Michael Saylor

MicroStrategy, crypto firm shares plunge with Bitcoin freefall

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MicroStrategy is leading Marathon, Riot and Coinbase in a cryptocurrency-exposed stock selloff, closing down over 25% on Monday, as the firm’s Bitcoin holdings dropped by around US$1 billion. 

See related article: MicroStrategy posts Q1 revenue loss amid falling Bitcoin price

Fast facts

  • MicroStrategy became entangled with Bitcoin after founder Michael Saylor added record amounts to the company’s portfolio since 2020.
  • Over the last two years, the software maker amassed nearly 130,000 Bitcoins as of the end of March, according to the company’s last quarterly report.
  • The recent cryptocurrency boom helped MicroStrategy recover from dot-com bubble losses of the early 2000s, but the company faces a new threat as Bitcoin is trading down more than 50% in the past six months, according to CoinGecko data
  • Saylor, who has told investors to mortgage their houses and buy Bitcoin, maintained that Bitcoin is a hedge against inflation in an interview with CNBC last week. 
  • The software firm may need to pledge additional collateral on a $205 million loan it took out this March in the case of an even deeper drop in Bitcoin prices. 
  • In May, MicroStrategy CFO Phong Le said that if Bitcoin fell to around $21,000, there was the potential for a margin call on outstanding loans, while Saylor said the company could still post collateral if Bitcoin drops below US$3,562.
  • Bitcoin was trading around US$21,200 at publishing time, according to CoinGecko.

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