By
Chimamanda U. Martha
April 15th, 2024
Business intelligence company MicroStrategy saw its stock price drop 23% after its Bitcoin holdings took a hit from the general crypto slump.
MicroStrategy (NASDAQ: MSTR) stock is currently trading more than 20% lower following Bitcoin’s (BTC) slump. This translates to the company beginning the week at a share price below $160. The figure is around 21% lower than its last week’s close at $203.36 per share.
MicroStrategy stock was trading at its lowest levels since September 2020 following the sustained downward spiral of BTC and co. The leading digital currency’s plunge continued to worsen to its current position below $23K, a new 18-month low. As a result, MicroStrategy now has an unrealized loss in excess of $1 billion on its Bitcoin holdings. In addition, the business intelligence company currently leads the losses for crypto-related stocks ahead of other platforms like Coinbase (NASDAQ: COIN).
Previously, a Bitcoin slump around $21K was discussed as a potential margin call point for MicroStrategy. However, the company’s CEO Michael Saylor dismissed those claims saying that the leading crypto would have to plummet even much further for that to happen. Saylor gave the figure for a potential MicroStrategy margin call at $3,500.
In addition to MicroStrategy, crypto miners have also seen their fortunes take a turn for the worse following the BTC slump. Companies like Marathon Digital (MARA), Riot Blockchain (RIOT), and Hut 8 (HUT) were in double-digit percentage declines at press time.
MicroStrategy Stock Predicament a Far Cry From Positive Optics Viewed from Bitcoin Investments in April
MicroStrategy’s current predicament comes approximately two months after its CEO lauded the company’s “Bitcoin experiment” in a shareholder letter. At the time, Saylor stated that the business intelligence firm’s decision to invest heavily in crypto paid off tremendously. Part of his letter read:
“MicroStrategy remains the largest publicly-traded corporate holder of bitcoin. MicroStrategy, together with its subsidiaries, holds 129,218 bitcoins acquired at an aggregate purchase price of $3.97 billion and an average purchase price per bitcoin of approximately $30,700.”
In addition, Saylor also suggested that his company would buy more BTC to consolidate its holdings.
As recently as eight days ago, Saylor also suggested that he remained unshaken by BTC’s near-term price swings. He further stated that MicroStrategy was in no rush to offload its Bitcoin holdings.
MicroStrategy & Bitcoin
MicroStrategy, led by its BTC-loving CEO Saylor, began stocking up on Bitcoin back in August 2020. During this period, the price of the largest crypto by market cap was just shy of $12,000. MicroStrategy built up its Bitcoin holdings substantially over the following months with the aid of junk bond and convertible note sales. Eventually, the business intelligence, mobile software and cloud-based servicing company held an impressive $4 billion in BTC. However, following the unsavory turn of events in the crypto marketplace and broader financial markets, that figure now sits under $3 billion.
Bitcoin, just like most of the other leading digital currencies, has been rattled by broader macroeconomic factors. A major one is surging inflation in the US which recently reached a 41-year high of 8.6%, according to data from last week.