MicroStrategy stock plunges 35% amid Binance-FTX saga

abdelaziz Fathi

Shares of MicroStrategy tumbled 20 percent on Wednesday as investors fretted over what a brutal selloff in Bitcoin and the collapse of Sam Bankman-Fried’s crypto empire would mean for the software company’s finances.

Microstrategy CEO

The stock hit its lowest level in five month and so far it has decreased by more than a third on a three-day losing streak. That came amid the market turmoil after Binance backed out of its plans to acquire rival FTX’s non-US unit, with bitcoin falling 15% today after a 13% drop on Tuesday. It’s trading below $16,000 for the first time since November 2020.

MicroStrategy, a maker of business-intelligence software, disclosed last month that it held 130,000 bitcoins, which were acquired at a total cost of around $3.98 billion and an average purchase price of approximately $30,639 apiece.

With bitcoin currently trading at $19,138, MicroStrategy’s crypto stash would now be worth just over $1.99 billion. That translates to an unrealized loss of more than $2 billion.

MicroStrategy turned to bitcoin in 2020 as a hedge against inflation. The analytics software maker, run by bitcoin bull Michael Saylor, has taken advantage of any price drop in Bitcoin to continue beefing up its investment in the world’s most-traded cryptocurrency.

This strategy, however, turned out to be a risky gamble, with Bitcoin now moving in lockstep with other cryptocurrencies plunging amid fears of a prolonged ”crypto winter.” The question now is if this slide triggers a margin call that would force Saylor’s business intelligence firm to sell part of its holdings.

However, Microstrategy CEO, who expects the price of bitcoin to hit $6 million, said that the company will never sell its bitcoin holdings. The executive also revealed that he personally owns 17,732 bitcoins, noting that the primary cryptocurrency is “unstoppable” and will replace gold.

The company was looking for new ways to generate yield on its massive crypto trove after its subsidiary raised $205 million via an interest-only term loan due 2025. Offered by the crypto-friendly bank Silvergate Capital, the fiat money was granted against a bitcoin holding worth around $820 million, which represents 12% of MicroStrategy’s total crypto holding. With 19,466 BTC held by the subsidiary pledged as collateral, the firm was looking to put its 95,643 “unencumbered” bitcoins to use in exchange for juicy yields.

    Read this next

    Fintech

    AU10TIX launches KYB solution to address regulatory requirements

    “Our customers have been requesting a comprehensive KYB solution, because money laundering and fraud have become far too prevalent in the corporate world. Our unified KYB/KYC solution is essential for identifying bad actors and maintaining a safe business environment in 2024.”

    Digital Assets

    Japan Is Rapidly Emerging As A Global Leader In Compliant Crypto Payments

    Japan is often hailed as one of the most forward-thinking nations in the crypto industry, with its government taking a very positive stance on the potential of concepts such as Web3. 

    Digital Assets

    Kraken launches institutional arm

    “If you already work with Kraken, you know how much we care about offering high quality products and a client-first experience. We’ve been the leading crypto exchange for more than a decade and through Kraken Institutional, we’ll offer the same deep expertise and cutting-edge technology to propel trading excellence for institutions.”

    Fintech

    Centroid integrates with brokerage solutions provider GTN

    “We are thrilled to integrate GTN into Centroid Bridge, our multi-asset connectivity bridging engine. This integration allows our clients to gain access to the wide range of multi-asset products offered by GTN.”

    Podcasts, Women of the Industry

    FF Podcast delves into the rise of prop trading as Brokeree releases Prop Pulse

    In the latest FinanceFeeds Podcast, Tatiana Pilipenko discusses Prop Pulse, Brokeree Solutions’ platform for prop firms and retail brokers aiming to delve into prop trading. Offering a flat fee structure, Prop Pulse emerges as a scalable solution in an era where successful traders increasingly prefer prop firms over traditional retail brokers.

    Inside View

    Scalping or day trading?

    Among the many popular trading styles with both beginners and experienced traders are scalping, which allows you to extract small portions of profit from each price movement, and day trading, which aims to trade over a single day. In this article, you will learn what scalping and day trading are and their differences and peculiarities. Ultimately, you will learn what to look for to understand which trading style is right for you.

    Crypto Insider

    Unveiling Plasma Next: INTMAX’s Solution to Scale Ethereum with Stateless Layer

     INTMAX has launched Plasma Next on the mainnet α, a groundbreaking Layer 2 zkRollup, revealed by co-founder Leona Hioki at ETH Denver. This innovation offers scalability with constant costs per block, merging Plasma’s scalability goals with zkRollups’ security.

    Fintech

    Nuam selects Vermiculus for clearing system in Chile, Colombia, and Peru

    “We are proud to deliver a system that plays an integral role in the core of this historical merger, empowering one of Latin America’s most crucial markets with VeriClear’s state-of-the-art technology, together with our deep market expertise.”

    Retail FX

    Moomoo launches super app in Malaysia

    “As an investment platform connecting 21 million retail investors globally, we envision collaborating with exchanges, regulatory bodies, and partners in the visible future to become the gateway, connecting Malaysia’s investment products to global capital and investors.”

    <