MicroStrategy shares down 19% as Bitcoin falls below $16,000

Shares of MicroStrategy, one of the largest corporate owners of Bitcoin, fell more than 19% in the last trading day to a four-month low. The losses came after Bitcoin fell below $16,000 in the past 24 hours, amid growing uncertainty over the fate of FTX, which is one of the world’s largest crypto exchanges and is suffering from an acute liquidity crisis. It hasn’t been a good year for the business intelligence firm, whose shares are now down 69.48% year-to-date.

Micro strategy suffers from Bitcoin price drop

Microstrategy, whose main business revolves around creating enterprise analytics and mobility software, has been involved in a Bitcoin play, acquiring and holding the cryptocurrency as a treasury reserve. Since late 2020, the company has invested millions of dollars in its flagship cryptocurrency in an effort to hedge against inflation and diversify its portfolio.

As reported, the company’s bold bet on BTC initially paid off well, especially in early 2021 when the leading cryptocurrency was on the rise. The company’s stock, which was trading at around $130 per share when the company adopted bitcoin, reached a record high of $1,272 in early 2021, an increase of more than 1,000%.

However, the recent crypto meltdown continued to erode the value of Microstrategy’s Bitcoin holdings. So much so that the company took a non-cash digital write-down of $170.1 million in the first quarter of the year, and another $917.8 million in digital assets in Q2.

As of now, the company owns 130,000 BTC, worth over $2.1 billion at today’s exchange rate. The average purchase price was $30,623 per coin with a total cost of $3.981 billion, according to data accumulated by Buy Bitcoin Worldwide. Therefore, the company is currently down more than $1.8 billion on its Bitcoin investment.

The poor performance of Bitcoin has also negatively affected MicroStrategy shares, which closed the last trading day down more than 19%. The company’s shares are down 69% YTD.

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Crypto prices crash as Binance walks away from FTX deal

Binance signed a letter of intent to buy FTX on Tuesday, although at the time it said the deal was subject to a due diligence process. On Wednesday afternoon, Binance announced that it has decided to withdraw from the potential FTX deal after conducting due diligence.

The exchange claimed that FTX mishandled users’ assets and also cited allegations of regulatory probes. “Our hope was to be able to support FTX’s customers in providing liquidity, but the issues are beyond our control or ability to help,” Binance said.

After the news, cryptocurrency prices went into free fall. Bitcoin fell to as low as $15,682, a level not seen in two years, and lost about 8% in the past 24 hours. Ethereum, the second largest cryptocurrency, has also fallen to $1,083, down about 4% in the past 24 hours.

While the FTX downfall may seem so sudden, its roots actually go back months, when SBF stepped in to rescue other crypto firms when the crypto market collapsed, according to a recent Reuters report. Citing people familiar with the company’s operations, the report said SBF suffered huge losses from some of these deals.

While the entire crypto market remains deep in the red, major cryptocurrencies have managed to trim some of their recent losses. Bitcoin is currently trading at around $16,287, up from the daily low of $15,682. Ethereum is trading at $1,175, up from the local low of $1,083.

Do you think MSTR will be able to recover in the near future? Let us know in the comments below.

About the author

Ruholamin Haqshanas is an accomplished crypto and financial journalist with over two years of experience writing in the field. He has a solid grasp of various segments of the FinTech space, including the decentralized iteration of financial systems (DeFi), and the emerging market for non-fungible tokens (NFT). He is an active user of digital assets for money transfers.