Can MicroStrategy still go bankrupt? That would have to happen, according to experts

MicroStrategy, the company led by Bitcoin proponent Michael Saylor, now owns over 400,000 BTC worth $46 billion. Nevertheless, Ki Young Ju, CEO of CryptoQuant, warns of the financial risks that could threaten MicroStrategy if the Bitcoin price were to drop drastically.

According to Ju, a drop to $16,500 would be necessary to seriously threaten the company’s financial stability, a scenario he describes as “as unlikely as an asteroid hitting Earth.”

Risks and Bitcoin Price Floor

MicroStrategy’s total debt currently stands at $7 billion, but the significant value of its BTC holdings provides some protection. Ju stresses that Bitcoin’s price floor is solidly at $30,000, which historically corresponds to the long-term average value of large holders.

According to Ju, a drop to $16,500 – as during the last bear market – is as unlikely today as a crash to $3,000 when Bitcoin once reached $60,000.

MicroStrategy only goes bankrupt if an asteroid hits Earth.

For 15 years, #Bitcoin has never dropped below the cost basis of long-term whales, which currently stands at $30K.$MSTR debt is $7B and its $BTC holdings are worth $46B. Based on BTC alone, the liq price is $16.5K. pic.twitter.com/cTwwTGYif4

— Ki Young Ju (@ki_young_ju) December 17, 2024

MicroStrategy remains active in its Bitcoin purchases. Over the past six weeks, the company has steadily added BTC to its portfolio, which now stands at 439,000 BTC, acquired at an average price of $61,725 per Bitcoin. Saylor revealed on Monday that the company’s Bitcoin holdings have generated an impressive 72.4% return this year.

MicroStrategy: Nasdaq 100 and new capital inflows

MicroStrategy’s recent inclusion in the Nasdaq 100 has further improved market sentiment. This development could lead to passive capital inflows from large mutual funds into MicroStrategy shares, which would provide the company with additional funds for further Bitcoin purchases.

Furthermore, the recent BTC rally to a new all-time high above $108,000 is attributed to a wave of short liquidations worth $151 million, confirming Bitcoin’s status as “digital gold,” according to CryptoQuant, while the Bitcoin-to-gold ratio also hit a record high.

Bitcoin maintains its momentum

Although macroeconomic factors such as central bank interest rate meetings could play a role, market confidence in Bitcoin currently dominates. A particularly loose stance by the US Federal Reserve could encourage further price increases for Bitcoin, according to analysts.

At the time of writing, Bitcoin is trading at around $104,140, down 2.6% over the past 24 hours but still up 6.5% week-on-week.

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Margharet Tess

Editor, Developer at Cryptheory Labs

I have been active in the cryptocurrency world for over 6 years, during which I have written countless articles about this sector. What fascinates me most about cryptocurrencies is their technological aspect and the problems they aim to solve. In the past three years, I have ventured into app development and am currently working on a larger project called P2E Buzzer. Stay tuned for the surprise. 🙂 My previous experiences: Business2Community.com, TradingPlatforms.com

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