As a seasoned analyst with over two decades of experience in the financial markets, I have witnessed numerous cycles of bull and bear runs, making me well-equipped to analyze the current Bitcoin (BTC) situation, particularly regarding MicroStrategy’s Bitcoin treasury.
Bitcoin (BTC) can fall below $20,000 without crucially impacting MicroStrategy’s Bitcoin treasury.
A recent study, shared on social media by financial advisor Jeff Walton on December 3, suggests that a business intelligence company may be able to withstand an 80% drop in the price of Bitcoin.
MicroStrategy feels the heat only if BTC price hits $18,000
MicroStrategy’s Bitcoin holdings have reached record levels, with the company investing even more billions into the cryptocurrency.
In November, BTC/USD experienced an almost 40% surge. Yet, expert analysis indicates that even if there’s a prolonged decline, it wouldn’t pose major issues for MicroStrategy or its CEO, Michael Saylor, who has been instrumental in building the Bitcoin treasury.
According to Walton’s calculation, the value of Bitcoin would have to decrease to around $18,826 for MicroStrategy’s assets to become lower than their debts.
“An 80% drawdown from today’s price.”
There’s been quite a bit of debate about the decision to include Bitcoin risks in corporate financial statements. Furthermore, it’s worth noting that Bitcoin has experienced drops of up to 80% in value on occasion. For example, from November 2021 to November 2022, the value of Bitcoin plummeted from $69,000 to a low of $15,600 against the US dollar.
For Walton, however, the argument against corporate Bitcoin adoption contains little logic.
“As the price of Bitcoin rises, the financial leverage falls, fast,” he explained.
“For the ‘This will not end well’ / ‘Ponzi’ ‘pyramid scheme’ bears, run the math. The $MSTR balance sheet is arguably underutilized from a ‘leverage’ perspective.”
Institutional Bitcoin demand “absolutely insane”
Just as eager for what lies ahead in the corporate world is Charles Edwards, the founder of Capriole Investments – a quantitative Bitcoin and digital asset fund.
This week, speaking to his followers, Edwards emphasized that MicroStrategy is merely a part of the growing field of institutional Bitcoin investors. In fact, he suggested, the current market may underestimate its potential positive results.
“Mastercard is gathering approximately $B per week to invest in Bitcoin. Meanwhile, Marathon Digital is increasing its holdings by 30% after raising $1 billion. This level of institutional appetite for Bitcoin is truly astonishing,” he remarked.
“13.5% of all Bitcoin is now held by institutions and ETFs and it’s going parabolic. It’s wild how numb we all are to this now that it’s the new normal. But this is the institutional adoption we were all dreaming about.”
According to a report from CryptoMoon, Edwards predicts that the height of the ongoing Bitcoin bull market is yet to come. He believes widespread “fear of missing out” (FOMO) will only start among the masses once Bitcoin’s price surpasses $100,000.
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2024-12-03 16:37