No, MicroStrategy Is Not Facing Margin Call On Bitcoin Loan

Alex Dovbnya

MicroStrategy CEO Michael Saylor has denied that his company is facing a margin call due to Bitcoin’s price drop

MicroStrategy CEO Michael Saylor has refuted speculation that his company may face a margin call on its Bitcoin loan.

The Bitcoin attorney has clarified that such a scenario will not happen as long as the loan-to-value (LTV) ratio remains below 50%.

Before that, Saylor tweeted that MicroStrategy’s balance sheet was structured to withstand extreme volatility.

The business intelligence firm took a $205 million loan from cryptocurrency-focused bank Silvergate Capital to fund its Bitcoin purchases. At the time, Saylor claimed that his company had managed to turn the flagship cryptocurrency into a “productive collateral” after a high-profile deal with the bank.

MicroStrategy has 129,218 Bitcoins in its coffers, which are worth about $2.8 billion at current prices. The Tysons, Virginia-based company has lost approximately $1 billion on its failed Bitcoin bet.

In May, MicroStrategy president Phong Le warned that the company could face a margin call if Bitcoin price falls below $21,000.

Earlier today, the top cryptocurrency dropped to $20,816 on the Bitstamp exchange.

The company switched to Bitcoin in August 2020, adopting the world’s largest cryptocurrency as its primary reserve asset. The company announced its big Bitcoin bet just months before Bitcoin started a major rally.

Saylor has managed to revive this career after he infamously lost $6 billion in one at the height of the dotcom bubble and became one of the most influential voices within the cryptocurrency community.

Shares of MicroStrategy crossed the $1,000 mark for the first time since last February for the first time since March 2000. However, the rally has not been sustainable and the company’s stock has recently erased all of its Bitcoin-driven gains.

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