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Is MicroStrategy about to double down with a $500 million Bitcoin buy?

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Bitcoin bull Max Keizer tweeted that MicroStrategy has approval to buy $500 million worth of BTC.

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He added that CEO Michael Saylor is currently “chilling out on his yacht” and will soon decide whether to continue.

Bitcoin Feels Better Than Big Capitals

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In April, an analyst at Bitcoin magazine Dylan DeClair talked about “global deleveraging”. It refers to an attempt to reduce debt on a global scale. Organizations that are excessively leveraged and unable to meet their debt obligations are at risk of default.

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Deleveraging in an environment of high inflation and rising interest rates creates the perfect storm for financial market volatility.

Since May 5, just before the Terra LUNA/UST crash, the total capital outflow from the cryptocurrency market has been $937 billion. And the outflow since the beginning of the year (from the beginning of the year) is 1.327 trillion dollars. The net result of this was a drop in token prices.

Bitcoin is down 57% year-to-date against the dollar, with big capitals faring worse. For example, Ethereum is down 72% YTD and Cardano is down 65% YTD.

With the Fed (and central banks around the world) likely to continue raising interest rates, the market carnage will continue for the foreseeable future.

With that in mind, is buying bitcoin even at such relatively low prices the right decision?

President Bukele alludes to the same

Site data saylortracker.com shows that MicroStrategy’s Bitcoin reserves are 129,218 BTC with an average purchase price of $30,695. This puts the company at an unrealized loss of $1.316 billion on its current price assets.

Critics argue that MicroStrategy is failing in its fiduciary duty to protect the interests of its shareholders due to the excessive use of bitcoin. It further states that the acquisition of a certain amount of BTC through $205 million loan exposes the company’s collateral to the risk of liquidation.

On Wednesday, sailor addressed those concerns in a tweet that dismissed the liquidation risk. He said that MicroStrategy anticipated volatility and “structured its balance sheet on HODL through adversity.”

Meanwhile, when the market begins to panic, El Salvador President Bukele joked with Bitcoin Magazine about buying more bitcoins. But given his famous sense of humor, it’s unclear if he was joking or not.





Credit : cryptoslate.com

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