MicroStrategy’s Bankruptcy Risk: CEO Warns Bitcoin Must Drop To $16,500 To Trigger Collapse

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As a seasoned researcher with a keen eye for market trends and a knack for deciphering financial complexities, I find myself intrigued by MicroStrategy’s Bitcoin strategy. The company’s aggressive acquisition of Bitcoin has caught my attention, particularly given its significant holdings surpassing the 400,000 mark.

As a passionate crypto investor, I’ve been closely following the moves of MicroStrategy, the company I admire for its bold approach to Bitcoin. Notably, this business intelligence firm, led by the renowned Bitcoin advocate Michael Saylor, has dramatically stepped up its Bitcoin acquisition game, now holding over 400,000 Bitcoins in its reserves.

As a researcher, I’ve noticed growing apprehensions regarding the financial resilience of our focus company, primarily due to fluctuations in Bitcoin prices. These concerns have been voiced notably by Ki Young Ju, the CEO of CryptoQuant. While it’s important to clarify that the possibility of this company declaring bankruptcy is not inevitable, Ju likened it to an event as improbable as “an asteroid striking Earth.

MicroStrategy’s Financial Risks As Bitcoin Price Floor Holds At $30,000

In a recent post on X (formerly Twitter), Ju elaborated on the matter by stating that BTC has maintained a consistent price floor, never dropping below the long-term cost basis of major holders, which currently stands at $30,000. He noted:

MicroStrategy’s current debt is approximately $7 billion, whereas its Bitcoin holdings are estimated to be worth around $46 billion. This implies a potential liquidation price for each Bitcoin of roughly $16,500. The lowest point during the previous cycle was at $16,000. Predicting a drop to that level now seems as unlikely as suggesting that Bitcoin’s value would be around $3,000 when it was trading at $60,000.

In the present market situation, it’s been observed that the recent spike in Bitcoin’s price beyond its previous record of $108,000 on Tuesday was primarily driven by around $151 million worth of short positions being closed over the last 12 hours.

It was revealed that the value of one Bitcoin relative to gold hit a record peak during this rise, further strengthening Bitcoin’s status as the “digital equivalent of gold” and confirming its position as a more appealing form of long-term investment compared to conventional gold holdings.

Furthermore, MicroStrategy’s addition to the Nasdaq 100 has increased investor optimism. Moreover, Saylor suggested potential future Bitcoin acquisitions, despite prices already surpassing $100,000 per coin.

According to CryptoQuant, incorporating MicroStrategy shares into passive investment funds might result in an increase of funds flowing into these shares. This added financial influx could give MicroStrategy more opportunities to secure capital for their Bitcoin purchases.

BTC Purchases For Sixth Consecutive Weeks

On Monday, Saylor confirmed that Microstrategy has continued its weekly purchase of the most popular cryptocurrency for the sixth time consecutively. This recent transaction expands the company’s substantial Bitcoin holdings, now totaling approximately 439,000 BTC, which they acquired for roughly $27.1 billion, with an average cost per coin of around $61,725.

Moreover, it’s worth noting that the company’s Bitcoin investments have yielded substantial profits. Specifically, these assets have seen a 46.4% rise in the current quarter and a remarkable 72.4% growth throughout the year so far.

According to CryptoQuant, this week’s central bank meetings seem to take a backseat to Bitcoin’s market mood. In a rather improbable scenario, an exceptionally accommodative stance from the Federal Reserve and its chairman, Jerome Powell, might offer the impetus for Bitcoin to continue climbing higher.

Currently, Bitcoin is being traded for approximately $104,140, representing a decrease of 2.6% over the past 24 hours. However, it’s worth noting that despite this drop, its value has increased by 6.5% during the current week.

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2024-12-18 12:40