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Crypto Crash Results In Bitcoin-Exposed Stocks Such As Coinbase, MicroStrategy Dipping


www.thecoinrepublic.com 14 June 2022 15:10, UTC
Reading time: ~2 m

The latest crypto massacre has pulled Bitcoin below $22,382.89 as of this writing. Meanwhile, MicroStrategy (MSTR) too suffered a drop of 26.72% on Monday’s premarket, reaching a 20-month low of $149.

On Friday, MSTR, which was trading at $203.36 on the day’s end, dropped to $147 after the market opened. However, it traced its recovery to $155.50 since the pressure of its stock trading at a discount to the firm’s Bitcoin holdings increased on the software manufacturer.

Following the trend, crypto exchange Coinbase (COIN) stock fell by a hefty 21.5% to $46.06 on premarket, before climbing up to $51.87 when going to press, down 11.66%.

Besides, several other Bitcoin-adjacent companies too were seen suffering while the shares of mining operators were the worst-hit.

Marathon Digital slipped by 18.17% in premarket. Bit Digital and Riot Blockchain, dropping by 14.89%, followed it.

Block Inc. (SQ) also fell to $66.59 in premarket, down by 7.35%, and continues to drop, exchanging hands at $63.63 at the time of writing. 

Although not so harsh, the shares of PayPal (PYPL) and Robinhood (HOOD) too suffered losses of 7.62% and 5.95%, respectively.

MicroStrategy was creating headlines for its Bitcoin accumulation strategy, however, the company is facing a margin call on a $205 million Bitcoin-backed loan with Silvergate Bank that was held to buy more crypto in March, with an average purchasing price of $30,700 over the last two years.

This is claimed by CFO Phong Le, who revealed these figures during the company’s first-quarter earnings last month.

During that time, Le stated that the margin call occurs [at] 50% LTV as far as where Bitcoin needs to fall. Le added that they took out the loan at a 25% loan-to-value (LTV). Further adding, he said, before they had a margin call, “Bitcoin needs to be around $21,000.”

MicroStrategy might be forced to sell some of the Bitcoin if the price drops to $21,000, even though Michael Saylor, the CEO of Microstrategy, keeps saying that he’d never sell any crypto.

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