Michael Saylor margin call if Bitcoin dumps below $21,000

[hZti]

Even if Sayler will not be liquidated this should all be a warning to not trade bitcoin with margin. There is way to much unpredictable movement in the market and a lot of extreme events since there are a few early adopters that hold a lot of coins that could crash the market in minutes.

[amt2299]

Bitcoin Price is 24,800 now, it is possibe to fall below $21,000 https://xtrading.com/market-data/

[swogerino]

Bitcoin Price is 24,800 now, it is possibe to fall below $21,000 https://xtrading.com/market-data/

It looks like we are going for a massive price crash in Bitcoin but these are the times where smart people start getting Bitcoin in different ways,the fastest one to buy the dip as they say,the slow one which I am doing from years is to mine it and although the difficulty of the network is not down yet with the passing of time it is going to do so thus making old irrelevant ASIC miners relevant again maybe.Whatever direction the price goes even below 21.000 dollars the true believers will hodl and new "true" recruits will surely benefit from such move as in the long run it is inevitable that the price is going to reach new all time highs.

[cr1776]

MicroStrategy holds crap ton of spot bitcoin on their balance sheets; they could just add more and more collateral so they wouldn't get liquidated. Unless we nuke far far below the $21k threshold, the risks for liquidation are virtually nonexistent.

Precisely.  There is a lot of FUD out there by people who want the price to drop either to buy lower or because they are short it.  It is easy to cherry pick statements and neglect the context to spread it.

[buwaytress]

Damn, that was risky then, but who'd have called an approach to 21k so soon, barely a month after the posting of that price, huh? 50% drop in a month, and using the same asset to borrow against to buy more of the same, that was a virtual double down on a risky position.

It's a crazy bet, probably one I'd have made myself in all honesty, to not see Bitcoin drop below previous ATH. Definitely would have done it in a blink if I had Micro's extra stash lying around.

[KingTin]

Microstrategy aside, we are in a massive negative feedback loop of untolled thousands of leveraged crypto longs being liquidated while their equity positions are facing the same problems.

This is the scene in the film Margin Call where Jeremy Irons informs everybody that "You don't understand! This!Is!It!"

The key difference is the US Federal Reserve had interest rates back then around 4-5%, a balance sheet of about $50 BILLION, and no meaningful inflation to address. I.e., they had unlimited tools to work with to fix it.

There is nothing that any central bank can do this time. This time, it really IS it.

The real negative feedback loop is leveraged long AND miners needing to sell to stay afloat.

[pawanjain]

I am wondering about those miners who would calculate their earnings to see if mining is profitable or not.
Because they stop mining and buy more bitcoins directly instead. That would create a significant pump in the market and the lat time I heard about it was that the profitable price was around $25k.
All in all, things are really uncertain this time but I think Michael Saylor would have thought this true and won't let any liquidations to occur at his side.
He's a smart person and in fact we all are in it together. We should HODL strong.

[hZti]

I am wondering about those miners who would calculate their earnings to see if mining is profitable or not.
Because they stop mining and buy more bitcoins directly instead. That would create a significant pump in the market and the lat time I heard about it was that the profitable price was around $25k.

Most miners mino for profit. They instantly sell BTC when they get it so I think many will just pause their mining.

[EdenHazard]

Damn, that was risky then, but who'd have called an approach to 21k so soon, barely a month after the posting of that price, huh? 50% drop in a month, and using the same asset to borrow against to buy more of the same, that was a virtual double down on a risky position.

It's a crazy bet, probably one I'd have made myself in all honesty, to not see Bitcoin drop below previous ATH. Definitely would have done it in a blink if I had Micro's extra stash lying around.

Crazy bet indeed but yeah that's a life of trader ... especially a trader that play in a margin trading , you would get this kind moment of falling like right now quite often .. approaching $21K within a couple days only and boom your position going to end liquidated.

And speaking about michael saylor ... i just cant imagined it. Too much money in stake.

[Dadan]

I don't know how or who play this bet game. First, Do Kwon with his challenge over Terraform Labs UST and it collapsed. Then now this Michael Saylor $205 Million Bitcoin-Collateralized Loan for Btc to drop below $21k which happened today. Who are the whales actually? Hedge funds?

[darkangel11]

Saylor's margin call is bullshit and FUD that someone made up to scare the market even more.

Remember that for every sell there's a buy and all those coins you panic sell are being bought. Wallet stats show that we hit an all time high for a number of addresses containing more than 10 bitcoin so all those small investors who had a few coins got destroyed in the last few months. Also bitcoin dormant addresses is constantly growing. 

I am wondering about those miners who would calculate their earnings to see if mining is profitable or not.
Because they stop mining and buy more bitcoins directly instead. That would create a significant pump in the market and the lat time I heard about it was that the profitable price was around $25k.

Most miners mino for profit. They instantly sell BTC when they get it so I think many will just pause their mining.

Glassnode watches miners and they were accumulating a lot of coins and not selling when we were at the first correction from 60k last year. In extreme situation when their return would be very low they can wait for a higher price. Most miners don't sell when they get the reward but wait for the best price to maximize profit.

[Mauser]

That sounds a bit like market manipulation, is that even legal? When all the big crypto players work together to force the price down it would mean they liquidate a lot of their positions now. Shouldn't we get some insider news about it? I don't think all the companies could remain quite for such a big a deal. Once the margin call is being triggered it would mean we would see strong buys in the market in an effort to close down the position. Shouldn't the price than rise again sharply? I am no expert on uncollateralised and not sure what options there are to avoid liquidation. Maybe there is a chance to restructure? Like how much further can the price drop, below 20k USD I would expect all the whales to start buying again.

[franky1]

quoting myself from another topic as its relavant to this topic and will clarify a few peoples opinons

Now fudders are working to make everyone scared of Michael Saylor dumping

incase anyone says the FUD and you want to correct them

the TL:dr; version
in short.. the coins are safe and locked AWAY from the market and only will be spent if the price dropped to $3562* a coin.

saylor has over 115.110k coins, so is happily able to, and contractually agreed keep adding collateral to back the loan company in a scenario of continual price decline all the way down to $3562* where its agreed the loan company and himself would have to create new terms or end the contract. thus the coins are safe from being spent/sold unless the price dropped to $3562*


(whereby if the loan company chose the option to sell at $3562*, they would then sell 57.55k coin total collateral after multiple margin thresholds passed, and multiple collateral rebalances down to that point)

the waffle version:
saylor wanted to buy alot a coin at $41k a few months back..
he did not sell any coin to buy more coin. nor want to use his own cash.. so he instead locked 5000btc as collateral with another company who gave him $205m fiat

the company giving the fiat had a termsheet that if the btc price halved to $20.5k then saylor would need to lock up another 5000btc to bring the collateral back into balance of being worth the same loan amount of $205m

this is not about losing or selling btc. is about locking up coin off/away the market. as collateral
this is not about the company which loaned the cash selling the collateral either.
the terms of the loan are that if the price went to $10.25k then saylor would have to lock up another 10k coins. if the price went to $5.125k then saylor would need to lock up a further 20k
saylor already agreed that he would happily keep the collateral balanced all the way down to a price point of $3562 before having to negotiate a settlement whereby the loan company could just sell the coins.. or create a new contract of adding more collateral in different format should the loan company not want to accept btc below that point as collateral..

.. but we are a long ways away from the risk of the loan company keeping ~57.55k of coins(combined collateral after several margin call thresholds passing down to the $3562* point) and selling them off if the price was $3562* if the loan company chose that option at that point

* the $3562 i mention, before the loan agreement comes to a dead-lock
with the term sheet limit of agreed amount saylor would happily give to collateral (its half his current holdings (115110/2) coins valued at the loan amount should the price go down to that)
($205m/57.55k coins=$3562)

https://cryptobriefing.com/michael-saylor-defends-bitcoin-backed-loan/

[Alina987014]

I agree too, I bought 4 btc 3 days in a row and I still think it can go up

[JakobFugger]

It's very hard to believe that number $3562. If it came to that, he would lose EVERYTHING. It would be completely liquidated. That is, a fund that had billions would disappear. Long before reaching that point, he would have had to look for several options to stay rich. As well as several other funds that became multimillionaires with this latest price hike.

There seems to be a very high gap between 19k and 11k. I hope the market doesn't test this 19k, as there could be a slingshot effect knocking down the rest of the market.

[pawanjain]

It's very hard to believe that number $3562. If it came to that, he would lose EVERYTHING. It would be completely liquidated. That is, a fund that had billions would disappear. Long before reaching that point, he would have had to look for several options to stay rich. As well as several other funds that became multimillionaires with this latest price hike.

There seems to be a very high gap between 19k and 11k. I hope the market doesn't test this 19k, as there could be a slingshot effect knocking down the rest of the market.

But the danger is that if bitcoin reaches the price of $3562 and the company decides to sell all of Saylor's coin then just imagine what disaster it would cause.
57k bitcoins selling at a price of $3.5k would literally drag the price further down and it may go below $1k or $500.
Who knows it might even be the end of bitcoin since there will be a hell lot of panic in this case.
But I hope that doesn't happen.

[franky1]

people cry "end of bitcoin" or "bitcoin is dead"

the function of making transactions is not determined by price.
bitcoin s function is determined by code. and as of yet there is no known bug that can break and kill bitcoin.

i am able to make a transaction and get it confirmed at any price.
so once the old players panic and sell out. its their loss. the buyers that bought the coin are going to continue on.
if the price did tank to low prices. then the new buyers of those loss(discount) prices are going to continue on. bitcoin will still run and function and make blocks. people will still use it.

if saylor did lose all his coins then new buyers will be gaining coins.
a huge discount just means better opportunity for the new buyer on the next cycle.

..
alot of people scream "tulip mania"..
but did you know this one fact people forget.
even hundreds of years later.. people still buy and sell tulips. garden stores still make money everyday selling tulips.

yes hundreds of years ago some large investors lost alot in the tulip craze of that era, but today people are still making money buying and selling tulips

bitcoin will continue functioning no matter the price and people will still make profit

[bbc.reporter]

@franky1. Agreed. Tulip mania is a story of a market bubble of overpriced tulips and an explanation on human behavior. There are similarities between the market bubbles of the tulip mania, the internet IPO bubble, the housing bubble and 2017's crypto ICO bubble. After all the speculation on the cryptospace, we can be quite certain that the market's real price levels will be discovered.

In any case, news update.

It appears Michael Saylor, Microstrategy's new head of strategy for bitcoin purchases, plans to buy more bitcoin. I hope this does not imply that the pump is over similar to his other purchases hehehehe.



MicroStrategy could sell up to $500 million in class A common stock and could buy more bitcoin.

A new prospectus filed with the Securities and Exchange Commission (SEC) says the firm has entered into an agreement with agents Cowen and Company and BTIG to sell up to $500 million in stock with a possible eye towards acquiring more bitcoin.

Source https://www.theblock.co/post/169010/microstrategy-could-raise-up-to-500-million-to-buy-bitcoin

[2stout]

According to Saylor, this talk of him being liquidated is just FUD.  You can see in his tweet today he claims that his company can survive a drop below $10K without an issue, and even below $4K he seems to think he'll be able to keep his leveraged trade active.

MicroStrategy has a $205M term loan and needs to maintain $410M as collateral. $MSTR has 115,109 BTC that it can pledge. If the price of #BTC falls below $3,562 the company could post some other collateral. See slides 11-12 in Q1 2022 presentation. #HODL

https://twitter.com/saylor/status/1523996525151539203

Not sure if I totally believe him here, but he certainly has some options before letting his current trade get liquidated.

I'm with you Og, I'm having a hard time believing Saylor, esp the <4k claim.  Guess he has to present a good face and project confidence in light of the recent re-org events.

[bbc.reporter]

I am not quite certain why Michael Saylor continues to buy bitcoin right before a dump begins. If bitcoin continues to dump he might become a forced seller and be forced to dump some of those coins to control his losses. I reckon an investor must sometimes reduce the size of the investment to keep much of it away from risk.



On September 20, 2022, MicroStrategy Incorporated (“MicroStrategy”) announced that, during the period between August 2, 2022 and September 19, 2022, MicroStrategy acquired approximately 301 bitcoins for approximately $6.0 million in cash, at an average price of approximately $19,851 per bitcoin, inclusive of fees and expenses. MicroStrategy purchased the bitcoins using excess cash. As of September 19, 2022, MicroStrategy, together with its subsidiaries, held an aggregate of approximately 130,000 bitcoins, which were acquired at an aggregate purchase price of approximately $3.98 billion and an average purchase price of approximately $30,639 per bitcoin, inclusive of fees and expenses.

Source https://www.microstrategy.com/content/dam/website-assets/collateral/financial-documents/financial-document-archive/form-8-k_9-20-2022.pdf