Premarket trading Monday saw Coinbase and MicroStrategy share prices plummet below $24,000, which caused shares of both Coinbase and MicroStrategy to collapse.
The latest crypto market chaos brought the price for Bitcoin down below $24,000. MicroStrategy (MSTR), a micro-capital firm, fell 26.72% Monday’s premarket to $149.
MSTR traded at $203.36 at the closing bell Friday. It then fell to $147 at the market open before recovering to $155.50. This was due to increased pressure from the software manufacturer’s stock trading at a discount relative to its Bitcoin holdings.
Stock in the crypto exchange coinbase (COIN stock) fell by 21.5% to $46.06 premarket before rising to $51.87 at press time, down 11.66%.
Other Bitcoin-related public companies also suffered, with mining operators being among the worst-hit.
Premarket losses for Marathon Digital were 18.17%, followed by Riot Blockchain, Bit Digital, and 14.89%.
Block Inc. (SQ), which fell 7.35% to $66.59 premarket, is still sliding and trades at $64.29 as of writing, down 10.55%.
Shares of Robinhood and Paypal (PYPL), both suffered less severe losses of 7.62% (respectively) and 5.95% (respectively).
MicroStrategy & Bitcoin
MicroStrategy has been in the news for its Bitcoin accumulation strategy. However, MicroStrategy faces margin calls on a $205 Million Bitcoin-backed loan with Silvergate Bank, which was taken in March to purchase more crypto.
This is according to Phong Le, the CFO of the company. He came up with the figures during last month’s first-quarter earnings calls.
“Bitcoin needs to fall so we borrowed the loan at 25% loan-to value (LTV), and the margin call is [at] 50% LTV. Le stated that Bitcoin must be cut in half, or approximately $21,000, before we can have a margin call.
MicroStrategy could be forced to sell some Bitcoin it has on its balance sheet if Bitcoin prices fall below $21,000. Despite CEO Michael Saylor repeatedly stating that he would never sell crypto.
Le stated that “as you can see, as we previously mentioned, we have quite some uncollateralized Bitcoin,” during the call last month. “So, we have more to contribute in the event that there is a lot of down volatility.”
MicroStrategy purchased $215 million more Bitcoins in SEC filing in Q1. This brought its total Bitcoin holdings to 129.218 Bitcoins, which were acquired for $3.97 Billion, or just above $3 billion at current prices.
Bitcoin, the most widely used cryptocurrency in the world, fell below $24,000 today, which was the first time that has happened since January 2021. Meanwhile, the market capitalization for all cryptocurrencies dropped below $1 trillion.
BTC trades at $23,243 as of the writing time, down more than 17% over the last 24 hours.