- Bitcoin has never fallen below the realized price of long-term whales, currently around $30,000.
- MicroStrategy’s $7 billion debt is counterbalanced by its $46 billion Bitcoin holdings.
- The company’s liquidation threshold sits at $16,500, well below current support levels.
Even as MicroStrategy continues to feel the heat from several researchers while posting lower revenues than 2020, it has a strong financial base anchored on the BTC reserves. New data also suggest that BTC has never traded below the realized price of long-term whales, which at present, stands at about $30,000. MicroStrategy’s current debt is $7 billion while the BTC holding stands at $46 billion. Thus, the firm’s liquidation risk seems restrained, if not given the possibility of a Bitcoin meltdown.
Whales’ Realized Price Offers a Safety Net
Holding the realized price of such whales as an important indicator of the Bitcoin market, the authors focus on the long-term investors who retained the coin for a long period.Currently in December, the value of the average U.S house has reached $298, 000. Such a long run trend supports a degree of base price level with little empirical evidence of price lowering below it.
It is this historical stability that lays the groundwork for MicroStrategy. It has been on record that the firm acts as one of the major corporate investors in Bitcoin. The asset has been used tactfully in the firm’s balance sheet.But the current data, available in the table, indicates that the asset’s price of $16,500 would be needed to have a liquidation risk – a situation that is rather unrealistic and needs an extreme change in the market conditions.
Strong Financial Cushion with A Low Probability of Crisis
Even the hefty $7 billion debt looks small against the value of Bitcoin that MicroStrategy holds. The businesses’ holdings are worth about $46 billion at $10,600 per Bitcoin. At press time, the coin is trading at $104K. This position guarantees that MicroStrategy’s balance sheet does not get impacted ordinarily by typical market fluctuations. Further Bitcoin declines below $30k as comfortable given that the level occurred at a realized price.
However, external entities such as macroeconomic changes or other market trends may strain this narrative; nevertheless, relevant data and statistics in the last fifteen years vindicates strengths of the asset. Holding period averages at 33 months, proving that accumulation by experienced investors of this coin has continued to yield significant profitability that is above the cost basis.
Using the data for current conditions, MicroStrategy’s probability of insolvency does not seem likely in any way. What the data implies is that the low hanging fruit of bearish implications is only reached if the BTC price drops to an ethereal, almost impossible level below the current $30,000 average realized price.
