Michael Saylor finally bought more bitcoin. Is that a good or bad thing for Microstrategy and Bitcoin? Covered: Michael Saylor Finally Buys The Dip Margin Call Coming? Michael Saylor Finally Buys The Dip MicroStrategy has purchased an additional 480 bitcoins for ~$10.0 million at an average price of ~$20,817 per #bitcoin. As of 6/28/22 @MicroStrategy […] The post How Michael Saylor Avoids A Margin Call For Microstrategy appeared first on CryptosRus.

How Michael Saylor Avoids A Margin Call For Microstrategy

Michael Saylor finally bought more bitcoin. Is that a good or bad thing for Microstrategy and Bitcoin?

Covered:

  • Michael Saylor Finally Buys The Dip
  • Margin Call Coming?

Michael Saylor Finally Buys The Dip

CEO of Microstrategy Michael Saylor announced today that he finally bought more bitcoin for his software company. The buy, which amounts to 400 bitcoin valued at 10 million dollars, brings the company’s total bitcoin holdings to 129,699 (at an average price of 30,664 USD).

Microstrategy, and Saylor, became famous for DCA’ing all throughout 2021’s bear trend. However, until now the bullish company had laid pretty low during May and June, last announcing a bitcoin buy of 190 million USD-worth back in April.

That buy reportedly was thanks to the 205 million loan it took from Silvergate Bank, crypto’s leading digital investment bank. Speculation ran rampant earlier this month that Microstrategy could get margin called by Silvergate, but Microstrategy denied they were anywhere near being unable to pay.

It’s unclear where Microstrategy got the money for their latest buy. The loan they took out still had 15 million leftover, but it could have just as easily been taken out of their cash on hand — their last earnings release ending March 31st showed they had over 90 million in cash or cash equivalents.

Back when things were going better, Microstrategy’s buys were met with resounding applause. However, with recent events, the applause has been muted, and some have turned to jeering.

Recommended: Who is Michael Saylor?

Margin Call Coming?

I wrote earlier this month about why I thought Microstrategy was well positioned to withstand a Bitcoin collapse. But, that was before Bitcoin fell below 18k on June 18th. BTC has since recovered and stayed above 20k mostly. Still, is adding more Bitcoin a good idea at this point? Also, does it change Microstrategy’s outlook?

Even though Microstrategy bought the dip at 20,900, the buy didn’t do much to bring down the average price. The software company only managed to add another 400 to their war chest of almost 130k bitcoin. That’s peanuts.

That said, the small buy should not hurt Microstrategy’s ability to meet creditor requirements. As Saylor pointed out they are 10k overcollateralized on their loans. Also, the majority of their Bitcoin holdings were bought with cash and are ready to be used for collateral if need be.

So nothing has changed, meaning, barring an absolutely unimaginable collapse Microstrategy will be okay. There’s no imminent margin call, nor are they selling bitcoin — their Bitcoin holdings statements from their last buy till today prove that. Microstrategy still believes in keeping Bitcoin on its balance sheet.

Conversely, today’s buy announcement, considering how small it was, also doesn’t signal a price reversal or a change in sentiment. It’s just a billion dollar company’s version of a DCA buy.

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