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MicroStrategy’s strategy is predicated on the price of Bitcoin going higher… it looks like the price will more than likely continue to head higher, so it should continue to work.

However, if there was some sort of Black swan where Bitcoin’s price declined significantly and people didn’t feel comfortable lending MicroStrategy more money, then they could be forced to sell Bitcoin.

This would lead to the price further declining as they are one of the largest holders of Bitcoin.

If this scenario happened Bitcoin would still be fine in the long-term but it would be a major setback.

I think this scenario is unlikely, but possible.

#bitcoin #microstrategy

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Discussion

Orange Pilled Dictator 1y ago

Yes, but were you following them when BTC dropped to 15k? They weren't forced to sell any. These contracts are extremely well executed. Not saying it's impossible, but these contracts are not reckless by any means.

Learn About Bit 1y ago

Yea I was thinking about that. I guess that drawdown wasn’t enough to cause serious problems. I’m assuming they now have more debt. I’d think it would probably have to be a pretty significant drawdown in price and sentiment. I’m not super familiar with how the debt is structured, but they seem to have a lot of it.

BitcoinStu 1y ago

Have you actually studied the way MSTR's debt is structured? They are in no danger of liquidation. Their debt cannot be "called" and it's duration is many years out, and their company cashflows 50 million USD per year.

MSTR is in no danger of liquidation at all. Study MSTR