Sunday, June 26, 2022

Bitcoin investor loses more than $1 billion as crypto crash deepens

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The world’s largest corporate investor in Bitcoin has wiped out more than $1 billion from its crypto holdings following the recent price plunge.

Software company MicroStrategy began stockpiling Bitcoin in August 2020 and has so far spent $3.97 billion in less than two years.

The company owns nearly 130,000 bitcoins, which fell to $2.6 billion after the cryptocurrency plunged another 10 percent Wednesday morning.

MicroStrategy CEO Michael Saylor said in May that if Bitcoin falls towards $21,000, it could trigger a margin call on a $205 million loan it raised with Silvergate Bank to buy BTC .

Although Bitcoin hit that number on Tuesday and fell to $20,178 on Wednesday, Mr. Saylor downplayed the risks of a margin call.

“As long as the Silvergate loan remains collateralized at an LTV of less than 50 percent, there is no margin,” Mr. Saylor wrote in an email to Bloomberg. “We manage accordingly.”

Amid the recent downturn this week, Mr. Saylor updated his Twitter profile picture to one with laser eyes, signaling his belief that Bitcoin will rally and eventually surge above $100,000.

In a message to his followers on Tuesday, he said that MicroStrategy has no intention of selling its bitcoin even if it falls below $4,000.

“When MicroStrategy launched a Bitcoin strategy, it anticipated volatility and structured its balance sheet to remain HODL against adversity,” he wrote.

Economist and prominent bitcoin skeptic Peter Schiff replied, “Volatility is one thing. This is a breakdown. Did you expect something like this? If so, why buy so much bitcoin in the first place?”

Other big-name corporate investors in Bitcoin have also suffered in the wake of the 2022 cryptocurrency crash, which saw Bitcoin’s price fall more than 70 percent from its all-time high of nearly $69,000 in November.

Tesla, which holds 43,200 BTC on its balance sheet, has seen its initial investment fall from $1.5 billion to $921 million at today’s prices.

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