The Bitcoin market has been extremely volatile and leaning towards dips that left many traders and investors on panic mode.
Companies like Tesla and MicroStrategy are experiencing the same dilemma with their Bitcoins suffering tragic lows.
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MicroStrategy and Tesla combined has over 177K Bitcoins or 129,218 and 48,000 BTCs; respectively.
BTC is on a plunge since the beginning of 2021. It has made a major dip of 27% in the past three months. In fact, Bitcoin’s price went as low as $30,000.
The downward trend in this price action has become an enormous pain point for traders and major BTC holders.
On the flipside, the 24-hour trading volume soared by 84% or as much as $83.3 billion. To sum it all, that is around a $12-billion loss from the BTC holding of other giant institutions.
MicroStrategy holds around 0.61% of the total BTC supply. Its current BTC entry value is at $3.9 billion and the recent value is at $4.11 billion.
Meanwhile, Tesla owns as much as 0.229% of the BTC supply with a Bitcoin entry value amounting to $1.5 billion. Its recent value is currently at $1.52 billion as of this writing.
As seen above, the ratio between the buying and selling price is extremely close that if it plummets further, that can precipitate a remarkable loss.
As the most sought after crypto has slumped to over 50%, the companies’ holdings have also diminished in value.
So, many people are wondering what the next move is for Tesla and Microstrategy. Will they be selling their BTC holding?
Michael Saylor, Microstrategy CEO, announced that the company currently has a $205 million loan and they need to have a collateral of $410 million to stay afloat.
Now, Microstrategy can use their BTC holdings as a pledge or collateral. Additionally, should the BTC price shrink down to around $3,600, the company can add some more collateral.
Saylor has been a Bitcoin advocate for the longest time. The company currently has a total holding of 129.218 BTC or around $4.1 billion as of this writing.
Even though Microstrategy happens to hold the biggest pie of Bitcoins among publicly traded institutions, they still carry the biggest risks. For Saylor, even though BTC is fluctuating widely, he shows no plan or interest to sell their BTC holdings anytime soon.
For the part of Tesla, the company asserted that its investment in bitcoin was intended to diversify its sources of liquidity and increase flexibility in order to remunerate its stockholders in large part.
However, Tesla announced in May last year that it would no longer accept bitcoin as payment. It stated that it wished to safeguard the environment because the minting of bitcoins takes massive quantities of electricity.
How Tesla and MicroStrategy will react to the ongoing bloodbath in the bitcoin market remains to be seen.
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Freelance writing is Jet’s other cup of tea. When not on his computer, he unwinds with a cold bottle of beer and laughs with his son over cartoons. Other than that, he’s just like everybody else who wants to be happy with their life.
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