Bitcoin (BTC) can fall below $20,000 without crucially impacting MicroStrategy’s Bitcoin treasury.
New research published on social media by capital adviser Jeff Walton on Dec. 3 concludes that the business intelligence firm could survive an 80% BTC price collapse.
MicroStrategy feels the heat only if BTC price hits $18,000
MicroStrategy’s Bitcoin exposure is higher than ever as the firm buys billions of dollars’ more BTC.
While BTC/USD increased by nearly 40% in November alone, analysis suggests that even a protracted correction would not cause MicroStrategy and CEO Michael Saylor, mastermind of the Bitcoin treasury, significant problems.
“The price of Bitcoin would need to fall to $18,826 in order for $MSTR’s assets to be worth less than their liabilities,” Walton calculates.
“An 80% drawdown from today’s price.”
MicroStrategy financial leverage data. Source: Jeff Walton/X
The practice of adding BTC risk to company balance sheets has fielded its fair share of criticism. Moreover, Bitcoin has seen 80% retracements before. For instance, between November 2021 and November 2022, BTC/USD declined from $69,000 to a low of $15,600.
For Walton, however, the argument against corporate Bitcoin adoption contains little logic.
“As the price of Bitcoin rises, the financial leverage falls, fast,” he explained.
“For the ‘This will not end well’ / ‘Ponzi’ ‘pyramid scheme’ bears, run the math. The $MSTR balance sheet is arguably underutilized from a ‘leverage’ perspective.”
MicroStrategy Bitcoin holdings data. Source: Bitcointreasuries.net
Institutional Bitcoin demand “absolutely insane”
Equally excited for the future of the corporate trend is Charles Edwards, founder of quantitative Bitcoin and digital asset fund Capriole Investments.
Addressing followers on X this week, Edwards noted that MicroStrategy was just one player in the new institutional Bitcoin investment arena. If anything, he argued, the market is not bullish enough on the outcome.
“MSTR raising $B/week to deploy into Bitcoin. MARA currently boosting its holdings by 30% with a $1B raise. Absolutely insane institutional demand,” he commented.
“13.5% of all Bitcoin is now held by institutions and ETFs and it's going parabolic. It's wild how numb we all are to this now that it's the new normal. But this is the institutional adoption we were all dreaming about.”
Corporate Bitcoin adoption data. Source: Charles Edwards/X
As Cointelegraph reported, Edwards sees the peak of the current Bitcoin bull run only beginning, with mass-market “FOMO” only due to begin once the BTC price passes the $100,000 mark.
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.
