You can see a stock chart with a representation of bitcoin in this photo illustration taken on March 13, 2020. REUTERS / Dado Ruvic / File Photo
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SINGAPORE, June 14 (Reuters) – Bitcoin approached a price level on Tuesday that could force software firm MicroStrategy Inc (MSTR.O) to add more tokens against a bitcoin-backed loan or sell some of its vast holdings, establishing fragile cryptocurrency markets. near.
MictroStrategy, an aggressive investor in bitcoins, said it borrowed $ 205 million from cryptobank Silvergate Capital (SI.N) in March, with the three-year loan secured mainly against some 19,466 bitcoins.
If the price of bitcoin fell below $ 21,000, that would trigger a “margin call” or additional capital demand, MicroStrategy President Phong Le said in a webcast in May.
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Bitcoin fell below that level to $ 20,816.36 on Tuesday before staying around $ 22,000. Normally, a margin call is fulfilled by providing more capital or settling the loan guarantee.
It was unclear if the price moves would have consequences for MicroStrategy or if the company already provided more bitcoins or cash to secure the loan.
The company and Silvergate did not respond to requests for comment.
Le from MicroStrategy said in May that the company had 95,643 “unrecorded bitcoins” that it could use as additional collateral. According to the last bitcoin price of $ 22,254, the value of these coins was $ 2.1 billion.
“We could add more bitcoins to the collateral package, so … we’re not in a margin call situation,” he had said.
Mark Palmer, head of digital asset research at BTIG, downplayed the risk of a margin call forcing MicroStrategy to cut its holdings. “We don’t see any circumstance in which MicroStrategy has to sell any of its holdings in bitcoins,” he said.
However, the situation, while not making MicroStrategy sell anything, was enough to keep the mood nervous.
Shares of MicroStrategy fell 3% and Silvergate lost 2% on Tuesday, extending Monday’s 25% and 17% fall losses online with a decline in cryptocurrency assets.
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Report by Tom Westbrook in Singapore and Medha Singh in Bangalore; Editing by Arun Koyyur
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