In the wake of the Federal Open Market Committee (FOMC) conference commencing today, the crypto market has been struck between a push and pull game by bulls and bears.
Yesterday, May 3rd, Bitcoin was hopping between support and resistance after the currency hit at $37,600. Then the flagship currency hit around $39,000.
At the time of writing, Bitcoin is changing hands at $38,999 with an increase of 1.13% over the last 24hrs.
The recent transcript of Microstrategy earnings reveals that the company has reportedly seen a huge loss on its Bitcoin holdings and also said that the company will have its first margin call once Bitcoin sees its price action bottoming at $21,000. But hold on, there is a catch here.
Microstrategy’s new Chief Financial Officer (CFO), Phong Le, was questioned about the company’s margin before the company receives margin call in regards to their Bitcoin positions. To which Phong Le replied by saying there is no requirement for the company to add more funds to their position.
In order to receive the first margin call in their position, Bitcoin needs to slice in half from its average entry positioned at $42,000. This means if Bitcoin’s price moves down to $21,000, then the move will invite a margin call. If there is a margin call then the company should include additional funds to their existing position.
What’s Stopping Microstrategy To Receive Margin Call
Though Microstrategy has a chance to receive a margin call at $21,000, the company’s CFO doesn’t look to be worried because of the company’s massive liquidity disposal. Before the flagship currency bottoms at $21,000, Microstrategy is expected to provide funding for their position along with averaging down the position and pulling the margin call limit lower.
A few have also anticipated that the company will be facing a liquidation only when Bitcoin hits $3,000 and if Bitcoin plunge towards 2018 levels, then Microstrategy will have enough liquidation to contribute.