MicroStrategy continues to buy bitcoin

The cryptocurrency bitcoin has seen a 70% drop in recent days. Michael Saylor, the CEO of MicroStrategy, has not regretted his decision to turn his company into a highly leveraged bet on the bitcoin’s price.

Saylor defends his positions in a recent interview with CNBC, mentioning the “fortress balance sheet” of his company, which took out billions of dollars worth of debts before interest rates went from 1.8% to double.

“I’m glad we took the loan at 1.5% interest, I think it’s a reasonable decision,” Saylor said.

Saylor appeared on Bloomberg and CNBC to discuss his thoughts on Bitcoin and rumors regarding a possible Bitcoin margin call for the company. To his credit, Saylor seems to be unfazed by the recent drop in Bitcoin’s price from its all-time high ($67,500). The investor even went so far as to declare he “can’t come up with a better concept” regarding MicroStrategy’s Bitcoin investments.

“We are 10x over secured in our margin loan,” Saylor said. “If the market traded down by 10, we’d have cash and generate a lot of cash flow. So this margin call is not as intense as people think.”

Investors disagree with Microstrategy’s worth, and all of their bonds are trading lower than the par price. The company’s market valuation is low, while they still have $2.7 billion in bitcoin holdings.

The company has a current value of $6,400 and a past value of $30,700, meaning its unrealized loss is over $1 billion.

Saylor, even with the recent fluctuation, says that bitcoin is still one of the best-performing asset classes when you zoom out far enough.

Bitcoin and MicroStrategy

When MicroStrategy started investing in Bitcoin in 2020, Bitcoin grew by 86% and gold dropped 10%, while the NASDAQ was flat.

For a total of 129,219 BTC, MicroStrategy has spent almost $4 billion, with each BTC costing over $30,700 on average. Saylor mentions a USD$200 million loan. He says that the company is already 10x over-collateralized on the loan, and looks to be in good shape. Despite the concerns of a MicroStrategy Bitcoin margin call, Saylor believes they are unnecessary. The margin call is moot if the market drops by ten since we have cash on hand and are generating cash flow.

Even while MicroStrategy is valued at $1.9 billion, its Bitcoin assets, at roughly $2.7 billion, investors aren’t nearly as optimistic as Saylor is.

Source: crypto hot news