• Wed. Jun 22nd, 2022

Coinbase, MicroStrategy and other stocks exposed to bitcoin amid crypto crash

ByHazel R. Lang

Jun 13, 2022

As the latest carnage in the crypto markets has brought the bitcoin price Below $24,000, MicroStrategy (MSTR) fell 26.72% in Monday’s premarket to hit a 20-month low of $149.

MSTR, which traded at $203.36 at Friday’s close, fell to $147 after the market opened, before recovering to $155.50, down 23.53%, as the software maker was under increased pressure due to its shares trading at a discount to that of the company. Bitcoin assets.

Following the trend, stock in exchange for crypto Coinbase (COIN) fell 21.5% to $46.06 premarket, before climbing to $51.87 at press time, down 11.66%.

Other bitcoin-adjacent public companies have also been battered, with miner stocks among the hardest hit.

Marathon Digital fell 18.17% pre-market, followed by Riot Blockchain and Bit Digital with losses of 14.89% and 14.89%, respectively.

Block Inc. (SQ) fell 7.35% to $66.59 pre-market and continues to fall, trading at $64.29 at the time of writing, down 10.55%.

Robinhood Shares (HOOD) and PayPal (PYPL) both posted less steep losses of 7.62% and 5.95%, respectively.

MicroStrategy and Bitcoin

MicroStrategy has made headlines for its Bitcoin accumulation strategy, however, with an average purchase price of $30,700 over the past two years, the company is facing a margin call on a loan of $205 million secured by Bitcoin with Silvergate Bank which was taken in March to buy more crypto.

That’s according to chief financial officer Phong Le who presented the numbers during the company’s first-quarter earnings call last month.

“As for where Bitcoin needs to fall, we took the loan at a loan to value (LTV) ratio of 25%, the margin call is happening [at] 50% LTV. So basically Bitcoin needs to be halved or around $21,000 before we have a margin call,” Le said at the time.

If Bitcoin’s price drops to $21,000, MicroStrategy could ultimately be forced to sell some of the Bitcoin it keeps on its balance sheet, despite CEO Michael Saylor repeatedly saying he would never sell crypto.

“As you can see, we mentioned earlier that we have quite a bit of unsecured bitcoin,” Le said on the call last month. “So we have more than we could contribute in the event that we have a lot of downside volatility.”

According to an SEC filing, MicroStrategy added an additional $215 million worth of Bitcoin at an average purchase price of $44,645 per coin in the first quarter, bringing its total holdings to 129,218 Bitcoin acquired for $3.97 billion. dollars, or slightly above $3 billion at current prices.

Bitcoin, the world’s most popular cryptocurrency, dipped below $24,000 earlier today for the first time since January 2021, as the combined market capitalization of all cryptocurrencies crashed in below $1 trillion.

As of this writing, BTC is trading at $23,243, down over 17% in the past 24 hours.

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