The recent dip in Bitcoin’s price to the $25,000 mark has dealt a considerable blow to MicroStrategy Inc, the most significant corporate investor in the cryptocurrency, causing a whopping $600 million in unrealized losses.
MicroStrategy’s Bitcoin Woes
Located in Virginia, this software giant holds an impressive stash of over 150,000 Bitcoin, now valued at roughly $3.96 billion. When factoring in the company’s original investment of $4.5 billion, this means an average buy-in of about $29,970 per Bitcoin, leading to a current deficit standing at $613 million.
A Temporary Setback?
Over the most recent three-day stretch, Bitcoin’s valuation tumbled by 11%, dropping from its August 16 level of over $29,000 to hover around the $25,000 bracket. This fall is especially significant for MicroStrategy as it pushes their Bitcoin assets into the red, a scenario unseen since June.
While the market took a favorable turn when Bitcoin surged past the $30,000 milestone, courtesy of the influx of institutional interests, the present-day downturn does little to shake MicroStrategy’s faith in the digital coin. Michael Saylor, the company’s chairman and an ardent Bitcoin advocate, remains at the helm of MicroStrategy’s crypto endeavors and has consistently reassured that a sell-off isn’t on the horizon.
In a silver lining, the company’s stock, MSTR, has witnessed a 132% surge year-to-date. Yet, it hasn’t been immune to the recent downturn, recording a 14.49% slump over the past week, as highlighted by Tradingview statistics.
Widespread Unrealized Losses in the Crypto Arena
MicroStrategy isn’t alone in its ordeal. With Bitcoin’s value taking a hit, a ripple effect is seen, impacting profitability across the board.
According to data analytics provider, Glassnode, there’s been a noticeable drop in the percentage of profitable Bitcoin. The profit rate plummeted from 73% to 60% in just a week, in tandem with Bitcoin’s sharp decrease in value. Glassnode further pointed out the “top-heavy” nature of the current market, suggesting that a segment of investors could be on the brink of recording unrealized losses.
Despite the shaky market dynamics, the confidence of long-term Bitcoin holders, who control a staggering 75% of the circulating supply, remains unshaken. These investors, often termed LTHs, are those who have retained their Bitcoin holdings for at least 155 days or more.
