MicroStrategy would be forced to add to collateral if Bitcoin slips below $21,000.
Dreamstime
MicroStrategy , the business-intelligence software maker that borrowed money to invest in Bitcoin as an inflation hedge, is facing a growing threat of a margin call as the cryptocurrency’s value continues to fall.
Shares of MicroStrategy (ticker: MSTR) plummeted more than 25% on Monday and fell 0.6% in premarket trading. The company owns more than 129,200 Bitcoin tokens and said it would face a margin call – a demand from creditors for a bigger deposit to cover possible losses – if the cryptocurrency slips below $21,000.
Bitcoin was trading at $22,521 in Asian hours Tuesday, down from around $30,000 on Friday.
MicroStrategy doesn’t expect a margin call and that the company has plenty of additional collateral to post if it needs to, Chief Executive Michael Saylor said Monday in an email to The Wall Street Journal.
The company’s Bitcoin holdings were worth $5.9 billion at the end of March. Its stock has lost more than 70% of its value this year.
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