Michael Saylor and the company he co-founded, Strategy (formerly MicroStrategy)has become synonymous with Bitcoin following the company’s pivot to being a BTC treasury company. Over the years, the company has grown to become the leading public company with the largest BTC holdings amounting to tens of billions of dollars. Although the whole BTC stack is now in big profit, there is a lot of speculation about what will happen if the Bitcoin price falls to the Strategy’s Average Buy Price.
Analyze the strategy’s Bitcoin holdings
The strategy has been steadily buying Bitcoin for the past four years following Michael Saylor first introduced the idea in 2020. These purchases have occurred at intervals with varying amounts of BTC purchased at different points in Bitcoin’s life cycle thus far, causing its average purchase price to fluctuate over time.
At the time of writing, Strategy currently has 641,205 BTC after its last purchase on November 3rd. The company had bought 397 BTC at an average price of $114,771 per Bitcoin, costing a total of about $45.6 million. This purchase brought the company’s average purchase price to $74,057 per BTC.
Its total holdings of 641,205 BTC cost $47.487 billion, but with rise in Bitcoin price over the yearsthe company sees over $18 billion in profits to date. According to data from Bitcoin Treasures, the entire BTC holdings are now worth $64.91 billion, representing a gain of 36.61%.
Given the information above, Strategy’s BTC holdings remain solid in gains and appear to be a good move so far. However, with the Bitcoin price crashing below $100,000 this week, there are many questions about what would happen if the Bitcoin price were to crash to the Strategy’s average price.
Some crypto community members on X (formerly Twitter) have speculated that this means that the entire holding is liquidated, but this is not the case. Strategy’s BTC holdings cannot be liquidated by the price falling below its average price because it actually owns the BTC it holds.
If the Bitcoin price were to fall below $74,000, the holdings would simply be at a loss, i.e. the price is now lower than where it was bought. In order for the holdings to be liquidated, the company must sell on the market, regardless of price, to repay the investors.
However, Saylor has previously said that the company has no plans to sell their significant BTC holdings anytime soon. Despite many rumors that the company was selling its BTC, which Saylor has dismissed, it has instead continued to buy, paving the way for other Bitcoin treasury companies in the space.
Featured image from Dall.E, chart from TradingView.com
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