MicroStrategy Could Suffer Margin Call as Bitcoin Slips Below $21K
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MicroStrategy, one of the largest institutional BTC investors took out a $205 million Bitcoin-back loan from Silvergate Capital in March. The three-year loan is backed by 19,466 Bitcoins.
According to an explanation by MicroStrategy President Phong Le in May, Bitcoin dropping below $21K would trigger a margin call for the firm or force it to commit more capital. A margin call is fulfilled by providing more capital or liquidating some collateral to service the loan.
It remains unknown if the recent price drop had any consequence on the software company or if it already provided additional funding to back the loan. As of press time, the company has not made any comments on the issue.
In May, Le asserted that his company had 95,643 “unencumbered Bitcoin” that could be deployed as backup collateral. He noted:
“We could contribute more bitcoin to the collateral package, so…we don’t get into a situation of a margin call.”
Key Bitcoin Levels to Watch — June 14
Bitcoin recorded one of its worst daily sessions since last month yesterday after erasing over 15% of its value amid unfavorable industry developments. The ultra-aggressive monetary policies being adopted by central banks also kept the pressure on the primary cryptocurrency as it fell to its lowest point in over two years.
The cryptocurrency recorded a bearish continuation earlier today, which got repelled around the $20.8K low. BTC needs more buyers to purchase at a discounted price of $21K to help stabilize it and assisted it to climb closer to the $30K level. In the meantime, investor inertia could worsen conditions for the benchmark cryptocurrency and place $20K on the cards.
Meanwhile, my resistance levels are at $23,000, $24,000, and $25,000, and my key support levels are at $22,000, $21,000, and $20,000.
Total Market Capitalization: $940.8 billion
Bitcoin Market Capitalization: $423.9 billion
Bitcoin Dominance: 45%
Market Rank: #1
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