Michael Saylor, Micro Strategy. Source: YouTube, CNBC According to the latest reports, MicroStrategy, the largest corporate Bitcoin holder, has as much as $ 1.8 billion in unrealized losses on purchases of the main cryptocurrency. Until now, executive chairman Michael Saylor has emphasized that the company will never sell its BTC. The refusal to sell means that the company is systematically making significant losses on paper in the face of the ongoing bear market. The BTC / USD exchange rate slightly fell below USD 17,000 on Saturday, oscillating at the lowest level in 2 years.
According to estimates, MicroStrategy has approximately $ 1.8 billion in unrealized losses on BTC investments
The company is reluctant to sell its coins, believing that Bitcoin is a better asset than cash or gold
Michael Saylor sees the FTX defeat as an acceleration of progress in token and exchange regulation
Do you want to buy or sell BTC, ETH or any other cryptocurrency? Check out the Cashify offer, a network of exchange offices that allows you to exchange over 460 cryptocurrencies
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Bitcoin: Can MicroStrategy keep holding its BTC?
MicroStrategy, a Virginia-based software company and its subsidiaries own approximately 130,000 Bitcoins, worth approximately $ 2.2 billion at the current price. The coins were purchased for a total price of nearly $ 4 billion, and the average price is around $ 30,369. This means that the corporate giant from this investment is as much as USD 1.8 billion in the red. President Michael Saylor has emphasized so far that the company will never sell its Bitcoins. A refusal to sell means the company is suffering significant losses on paper in the wake of the ongoing bear market. In addition, the company recorded an impairment charge of $ 917.8 million after reporting losses related to the decline in the BTC price earlier this year. MicroStrategy classifies BTC as an intangible asset, which means the company must systematically report any decline in asset value. If a company decides to sell its Bitcoins, it will have to report capital gains tax to the Internal Revenue Service.
Do you want to buy or sell Bitcoin (BTC)? Take advantage of Cashify, a currency exchange network that allows you to exchange over 460 cryptocurrencies. CHECK US >> Saylor stepped down as CEO of MicroStrategy in August 2022 to focus on the company’s strategy after it recorded losses of $ 1 billion. The company has since spent $ 6 million in excess cash to purchase 301 Bitcoins in September 2022. However, this BTC purchase is already in the red as the average price has dropped by almost 15% since then. MicroStrategy has been accumulating the main cryptocurrency since 2020. CEO Michael Saylor was adamant that BTC is a lower-risk asset than cash or gold. – In an expansive monetary environment, you want scarce assets. The world’s most rare asset is Bitcoin. It’s digital gold, Saylor told Bloomberg in February 2021.
Will Microstrategy receive a margin call?
In June 2022, Saylor denied that MicroStrategy had received a margin call for a $ 205 million Bitcoin-backed loan from Silvergate Capital. A margin call occurs when an investor borrows money that is a multiple of an initial amount known as a margin call. When the margin value falls below a certain threshold, the trader must deposit additional funds to keep the position open. Saylor points out that his company has enough Bitcoin to secure the loan unless the price drops below $ 3,500.
Bitcoin (BTC) needs a clear regulatory pathway
Speaking to CNBC on November 10, 2022, Saylor emphasized that the recent collapse of FTX is both a boon to Bitcoin and a disaster to the cryptocurrency industry. He argued that unlike tokens on exchanges, Bitcoin is a commodity that can be completely independent. He believes regulators must provide clear guidelines on how to “legalize digital security, digital currencies, tokens and crypto exchanges.” Despite the enormous unrecorded losses, with a current price of $ 16,800 per BTC, it is priced higher than MicroStrategy’s first purchase in 2020. During this time, the company purchased 21,454 virtual coins for an average price of $ 11,652.
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