MicroStrategy, the business intelligence firm, has recently announced its repayment of $161 million to Silvergate Bank in exchange for 34,619 BTC. The announcement comes after the financial institution declared its voluntary winding down of operations, followed by the shutdown of other banks by the US government.
MicroStrategy made headlines last year when it used Bitcoin as collateral for a loan, which enabled the company to purchase more BTC. When Bitcoin’s price took a significant plunge in 2022, questions arose regarding whether MicroStrategy would face margin calls. The company’s executive chairman, Michael Saylor, claimed there was no cause for concern, despite the fact that the Bitcoin reserves’ value was significantly lower than its cost price.
In a filing with the SEC, MicroStrategy reported buying 6,455 BTC for $150 million between February 16 and March 23. The publicly listed company’s move to increase its Bitcoin reserves indicates its continued faith in the cryptocurrency.
Since August 2020, MicroStrategy has amassed 138,955 BTC, spending $4.17 billion. However, the dramatic declines in Bitcoin’s value over the past 16 months mean that the holdings are currently worth $3.77 billion, leaving the company at a loss of $330 million.
Despite the volatility in Bitcoin’s value, Saylor remains bullish on the cryptocurrency, as evidenced by his Twitter account. On Saturday, he tweeted a chart comparing Bitcoin’s performance with other major asset classes since August 2020, highlighting Bitcoin’s growth of 131% versus the S&P 500’s growth of 18%, the Nasdaq’s growth of 8%, gold’s 2% decline, bonds’ 16% drop, and silver’s 19% loss.
MicroStrategy’s stock price is often viewed as a barometer for Wall Street sentiment towards the cryptocurrency industry, alongside Coinbase. This year, its stock has risen by 70%, slightly better than Bitcoin’s surge of 63%. However, compared to two years ago, MicroStrategy’s stock has dropped by 70%.
Conclusion
MicroStrategy’s recent announcement of repaying its loan to Silvergate Bank and acquiring 6,455 BTC has caused a stir in the cryptocurrency industry. Despite Bitcoin’s value’s recent volatility, the company’s executive chairman, Michael Saylor, remains confident in the cryptocurrency’s long-term prospects. MicroStrategy’s move to increase its Bitcoin holdings indicates that it believes in the currency’s potential to rebound from its recent slump.
