With bitcoin falling below $25,000, it is important to recall the comments of the Microstrategy CFO. The comments were about the possibility of the company receiving a margin call on the giant BTC holdings at $21,000.
On a May 3 earnings call, the firm’s new chief financial officer, Phone Le, described the collateralization method on Microstrategy’s bitcoin position. He assured that he need not add extra cash to his holding.
Furthermore, Lay informed the board members that the first margin call would be issued when bitcoin dips below $42,000. At the moment, bitcoin is testing the $22,000 price level.
As MicroStrategy prepares its first margin call, investors are at ease. This is due to the large liquidity collateral in the company. The company’s current capital is more than enough to support the current situation and make a fresh start.
Today, MicroStrategy has liquidated approximately $103 million worth of bitcoin. The liquidation took place after bitcoin saw a massive selloff below the $21,000 support.
At the time of publication, bitcoin is trading slightly higher from its lows, down 7.76% over the past 24 hours and trading at $22,351.
If Bitcoin retraces sharply, the next position should cover most of their losses. As a result, Seller’s urge to buy bitcoin at local highs is disappointing news for investors.
In the midst of unexpectedly low inflation figures, the riskier asset began to fall sharply in value. This is because of traders and investors shifting their holdings to stable assets such as commodities and bonds.
Due to its volatile character, the cryptocurrency market has seen significant outflows.