One thing is certain, as long as the price of bitcoin remains correct, Microstrategy will not part with its holdings, claims broker Bernstein. Michael Saylor’s company has built a solid reputation, but nothing equals its firm belief in the most famous of cryptocurrencies.
Microstrategy won’t liquidate bitcoin (BTC) holdings to pay off debt, at least not yet
Microstrategy has a huge debt and many people are wondering about the company’s strategy to pay it off. But if anyone thinks that the company will have to get rid of its cryptos, this is not the case of the broker Bernstein. According to a report published on Tuesday, the broker says that the software company will only sell its assets in the event of an extreme price drop.
Because of this, as long as the bitcoin price remains high, Microstrategy has no intention of reselling its crypto investment. According to his statements, an uptrend in BTC means a stronger balance sheet for the company.
In this configuration, she can repay her debt without liquidating her crypto assets. However, if the price of bitcoin (BTC) were to collapse, Michael Saylor’s company would have no choice but to sell its tokens to repay its debt by mid-2025.
BTC Volatility Could Challenge Company Strategy
Microstrategy is a company that runs largely on bitcoin (BTC). According to the note, the company holds roughly 152,000 BTC, worth $4.5 billion. This number represents approximately 0.78% of the number of bitcoin tokens in circulation and nearly 20% of daily BTC trading volume.
Thus, bitcoin accounts for 95% of Microstrategy’s market capitalization. As for the debt incurred to buy these tokens, it is equivalent to almost half of the net worth of the company. Given the volatility of bitcoin, the company may well be forced, one day or another, to liquidate its holdings.
Despite the unstable nature of bitcoin (BTC), Microstrategy is not yet at this stage. According to a Berenberg report, the company could refinance its debt maturities if its stock price and the value of its BTC holdings increase exponentially. For now, everything seems to be going well, as bitcoin is still hovering above $30,000.
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