Institutional holder paying their debts from BTC share - doesnt affect prices

[Flexystar]

I was reading this article about Bernstein, CEO of MicroStrategy and he gave very positive thoughts on how institutional repayments for their debts work without actually hampering the prices of Bitcoin in the real market.

For example, their balance sheets are worth billions of dollars and so as to their debts in the long-running business. One may think that so many debts must be pulling down the bitcoin price in the market that we trade. Like, someone may think it's huge concentrated debt and thus could aggravate the market to go bear if they start selling in large chunks.

However, he stated that though the debts are heavy, they are paying it in installments,s and thus compare to the market volume the sold bitcoins are nothing.

Even if you think about all the institutional debts out there combined, it has a tiny effect on the market. This could be probably because of the large volume of buying and selling.

Apart from this, these institutes are gaining a good grip on profits. Whenever the prices are going up in the market, they have very strong balance sheets and thus they easily pay off debts and keep holding an even better amount of bitcoins.

Rising bitcoin prices mean a stronger balance sheet, higher stock prices and easier debt repayment, without the company needing to sell its holdings, the report said.

Whether MicroStrategy (MSTR) sells its bitcoin (BTC) tokens to pay down debt is closely tied to how the cryptocurrency performs. The position is not large enough to distort prices but it does present a sentiment risk in a down cycle, Bernstein said in a research report Wednesday.
The business analytics software company is the largest corporate holder of bitcoin as a balance sheet treasury asset, owning around 140,000 BTC at an average cost of $29,800. The stash is worth about $4 billion at current prices, the report said.
The company has about $2.2 billion in debt, with repayments due in 2025 and beyond. It has pledged 15,000 of its bitcoins, Bernstein said.

“High BTC prices mean a stronger balance sheet, higher stock prices and easier debt repayment without selling its BTC holdings,” analysts Gautam Chhugani and Manas Agrawal wrote.
MicroStrategy holds around 0.7% of total bitcoin in circulation, representing about 20% of daily average traded volume in spot markets, the note said.
At those levels, MicroStrategy does not “necessarily pose a concentration risk” even if trading volumes fell during a bear market, though it may affect market sentiment.
“The potential liquidation of MicroStrategy’s BTC during bear markets creates an overhang for BTC in a down cycle,” it said.

MicroStrategy’s Bitcoin Holding Doesn’t Necessarily Pose a Concentration Risk: Bernstein

[joniboini]

Well, we can probably trust this a little bit if they share when they sell their BTC and how they do that. Some traders note that whenever there is a PR of MicroStrategy buying some Bitcoins, the price of BTC decrease in the next hours or so. Based on this fact, we can easily conclude that they can influence the market to some extent by releasing 'positive' news when they plan to sell their stash. But I wouldn't be surprised if they offload the majority of their BTC through OTC markets, hence why it doesn't get reflected on the retail spot market. It would be stupid if they dump large holdings that can easily influence the market and lower their repayment value.

Kinda weird how they call their holding BTC tokens though. Either it is a mistake, or a deliberate choice to confuse some readers.

[southerngentuk]

This could give some positive thoughts on the potential of Bitcoin and the crypto market in general. If large institutions are paying off their debt gradually and not having a major impact on the market, that could indicate that the market is becoming more mature and stable. Additionally, the fact that institutions are patiently paying down their debt and continuing to hold Bitcoin could indicate that they believe in the potential of this cryptocurrency and are investing for the long term rather than just looking for short-term returns.
However, it should be noted that the cryptocurrency market is still very volatile, and institutions that are paying off debt can still cause fluctuations in the market if they decide to sell some of their assets. large amount of Bitcoin at the same time. It is advisable to be absolutely careful and research carefully before investing in the cryptocurrency market.

[coupable]

If the institution operates entirely using Bitcoin and its treasury does not contain assets of other types, then it would never be in its interest for the price to be affected as a direct result of its financial activities. In most cases, market offerings must be carried out in a prudent manner, since the total platform savings are equal to a very important percentage of the daily trading volume in all markets. It is most likely that the bitcoin to be sold will be distributed on more than one platform, and the issuance of sales offers is done in a deliberate manner, especially since it is not in the interest of microstrategy that the price collapse or be affected sharply, as this will affect the activity of the platform as a whole.

[DaveF]

Well, we can probably trust this a little bit if they share when they sell their BTC and how they do that. Some traders note that whenever there is a PR of MicroStrategy buying some Bitcoins, the price of BTC decrease in the next hours or so. Based on this fact, we can easily conclude that they can influence the market to some extent by releasing 'positive' news when they plan to sell their stash. But I wouldn't be surprised if they offload the majority of their BTC through OTC markets, hence why it doesn't get reflected on the retail spot market. It would be stupid if they dump large holdings that can easily influence the market and lower their repayment value.

I think it's more along the line of they have a lot of people working on buy / sell strategies and do not release all the info on things they do in real time.
So they do one thing and may or may not announce it.
They do something else and then announce it a certain time later.
And so on. This way they can do what they want and we just keep guessing as to everything they did.

Kinda weird how they call their holding BTC tokens though. Either it is a mistake, or a deliberate choice to confuse some readers.

Might be a regulatory thing about how they describe their holdings.

-Dave

[avikz]

That's fine! When an institutional business invests in an asset which is not a part of their line of businesses, it is mainly to make profit out of it. So if bitcoin is helping them to pay off their debts from the profits they are making from bitcoin investments, that's a great news!

Because these investors will bring more institutional investors into this market. Also they will re-enter the market when the time is ripe. So it's all good and positive.

[mvdheuvel1983]

For example, their balance sheets are worth billions of dollars and so as to their debts in the long-running business. One may think that so many debts must be pulling down the bitcoin price in the market that we trade. Like, someone may think it's huge concentrated debt and thus could aggravate the market to go bear if they start selling in large chunks.

I am just thinking that now this sounds quite good, they are paying their debts and nothing is happening to the price of bitcoin.
The what if question I have is, what if other institutional investors decide to follow suite will anything happen to the price of bitcoin in the long run.
I may be wrong but isn't this not the same as whale selling-off their bitcoins.

[darkangel11]

I was reading this article about Bernstein, CEO of MicroStrategy and he gave very positive thoughts on how institutional repayments for their debts

What? Since when Microstrategy have a CEO named Bernstein? You try to comment on articles that you don't even understand.
The current CEO is Phong Le, who took this role last year after Saylor retired to the role of chairman.

The Berstein mentioned in the article is most likely Bernstein Research, an investment research company.