As the Federal Open Market Committee (FOMC) conference begins today, the crypto market has been hit between a push and pull game by bulls and bears.
Yesterday, May 3, bitcoin was jumping between support and resistance after the currency hit $37,600. The major currency then reached around $39,000.
At the time of writing, bitcoin is changing hands at $38,999, up 1.13% over the past 24 hours.
A recent transcript from Microstrategy’s earnings call shows that the company has reportedly seen huge losses on its bitcoin holdings and also states that bitcoin’s price action will be the company’s first margin call after seeing the bottom of $21,000. But wait, there’s a catch here.
Microstrategy’s new Chief Financial Officer (CFO), Fong Le, was questioned about the company’s margins before the company received a margin call regarding their bitcoin positions. To which Fong Le responded by saying that there was no need for the company to add more funds to its position.
To receive the first margin call in its position, Bitcoin needs to cut in half from its average entry at $42,000. This means that if the price of bitcoin drops to $21,000, the move will invite a margin call. If there is a margin call, the company should infuse additional funds in its existing position.
What is stopping the micro strategy to get a margin call
Although MicroStrategy has a chance to receive a margin call at $21,000, the company’s CFO doesn’t appear concerned because of the company’s massive liquidity settlement. Prior to the flagship currency’s low of $21,000, Microstrategy is expected to provide funding for its positions, as well as average positions and reduce margin call limits.
Some have even speculated that the company will only face liquidation when bitcoin reaches $3,000 and that if bitcoin falls to 2018 levels, Microstrategy will have enough liquidations to contribute.