In a statement on X, Ki Young Ju, CEO of CryptoQuant, a leading on-chain analytics firm, provided a stark assessment of MicroStrategy’s financial health in relation to its Bitcoin investments.
Can MicroStrategy Go Bankrupt?
Ju stated, “MicroStrategy only goes bankrupt if an asteroid hits Earth. For 15 years, Bitcoin has never dropped below the cost basis of long-term whales, which currently stands at $30K. MSTR debt is $7B and its BTC holdings are worth $46B. Based on BTC alone, the liq price is $16.5K.” He further simplified his analysis by urging, “I know calculating the liquidation price seems pointless at this point, but man, just try to keep it simple”.
This bullish perspective on MicroStrategy’s solvency comes amid contrasting views, particularly from notable Bitcoin critic Peter Schiff, who in an interview expressed a dire outlook: “I mean, ultimately, I think MicroStrategy goes bankrupt. I think eventually the Bitcoin is going to crash and the creditors are going to end up with the company. I mean, that’s what I think is going to happen at the end of the day”.
MicroStrategy’s recent financial moves and market performance have been significant. Last week, the company was added to the prestigious Nasdaq-100 index, which could potentially attract more investment and enhance its market credibility.
Following the inclusion, MicroStrategy announced on December 16, 2024, that it had further expanded its Bitcoin reserves by purchasing an additional 15,350 BTC at approximately $100,386 per Bitcoin, bringing its total holdings to 439,000 BTC. All Bitcoins were acquired for about $27.1 billion at an average price of $61,725 per BTC.
At the end of October, the company announced an aggressive Bitcoin acquisition strategy, named the “21/21 plan,” which involves raising $21 billion through equity and fixed-income securities specifically to increase its Bitcoin reserves. Since the announcement of this plan, MicroStrategy has been consistently buying Bitcoin on a weekly basis.
Charles Edwards, CEO of Capriole Investments, commented on the potential acceleration of this strategy, noting, “We are about to see a big jump in Saylor’s Bitcoin buying. Being NASDAQ 100 listed gives tons of credence for cap raising. My guess: MSTR 21/21 plan complete within 3 months”.
The inclusion in the Nasdaq-100 index might also fuel a positive feedback loop for both MicroStrategy and Bitcoin, as described by macro analyst Alex Krüger on X, “Microstrategy included in the Nasdaq. So people have to buy MSTR because it’s in the index which means Saylor can sell more shares and convert to buy more Bitcoin which pushes BTC up and then MSTR goes up which means you have to buy more shares to match the index, rinse and repeat. Bitcoin to infinity”.
At press time, BTC traded at $107,226.
Featured image from YouTube, chart from TradingView.com
