Bitcoin has experienced significant volatility over the past week as traders attempt to anticipate a “crisis scenario” affecting the bitcoin price.
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The price of bitcoin has fallen to levels not seen since early November, with anxious crypto investors cautioned to steer clear of an unknown threat.
As major Wall Street players confront the potential of an “existential” bitcoin and crypto-destabilizing event, Michael Saylor’s firm, now a bitcoin buyer, Strategy, has indicated it may have to sell some of its bitcoin holdings to fulfill its financial commitments.
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Strategy’s founder, Michael Saylor, has amassed $42 billion worth of bitcoin, benefiting from the bitcoin price … More
“Since bitcoin constitutes the majority of our asset portfolio, if we cannot secure equity or debt financing promptly, on favorable terms, or at all, we may need to liquidate some bitcoin to meet our financial obligations, potentially at prices below our cost basis or in unfavorable conditions,” a recent regulatory filing from Strategy stated.
Strategy anticipates recording an unrealized loss of nearly $6 billion for the first quarter, despite a related $1.69 billion tax benefit, and cautioned that profitability might remain elusive in subsequent quarters, particularly if the price of bitcoin continues to decline.
“A substantial drop in the market value of our bitcoin holdings could negatively impact our ability to fulfill our financial obligations,” the filing added.
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Bitcoin’s price has sharply declined, mirroring the downturn in stock markets.
Strategy’s stock has nearly halved since its peak in November, which led to its inclusion in the prestigious Nasdaq 100 index.
Currently, Strategy holds approximately 530,000 bitcoin worth nearly $42 billion, acquired at an average price of $67,000 per bitcoin, funding its purchases through the sale of convertible bonds and stock issuance.
As of the end of March, Strategy had around $8 billion in debt, with approximately $35 million due annually in interest, in addition to nearly $150 million in stock dividends each year.
Meanwhile, cryptocurrency analysts are fervently attempting to forecast the market’s future direction, with one notable analyst projecting that bitcoin could plunge back to around $10,000.
“Everyone’s in it for the long haul, as long as it’s on the rise,” wrote Mike McGlone, senior commodity strategist at Bloomberg Intelligence, in a report shared on X. “[I] didn’t predict how bitcoin would rise to $100,000 from $10,000 in 2020, but trends indicated it. Now, I foresee a reversion path back toward $10,000.”
