Warning: The analyst who wrote this piece has strategy shares (MSTR).
Bitcoin net price reductions have dominated the titles of the news this week, but the main strategy of BTC holder (MSTR) has been downwards for more than three months.
By exchanging the level of $ 250 on Wednesday, the strategy is approximately 55% since it peaks at $ 543 on November 21. Investors of MSTR products with leverage have undergone even greater losses. The Daily Daily Target 2x Long MSTR ETF (MSTX) plunged 90%, while the T-Rex ETF (MSTU) decreased by 85%.
Despite the drop in bitcoin, the acquisition of the BTC of the strategy remains profitable. Since it launched purchases in August 2020, the company has increased by 32% on its assets, with an average cost of $ 66,300 per BTC and an unable profit of $ 10.65 billion at the current bitcoin price of around $ 87,000.
The question of forced sales
A more in -depth examination of the convertible debt of the strategy highlights potential “liquidation prices” or forced bitcoin sales. In particular, all 499,096 BTCs of the company remain smoothly, which means that the strategy has promised no bitcoin as a guarantee. An anterior convertible note using Bitcoin as warranty with Silvergate Bank has been fully reimbursed.
According to Bitcoin Overflow on X, the strategy has $ 8.2 billion in total circulation, supported by 499,096 BTC, currently estimated at $ 43.4 billion.
The short answer: as long as the value of the Bitcoin of the strategy exceeds its debt levels, the company would not need to sell any of its BTC assets. In other words, Bitcoin should decrease up to around $ 16,500, or about 80% additional compared to current levels.
Taking a more detailed look, two of the six convertible obligations underway – the 2029 and 2030 emissions – are below their supply price. These are important obligations, however, representing $ 5 billion out of the total of $ 8.2 billion. Even then, the debt only matured in 2029, allowing the recovery time.
And in theory, the strategy could roll on more paper, if that were to happen. If the company’s Bitcoin value was to drop below the debt levels at a time when the convertible obligations matured and the MSTR action price was lower than the conversion price (which would most likely be in this scenario), the strategy – in order to prevent massive dilution in its shares.
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