The Bitcoin (BTC) market is extremely volatile and worries many investors. Giant companies such as Tesla and MicroStrategy, on the other hand, face a number of problems as the BTC price drops. So, will whales and companies with huge BTC investments sell their BTC?
BTC price drops can lead to huge losses
MicroStrategy, known as the largest Bitcoin investor, currently holds 129,218 BTC. Another Bitcoin investor company Tesla is known to have 48 thousand BTC. In other words, the amount of BC held by these two companies alone is more than 177 thousand. As we reported on cryptokoin.com, BTC has been on a downtrend since the beginning of 2021 and has seen a massive drop of about 27 percent in the last three months. With this downward trend in price movement, BTC fell below the cost price of the companies. To summarize, this means a loss of about 12 billion dollars from the BTC wallets of the giant companies.
MicroStrategy holds approximately 0.61% of the total BTC supply. The company has a current BTC entry value of $3.9 billion and a final value of $4.11 billion. Tesla, on the other hand, owns about 0.229 percent of the BTC supply, with a Bitcoin inflow value of $1.5 billion. Since the ratio between the buy and sell price of companies is extremely close, if Bitcoin falls further, this could cause a significant loss for companies. As BTC fell more than 50 percent, companies’ assets also lost value.
Will MicroStrategy and Tesla sell their Bitcoin investments?
Many are wondering what Tesla and Microstrategy’s next move is. Microstrategy CEO Michael Saylor explained that the company currently has $205 million in loans and must have $410 million in collateral to stay afloat. Now Microstrategy can use BTC assets as a pledge or collateral. Additionally, if the BTC price drops to around $3,600, the company could add some more collateral. Famous CEO Saylor is known as a long-time Bitcoin advocate. While Microstrategy is the company with the most BTC of any publicly traded institution, they still carry the biggest risks. According to Saylor, although BTC is fluctuating widely, Microstrategy has no plans to sell its BTC holdings anytime soon.
MicroStrategy has a $205M term loan and needs to maintain $410M as collateral. $MSTR has 115,109 BTC that it can pledge. If the price of #BTC falls below $3,562 the company could post some other collateral. See slides 11-12 in Q1 2022 presentation. #HODLhttps://t.co/9WHsIB6Usx
— Michael Saylor⚡️ (@saylor) May 10, 2022
Tesla aims to diversify its liquidity sources and support its shareholders. claimed to aim to increase flexibility in order to greatly reward However, Tesla announced in May last year that it would no longer accept Bitcoin as a payment method. As the reason, he showed that they want to protect the environment as the printing of Bitcoin requires a large amount of electricity. It is not yet clear how Tesla and MicroStrategy will respond to the massive price drops that continue in the Bitcoin market.
