Why MicroStrategy is bullish on Bitcoin despite massive selloff
- MicroStrategy remains bullish on Bitcoin despite the possibility of margin call on a $205 million loan that the firm took in 2022, to buy more Bitcoin.
- Michael Saylor argues that he has faith in Bitcoin and compares the recent bloodbath to the early days of oil and car industries.
- Analysts predict further slump in Bitcoin price as the asset’s price continues to decline.
MicroStrategy, a leading data intelligence firm suffers losses as share price plummets. Michael Saylor remains bullish on Bitcoin despite the bloodbath, remains unfazed by mass sell-off.
Michael Saylor lost $3.5 billion in recent Bitcoin bloodbath
According to the Bloomberg Billionaires Index, the recent Bitcoin price crash generated $3.5 billion in losses for MicroStrategy CEO Michael Saylor. In February 2021, MicroStrategy shares and options peaked at $3 billion, since then it plunged to $355 million, an 86% drawdown.
Under CEO Michael Saylor’s leadership, MicroStrategy has spent $4 billion on buying cryptocurrency, as of March 31, 2022. This strategy proved to be effective in the crypto rally during the pandemic, when tech stocks and Bitcoin hit record highs. MicroStrategy is now hit by a historic sell-off and witnessed a decline steeper than Nasdaq 100.
The total impairment charges on MicroStrategy’s Bitcoin holdings have reached roughly $1 billion at the end of the last quarter. The firm’s loan for buying more Bitcoin in 2022, came under scrutiny as experts believe MicroStrategy could face a margin call on the $205 million it borrowed. Saylor has assuaged investor concerns and confirmed that the firm has more collateral and can deploy when needed, avoiding a margin call.
Why is Saylor still bullish on Bitcoin?
In a recent email, Saylor pointed out that Bitcoin price is still 72% higher than MicroStrategy’s first purchase in August 2020. Experts have pointed out that most of the firm’s Bitcoin purchases came later at much higher prices and there is no excuse for bad timing.
Taylor was quoted as saying, all good investors including Warren Buffett and John Bogle know that you should not worry about short-term market gyrations. Taylor said,
Any time horizon shorter than four years is likely to result in a great deal of frustration & uncertainty.
Analysts predict further slump in Bitcoin price
Analysts at InsideBitcoin noted that BTC/USD is likely to cross above the upper boundary of the channel and higher resistance is located at $23,000. However, RSI is moving sideways and Bitcoin price needs to sustain above support at $20,000 to sustain uptrend. Bitcoin price is likely to plummet to $18,000 and drop to the lower boundary of the channel.
BTC-USD price chart
Author
Ekta Mourya
FXStreet
Ekta Mourya has extensive experience in fundamental and on-chain analysis, particularly focused on impact of macroeconomics and central bank policies on cryptocurrencies.
