Discharge of responsibility: The analyst who wrote this piece has Strategy (MST) actions.
The acute decreases in Bitcoin’s prices have dominated news holders this week, but BTC’s great owner (MSTR) of BTC has been in a bassist trend for more than three months.
When negotiating around the level of $ 250 on Wednesday, the strategy is lower by approximately 55% since it reaches a maximum point in $ 543 on November 21. Investors in leisurely MSTR products have suffered even higher losses. Defiance 2x Long Mstr ETF (MSTX) target has sunk 90%, while ETF T-Rex (MSTU) has decreased to 85%.
Despite the decrease in Bitcoin, the BTC’s acquisition of strategy remains profitable. Since starting purchases in August 2020, the company increased 32% in its holdings, with an average cost of $ 66,300 per BTC and an unrealized gain of $ 10.65 billion at the current Bitcoin price of approximately $ 87,000.
The forced sales question
A closer look at the convertible debt of the strategy highlights the possible “liquidation prices” or forced Bitcoins sales. In particular, all 499,096 BTC of the company remain without Bigue, which means that the strategy has not promised any bitcoin as a guarantee. A previous convertible note that uses Bitcoin as a guarantee with Silvergate Bank was completely reimbursed.
According to Bitcoin Overflow On X, the strategy has $ 8.2 billion in total debt in circulation, backed by 499,096 BTC, currently valued at $ 43.4 billion.
The short answer: provided that the Bitcoin value of the strategy exceeds its debt levels, the company would not need to sell any of its BTC holdings. In other words, Bitcoin would have to decrease to approximately $ 16,500, or approximately another 80% of the current levels.
Observe a more detailed aspect, two of the six slope convertible bonds, the problems of 2029 and 2030, are below their offer price. However, they are large bonds that represent $ 5 billion of the total of $ 8.2 billion. Even then, the debt does not mature until 2029, which allows time for recovery.
And in theory, the strategy could transfer more paper, if that was going to happen. If the company’s bitcoin value fell below the levels of debt at the time the convertible bonds matured, and the price of Mstr’s shares was below the conversion price (which would be very likely in that scenario), the strategy, to avoid massive dilution in their actions, would probably decide to sell Bitcoin to pay the cash instead of turning them into equity.
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