As the latest carnage in the crypto markets brought the below $24,000, MicroStrategy (MSTR) fell as much as 26.72% on Monday’s premarket to a 20-month low of $149.
MSTR, which traded at $203.36 on the closing bell on Friday, fell to $147 after the market open, before recovering to $155.50, down 23.53%, as the software manufacturer came under increased pressure due to its stock trading at a discount to the firm's holdings.
Following the trend, stock in crypto exchange (COIN) stock fell by a hefty 21.5% to $46.06 on premarket, before climbing up to $51.87 at time of going to press, down 11.66%.
Other Bitcoin-adjacent public companies took a beating too, with the shares of mining operators among the worst-hit.
Marathon Digital tumbled 18.17% in premarket, followed by Riot Blockchain and Bit Digital with losses of 14.89% and 14.89%, respectively.
Block Inc. (SQ) dropped 7.35% to $66.59 in premarket and is continuing to slip, trading at $64.29 at the time of writing, down 10.55%.
Shares of Robinhood (HOOD) and (PYPL) both saw less brutal losses of 7.62% and 5.95%, respectively.
MicroStrategy has been making headlines for its Bitcoin accumulation strategy, however, with an average purchasing price of $30,700 over the past two years, the firm faces a margin call on a $205 million Bitcoin-backed loan with Silvergate Bank that was taken in March to buy more crypto.
That’s according to CFO Phong Le who came up with these figures during the company’s first-quarter earnings call last month.
“As far as where Bitcoin needs to fall, we took out the loan at a 25% loan-to-value (LTV), the margin call occurs [at] 50% LTV. So essentially, Bitcoin needs to cut in half or around $21,000 before we'd have a margin call,” Le said at the time.
Should the price of Bitcoin drop to $21,000, MicroStrategy may be ultimately forced to sell some of the Bitcoin it keeps on its balance sheet—despite CEO Michael Saylor repeatedly saying he’d never sell any crypto.
“As you can see, we mentioned previously we have quite a bit of uncollateralized Bitcoin,” Le said during last month’s call. “So we have more that we could contribute in the case that we have a lot of downward volatility.”
Per an SEC filing, MicroStrategy added another $215 million worth of Bitcoin at an average purchase price of $44,645 per coin in Q1, bringing its total holdings to 129,218 Bitcoins acquired for $3.97 billion, or slightly above $3 billion in current prices
Bitcoin, the world’s most popular cryptocurrency, plunged below $24,000 earlier today for the first time since January 2021, while the combined market capitalization of all cryptocurrencies crashed below $1 trillion.
At the time of writing, BTC is trading hands at $23,243, down over 17% in the past 24 hours.