Michael Saylor, the CEO of Microstrategy, said that they can avoid a margin call if Bitcoin falls below $21,000 and that they have enough Bitcoin to put up as collateral to fund the loan all the way down to a BTC price of $3,562.
MicroStrategy, a software analytics company and the world’s largest corporate bitcoin holder, has dominated the news on Tuesday as it faces margin calls on a $205 million bitcoin-backed loan.
Bitcoin momentarily dipped below the loan’s margin call level of $21,000 overnight, exposing the company’s risk. However, the company’s CEO took to Twitter to reassure investors that the company is in a strong position to avoid selling its bitcoin.
“When MicroStrategy adopted a #Bitcoin Strategy, it anticipated volatility and structured its balance sheet so that it could continue to #HODL through adversity,” Saylor said.
Saylor retweeted a prior announcement from May 10 that went into greater detail about the loan’s terms and the company’s strategy.
“MicroStrategy has a $205M term loan and needs to maintain $410M as collateral. $MSTR [MicroStrategy] has 115,109 BTC that it can pledge,” Saylor explained. “If the price of #BTC falls below $3,562 the company could post some other collateral.”
The loan from Silvergate Bank requires $410 million in collateral, which the firm would fall short of if the price of bitcoin fell below $21,000, forcing MicroStrategy to provide more collateral to meet the loan’s terms.
MicroStrategy has enough bitcoin to put up as collateral to fund the loan all the way down to a BTC price of $3,562, according to Saylor. If bitcoin falls below that level, the corporation plans to increase its collateralization with other assets.
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