Microstrategy is not ready to liquidate its bitcoins (BTC)
One thing’s for sure: as long as the price of bitcoin remains correct, Microstrategy won’t part with its holdings, says broker Bernstein. Michael Saylor’s company has built up a solid reputation, but nothing can match its firm belief in the most famous of cryptocurrencies.
Microstrategy will not liquidate its bitcoin (BTC) holdings to pay off its debt, at least not for the time being
Microstrategy has a huge debt, and many people are wondering about the company’s strategy for paying it off. But while some believe that the company will have to divest itself of its cryptos, this is not the case for broker Bernstein. According to a report published on Tuesday, the broker states that the software company will only sell its assets in the event of an extreme price decline.
As a result, as long as the price of bitcoin remains high, Microstrategy has no intention of reselling its crypto investment. According to its statements, a rising BTC trend means a stronger balance sheet for the company.
In this configuration, it can repay its debt without liquidating its crypto assets. However, if the price of bitcoin (BTC) were to collapse, Michael Saylor’s company would have no choice but to proceed with a sale of its tokens to repay its debt by mid-2025.
BTC volatility could call the company’s strategy into question
Microstrategy is a company that operates largely on bitcoin (BTC). According to the note, the company holds around 152,000 BTC, worth $4.5 billion. This number represents around 0.78% of the number of bitcoin tokens in circulation, and almost 20% of the daily volume of BTC transactions.
As a result, bitcoin represents 95% of Microstrategy’s market capitalization. As for the debt contracted to purchase these tokens, it is equivalent to almost half the company’s net worth. Given bitcoin’s volatility, the company may well be forced to liquidate its holdings at some point in the future.
Despite the volatile nature of bitcoin (BTC), Microstrategy is not at that stage yet. According to a report by Berenberg, the company could refinance its debt maturities if its share price and the value of its BTC holdings increased exponentially. For the time being, all seems well, with bitcoin still hovering above the $30,000 mark.
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