No, MicroStrategy Didn’t Have To Sell Bitcoins

Yesterday, when the rate of bitcoin (BTC) dropped below $21,000, rumors flared that MicroStrategy margin call would have received on an outstanding loan of $205 million. MicroStrategy denies that this was the case and reiterates that the company is not in trouble for the time being.

MicroStrategy Holds Up Despite Bitcoin Crash

In March of this year, a MicroStrategy subsidiary, MacroStrategy, entered into a $205 million loan to purchase a new batch of bitcoins. Collateral for this loan was just over $400 million. A large part of this collateral consists of bitcoins and because the price of bitcoin has plummeted so much, the margin requirement of the loan around a bitcoin price of $21,000 are no longer sufficient.

That would mean that MicroStrategy is currently a margin call gets. That basically means that the company would be forced to sell some of their bitcoins. However, there is still an option for the company to get out of such a margin call; adding additional collateral in the form of more bitcoins.

That’s exactly what MicroStrategy has most likely done. The company let to CNBC know that there has been no margin call. In addition, the company has more than 110,000 bitcoins in its possession that it can make available as collateral for these and other loans.

“MicroStrategy has not received a margin call against our Silvergate loan, even as bitcoin prices fluctuate lately. We can always bring in additional Bitcoins to maintain the required loan-to-value ratio…even at current prices, we have more than enough additional Bitcoins to meet our requirements under the loan agreement.”

BTC bottom of $3,500

Earlier, Michael Saylor indicated that MicroStrategy will only really get into trouble if the price of bitcoin collapses all the way to $3,500. At that time, they will indeed be forced to sell part of their bitcoin portfolio. Fortunately, it is far from that and until then it seems that major problems at MicroStrategy will not occur.