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Michael Saylor is one of the entrepreneurs most committed to merging BTC with traditional finance. However, some analysts fear that Bitcoin will eventually bankrupt MicroStrategy. Is this possible? For CryptoQuant CEO Ki Young Ju, there are chances of this happening, but they are really remote.
In a post on his X account, Ju stated that while it is possible for this to happen, the chances are low. In fact, he assures that this would only be possible in the context of a black swan of enormous dimensions, such as an asteroid that impacts the Earth.
He supports this statement with a key fact about the largest Cryptocurrency and it is the average base cost of whales in the long term. He explains that in its entire history, not even in the worst of winters, BTC has never fallen below this benchmark. Currently, it stands at $30,000.
However, if this phenomenon were to occur for the first time with the arrival of a black swan, MicroStrategy would not go bankrupt. This is due to specific factors such as the company’s debt, which amounts to $7 billion, while its assets in BTC are $46 billion.
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
What would be the price of Bitcoin that drives MicroStrategy to bankruptcy?
With BTC losing the average base cost of whales for the first time in its history, the firm’s reserves would remain on top of its debt. This means that in this unlikely scenario, the firm would stay afloat without major problems.
Thus, doing the calculation only in the company’s bitcoins, the price of the currency would have to fall to $16,500 to cause the fall, according to Ju. Despite this, the expert adds that this conclusion is a mere theoretical simplification that assumes that the board will remain idly by.
On the other hand, Ju responds to some comments about MSTR’s survival when BTC fell to $16K in 2022. He explains that the bottom was different then. When Bitcoin’s high was $60K the bottom (which is now $30K) was approximately $3K, he notes.
During the last few weeks, the company MicroStrategy has made massive purchases of Bitcoin. Currently, its balance sheets accumulate 439,000 bitcoins and the company is preparing for its 21/21 plan. This consists of raising $42 billion between 2025 and 2027 to buy BTC.
According to the firm’s CEO, Michael Saylor, the price of Bitcoin will reach $13 million per coin in the long term. This means that the current massive purchases are bargain prices.
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