In May, an alleged “insider” claimed that a group of bitcoin whales were trying to liquidate multiple positions from a major player. Blockchain TRON founder Justin Sun, and Michael Sayer, CEO of software company Microstrategy, was the top 2 suspicious target.
Rumors spread as Sailor announced new BTC purchases and issued more debt for the company to expand its BTC holdings. As recently reported, the company will use the $1.6 billion it received through the debt instrument to buy more bitcoin.
With the cryptocurrency losing over 50% of its value in a month, many wonder what will happen if the downtrend continues, will the microstrategy position be compromised?
Anonymous analyst “degentrading” dealt with this “Saylor Fud” and claimed that the situation in the executive and his company is “not that dire”. analyst said:
The latest bond issuance will only secure the senior on BTC that it plans to deposit on the proceeds from this issuance. IE – even if it fails to support the 400M bid market and gets liquidated – 92,079 held BTC will not be at risk.
The analyst went in more depth on MicroStrategy’s capital structure. The company has 2 outstanding bonds to mature by 2025 and 2027. The former has 0.75% interest and the second has none, as seen below.
Will MicroStrategy Sell Its Bitcoin (BTC)?
The software company must pay about $5 million annually in interest for its debt. As the analyst concluded, MicroStrategy generates approximately $50 million in net profit per year. In theory, the company could pay for its financial commitments.
This means that from now until at least 2025, the seller cannot be liquidated until it pays interest on the 0.75% 2025 bond.
Other users claim that Michael Sayer may be ousted from his position as CEO. In case of a major drop in the crypto market, the company will be free to sell its bitcoins. With over 90,000 BTC in its coffers, this would create enough selling pressure to push the price of BTC further down.
However, Saylor owns 25% of the business and owns 72% of the shares with 10x voting power, as the analyst found: “Saylor cannot be forced to sell by anyone”.
“Degentrading” reached three important conclusions. First, the loans MicroStrategy recently acquired will have no effect on their overall bitcoin holdings; The company cannot be taken out of its position. Second, the interest rate is too low to put the company at risk.
Finally, due to his high voting power, Sailor has enough control over the board to retain his position as CEO and hold his BTC.
As the chart below shows, MicroStrategy (MSTR) shares were once valued at $3,000 during the year 2000. By the end of that year, the company lost 99.6% of its value by the time their BTC purchase was announced in 2020.
For more than two decades, as the analyst noted, Sailor has held his position. The recent crash in the price of bitcoin is “a blip” in the executive’s history with the market.
At the time of writing, BTC is trading with gains on the lower time frame at $36,553, but heavy losses on the second week and 30-day charts.