All $400 million of MicroStrategy Bitcoin reserve holdings could be liquidated at any time, especially on Saturday
MicroStrategy’s decision to use Bitcoin as its primary reserve currency has Michael Saylor seemingly favoring the asset over Altcoins. However, that doesn’t stop all of the $ 400 million Bitcoin holdings of business intelligence firm MicroStrategy from being liquidated at any time.
MicroStrategy CEO seems to embrace Bitcoin maximalism but could liquidate BTC at any time
In a September 20 tweet, the business intelligence company’s CEO stated that he considers Bitcoin to be a crypto asset network, unlike tokens like Ethereum or stablecoins, which he referred to as crypto-application networks.
When considering network dominance in the crypto industry, I find it clarifying to separate crypto-asset networks like #Bitcoin from crypto-application networks like Ethereum & stablecoins. Bitcoin dominance has advanced from a low of 71.05% on December 20, 2017 to 93.57% today. pic.twitter.com/03cbWVyoLY
— Michael Saylor (@michael_saylor) September 20, 2020
Meanwhile, during an interview on September 22 with Bloomberg, Saylor said the Federal Reserve’s recent relaxing of its inflation policy helped convinced him to put the remainder of the enterprise-software maker’s cash into Bitcoin.
“We feel pretty confident that Bitcoin is less risky than holding cash, less risky than holding gold.”
MicroStrategy invested some money in a share buyback and considered real-estate investments, but Covid has decimated much of the commercial market. But according to Saylor, Gold is still being mined, decreasing future returns, unlike the finite amount of Bitcoin to be issued.
So this summer, MicroStrategy became the first public company to invest the lion’s share of its treasury in Bitcoin. In mid-August, the company announced it had purchased $ 250 million of the cryptocurrency, and on September 15, Saylor bought an additional $ 175 million. He intends to continue buying with cash from operations.
MicroStrategy’s total holdings are now valued at roughly $ 401.5 million with the crypto asset’s recent 6% drop, meaning a negative 3.2% return after six weeks. However, Bitcoin, in general, has been on the rise in 2020, up from the $ 7,000s in January to test the $ 11,000 barrier in September.
Saylor said when he talked with ten large shareholders, most of them were very supportive and complimentary about the $ 1.5 billion market cap company investing in Bitcoin.
Even so, Saylor said he’s not a crypto diehard. If the bond to jump, for instance, he said he won hesitate to dump the cryptocurrency, though he has no immediate plans to sell.
“We can liquidate it any day of the week, any hour of the day. If I needed to liquidate $200 million of Bitcoin, I believe I could do it on a Saturday. If I took a haircut, I believe it would be 2%.”
Volatility is not really a reason to sell, but he wouldn’t hesitate to sell 38,250 MicroStrategy’s Bitcoins right away if an altcoin’s yields soared.
Selling such a large amount of crypto assets could easily cause a significant drop in price, as happened in June when whales reported dropping Bitcoin prices below $ 9,000. Although MicroStrategy acquired Bitcoin in 78,338 separate off-chain transactions, the CEO says offloading them will be much simpler.
While many crypto faithful have been saying that institutional investors are coming for years, that rush has hai materialized. Bitcoin is highly volatile, and most company treasurers would consider it a viable alternative for what is typically seen as a place to park cash for a short period.
Bitcoin has been the game-changer Saylor hoped for since the company announced its initial purchase on August 11, though he does seem too concerned. The largest cryptocurrency has dropped by about 6% to around $ 10,500. It is still up about 47% this year.
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