The cryptocurrency market is as much about psychology as it is about supply and demand. According to a study by Bernstein, the sale of bitcoins by MicroStrategy to pay off its debt should not have a significant impact on the market, but could affect the state of mind of investors.
Sale of BTC: no risk in the market, according to Bernstein
MicroStrategy, the business analytics software company, recently made the decision to pay off its $205 million debt to Silvergate Bank. However, the company still owes a large sum to other institutions which it will normally have to repay next year.
As the largest bitcoin holder on its balance sheet, the mass sale of its BTC holdings may raise questions in the market. Bernstein analysts, however, noted that the amount of bitcoins for sale is not sufficient to have a significant impact on the market.
” High BTC prices mean a stronger balance sheet, higher stock prices, and easier debt repayment without selling your BTC holdings wrote analysts Gautam Chhugani and Manas Agrawal in the report.
The report by brokerage firm Bernstein states that although MicroStrategy’s sale of 15,000 bitcoins is unlikely to have a direct effect on the market, it could still influence investor psychology. Indeed, the mass sale of bitcoin by a company as large as MicroStrategy could cause a panic in the market, leading investors to also sell their bitcoins and thus sending the market into a bear cycle.
MicroStrategy currently holds around 140,000 BTC, or nearly $4 billion at current price, while its debt stands at around 2.2 billion, or the equivalent of 15,000 bitcoins.
Although MicroStrategy is considered a bitcoin whale, its assets represent only a tiny fraction of 0.7% of the total bitcoins in circulation. This still represents nearly 20% of the trading volume on the markets. However, these numbers are largely insignificant to influence the Bitcoin market, which is already strong and stable.
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