MicroStrategy has 129,218 Bitcoins in its vault. As a result of Bitcoin’s price drop, there are growing concerns that the company may need to cash out or pledge a significant portion of its Bitcoin reserves as collateral.
Microstrategy’s CEO, Michael Saylor, said Tuesday that the company does not expect to receive a margin call and has adequate collateral. The next day, however, rumors began to circulate that the company might soon need to liquidate its Bitcoin.
Saylor stated on CNBC’s “Squawk on the Street” yesterday that the margin issue is out of place. He stated that the rumors were not true, considering it “clearly false” that MicroStrategy might sell some of its Bitcoin.
Saylor confirmed in a tweet on May 10 that Microstrategy must hold $410 million “as collateral for this loan.” In March, MicroStrategy borrowed $205 million from crypto bank Silvergate Capital. The proceeds were used to purchase additional bitcoin.
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He stated that when Microstrategy implemented a “Bitcoin Strategy”, it anticipated volatility and designed its balance sheet to be able to “stand still” in times of turmoil. According to Mark Palmer, head of digital asset analysis at BTIG, the software company will not need to liquidate any of its Bitcoin holdings.
