrategy has recently made purchase of more bitcoin (BTC) this week, after which CEO Michael Saylor in an interview, stated that the company due to its robust capital structure is in a position to face the current market trembles along with continuing its bitcoin purchase. 

Following its strategy of purchasing bitcoin as per Micael Saylor’s ‘Long term game,’ Microstrategy took a loan from Silvergate Bank in March. Silvergate is known to be the prominent crypto focused lending financial institution that avails the business intelligence service provider firm about $204.7 million in loans for three years. 

MicroStrategy put its $820 million worth of bitcoin against the collateralization of SolverGate’s recent loan, which accounts for about 12% of the company’s overall bitcoin (BTC) holdings. But as time passed after purchasing the bitcoin from the loan amount, the price of the top cryptocurrency has been on a consistent decline, and amidst the market crash due to the Terra ecosystem collapse, the bitcoin price had nosedived. 

Given the market condition that made up after this till the present, the market has not revived yet and the drop in bitcoin price took the value of bitcoin reserve of company down with it. This made the rumors regarding the liquidation of MicroStrategy if the price dropped below $21,000. However they were dismissed by the company and CEO Michael Saylor.

Saylor explained the current situation of MicroStrategy’s strategy to a popular YouTube channel about crypto, MMCrypto’s creator Christopher Jaszcynski that even when bitcoin value was dropped to its half, the company still had collateralized value of about ten times against it. This he told to see it as having collateral of a million dollars against the borrowing of $40,000. 

Further, Saylor added that the situation would only get worse when the bitcoin price drops beyond 95%, and that will be the point for shareholders to worry about it. MicroStrategy’s CEO also said that the company has other streams of cash flows and assets that make them prepare for any worse that could hit. He said that the situation would only worsen for the company and its collateral if bitcoin would get down to $3,500. 

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