Home » Bitcoin » Microstrategy Could Get a Margin Call if Bitcoin Drops to $21k, But the Company is Prepared
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Microstrategy Could Get a Margin Call if Bitcoin Drops to $21k, But the Company is Prepared
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![](https://en.ethereumworldnews.com/wp-content/uploads/2022/03/B6BD294B-AE0A-4844-940F-8CB9AD66C2E9-50x50.jpeg"></p><p>Summary:</p><ul><li>Michael Saylor’s Microstrategy could face a margin call on its debt if Bitcoin drops below $21k</li><li>However, the company is prepared to add funding to their existing position</li><li>Microstrategy recently secured a loan of $205 million in late March, payable monthly beginning this month till March 2025</li><li>Microstrategy now holds 129,218 Bitcoins with a cumulative impairment loss of $1.071 billion</li></ul><p>The business intelligence and analytics company of Microstrategy could be set to receive a margin call on its debt if Bitcoin (BTC) drops below $21k. This is according to the company’s CFO, Phong Le, during the company’s most recent earnings call.</p><p>Mr. Le was responding to a question by Microstrategy’s Senior Director, Treasury and Investor Relations, Shirish Jajodia, who asked how far Bitcoin had to fall for the company to receive a margin call on its $205 million loan from Sivergate Bank. Mr. Le responded that BTC had to drop to $21k, but the company was ready to contribute more to its existing position. He said:</p><blockquote><p>We took out the loan primarily so that we could continue to invest more in Bitcoin and also really to create a market for a Bitcoin-backed term loan…</p><p>As far as where Bitcoin needs to fall, we took out the loan at a 25% LTV, the margin call occurs 50% LTV. So essentially, Bitcoin needs to cut in half or around $21,000 before we’d have a margin call.</p><p>That said, before it gets to 50%, we could contribute more Bitcoin to the collateral package, so it never gets there, so we don’t ever get into a situation of March call also.</p></blockquote><h2>Microstrategy’s $205 Million Loan Matures in March 2025</h2><p>The loan in question from Silvergate bank is worth $205 million and bears interest at a ‘floating rate equal to the Secured Overnight Financing Rate 30 Day Average as published by the Federal Reserve Bank of New York’s website plus 3.70%, with a floor of 3.75%’</p><p>It is also payable monthly in arrears beginning May 2022 and will mature in March 2025 unless earlier repaid per its terms.</p><h2>Microstrategy Owns 129,218 Bitcoin with a Cumulative Impairment loss of $1.071 Billion</h2><p>At the time of writing, Microstrategy owns 129,218 Bitcoin. According to the company’s first-quarter financial results of 2022, the company’s holdings of Bitcoin have a ‘cumulative impairment losses of $1.071 billion since acquisition and an average carrying amount per bitcoin of approximately $22,409.’</p><p>[Feature image courtesy of Michael Saylor on Twitter]</p><p>Source: <a href="https://en.ethereumworldnews.com/microstrategy-margin-call-if-bitcoin-drops-to-21k-but-the-company-is-prepared/" target="_blank" rel="noopener">Read Full Article</a></p><div class=)
