GuShiio.com Bitcoin led the crypto market down across the board, and the pessimistic liquidity outlook intensified market selling sentiment. In this market environment, investors can’t help but worry that MicroStrategy, a Bitcoin leverage veteran, will encounter a “rollover”. But to some extent, Strategy’s convertible bond structure and financing capabilities reduce the possibility of its bitcoin being forcibly mortgaged or liquidated.
Author: Nancy, PANews
“Sell a kidney if necessary, but keep Bitcoin.” This seemingly jokingly joke in the latest tweet of Strategy founder Michael Saylor is a strong belief in the long-term value of Bitcoin.
Recently, Bitcoin has led the crypto market down across the board, and the pessimistic liquidity outlook has intensified market selling sentiment. In this market environment, investors can’t help but worry that MicroStrategy, a Bitcoin leverage veteran, will encounter a “rollover”.
Long betting encounters a cold snap,What are the liquidation risks?
The Bitcoin Super Long Strategy is facing dual pressure from profit retractions and stock price declines.
MSTR-tracker data shows that as of February 28, Strategy held a total of 499096 bitcoins, with a total purchase cost of nearly US$33.12 billion, an average purchase price of approximately US$66357, and the total value of current Bitcoin positions is US$39.57 billion. Compared with Strategy’s floating profit of nearly US$20 billion in previous months, it has now dropped to US$6.45 billion.
While floating profits retreated significantly, Strategy’s share price also continued to fall. Google Finance showed that as of February 28, Strategy’s share price fell more than 39.4% from this year’s year-on-year high of $396.5. Markets have also raised concerns that the Bitcoin treasury company may be forced to liquidate its Bitcoin holdings."" For example, crypto analyst Miles Deutscher pointed out, Strategy’s market value premium relative to its Bitcoin assets has dropped from 3.4 times in November last year to 1.6 times today. The lower this number, the more difficult it will be for Michael Saylor to raise more money to buy Bitcoin, which means that his pace of buying Bitcoin may slow down.
However, analyst firm The Kobeissi Letter believes this is almost impossible. The reason is that the structural design of Strategy convertible notes, the company’s previous ability to raise US$1.8 billion in equity during the Bitcoin decline, and Michael Saylor’s 46.8% voting power together constitute a strong guarantee against forced liquidation. Even if the price of Bitcoin fell 50% to $33000, Strategy’s assets would still exceed more than 100% of its debt.
Strategy currently has a total of US$9.26 billion in unsecured debt. According to Strategy’s official website, the company has six outstanding convertible bonds, most of which are issued at extremely low interest rates and have maturity dates after 2028. The latest debt is due in June 2032. Even if the two largest bonds total US$5 billion, accounting for more than half of the total debt, and the market price of their convertible bonds is lower than the issue price, or increase market concerns about these debts, these debts will not mature until the end of 2029, and Strategy has enough time to respond and adjust. What’s more, Strategy’s Bitcoin itself is not directly mortgaged as collateral for loans, and its funds mainly come from external investors. To some extent, Strategy’s convertible bond structure and financing capabilities reduce the possibility of its bitcoin being forcibly mortgaged or liquidated.
In addition, judging from the stock positions of Strategy, it not only demonstrates the high recognition and confidence of Strategy by large institutional investors, but also brings it stronger market credibility and capital support. Fintel data shows that Strategy has 1403 institutional owners and shareholders, such as Susquehanna International Group, Vanguard Group, IMC-Chicago, Citadel Advisors, Jane Street Group, Capital International and BlackRock.
Against the market, we continue to be bullish,Target for 2025 to target tens of billions of revenue
Despite the cold snap in the crypto market, Michael Saylor remains firmly bullish, and even continues to increase positions when Bitcoin falls.
“From selling software to selling Bitcoin, Saylor’s orange empire took shape.” In order to emphasize crypto-centric businesses, Strategy also recently rebranded. In early February this year, Strategy stated in an announcement that as the world’s first and largest Bitcoin finance company, this brand simplification is a natural evolution of the company, reflecting the company’s focus and broad appeal. The new logo includes a stylized “B” that represents the company’s Bitcoin strategy and its unique status as a Bitcoin finance company. The brand’s dominant color is now orange, representing energy, wisdom and Bitcoin. At the same time, Strategy has also launched a new software website, strategysoftware.com, and a branded goods website, store.strategy.com. (Related reading: MicroStrategy changed its name to “Strategy”, Q4 Bitcoin holdings almost doubled, and wanted to be a “smart leverage” for Bitcoin)
In terms of promoting the crypto industry, Strategy not only launched the Bitcoin Hub joint office space to attract innovators to promote the development of the Bitcoin ecosystem, but also met with the SEC Crypto Working Group to propose a digital asset regulatory framework in an attempt to establish clear boundaries for the market. From the industry’s perspective, Saylor is not only hoarding Bitcoin, but also shaping industry rules and showing the attitude of a long-term player.
It is worth mentioning that Strategy announced that it will adopt the latest FASB accounting standards in the first quarter of 2025. If Bitcoin closes above US$96,337 in the first quarter, Strategy’s positive profitability is expected to meet the criteria for inclusion in the S & P 500. Once realized, Strategy will further enhance its market influence. Strategy announced in its previously released financial report that its Bitcoin revenue target for 2025 is set at US$10 billion, with an annualized rate of return of 15%.
