Opening the Fact-Check
Claims are circulating that MicroStrategy, a prominent corporate holder of $BTC, could face a forced liquidation of approximately $55 billion of its Bitcoin holdings, allegedly triggered by a 4% decline in $BTC price. MicroStrategy currently holds 717,722 $BTC.
MicroStrategy’s Unconventional Bitcoin Strategy
Under Michael Saylor, MicroStrategy adopted a corporate strategy focused on acquiring and holding $BTC as its primary treasury reserve asset, becoming one of the largest corporate holders globally. The company financed extensive $BTC acquisitions through convertible notes, secured debt, and equity offerings. Its holdings were acquired at an approximate total cost of $54.56 billion, averaging $76,020 per $BTC. This aggressive accumulation strategy, which began in August 2020, has consistently positioned MicroStrategy as a bellwether for institutional Bitcoin adoption.
Holdings, Liquidation Claims, and Current Status
MicroStrategy recently acquired an additional 592 $BTC for $39.8 million, at an average price of $67,286 per coin, maintaining its accumulation strategy. With $BTC trading around $63,081, the company's portfolio shows an approximate unrealized loss of $9.5 billion, calculated from its average acquisition cost. The claim under investigation posits such a price decline would trigger a forced liquidation of a substantial portion of MicroStrategy’s holdings. MicroStrategy has not officially confirmed or denied the specific liquidation conditions, and its long-term Bitcoin accumulation strategy remains in effect. The investigation continues to assess the validity of these circulating claims.
Market Reaction and Sentiment Impact
$BTC price declined below $63,000, marking a 4.7% decrease over 24 hours and a 5.6% decline over seven days. $BTC was also on track for its steepest monthly decline since June 2022, having slid over 19% in February. Spot Bitcoin ETFs recorded substantial net outflows, including $203.8 million on February 23. This contributed to a multi-billion dollar outflow streak, totaling $3.8 billion over five consecutive weeks for $BTC ETFs, with BlackRock clients selling $117.44 million. The Bitcoin Fear and Greed Index registered a score of 8, indicating 'Extreme Fear.' Community sentiment regarding MicroStrategy’s unrealized losses was predominantly negative, with scores ranging from -24 to -66. Overall market perception for $BTC price drops and ETF outflows ranged from -41 to -71.