Elain Brown Tech 05.10.2022 09:May AM EDT

Largest Corporate Bitcoin Holder MicroStrategy Becomes Another Casualty in Bitcoin Crash

MicroStrategy, the world's largest corporate bitcoin holder, suffered a pretty big loss on Monday when the price of bitcoin fell below its average purchase price of $30,700.

MicroStrategy went under when the red candle on the BTC/USD chart caused the price to drop below $30,700, which is the average price it paid for all of its more than 129,000 bitcoins. TradingView data shows that Bitcoin fell to its lowest at $30,331 on Monday.

The bitcoin price hasn't had a nice run in recent weeks. The price of Bitcoin has continued to decrease in recent days, following a broader stock market sell-off in the United States last week. In accordance with prior reports, Bitcoin fell by 5% to $32,860.

Later in the day, Bitcoin's price fell to its lowest point since July 2021.

This is the cryptocurrency's lowest price record.

MicroStrategy Losing on Bitcoin

MicroStrategy Inc. is on the losing end for the fourth quarter, following a $146.6 million impairment charge to write down the value of its Bitcoin holdings.

According to Bitcoin Magazine, "the enterprise software-maker run by Michael Saylor, which has made holding Bitcoin on its balance sheet part of its business strategy, took the write-down after the U.S. Securities and Exchange Commission said in January that it couldn't strip out Bitcoin's wild price swings from the unofficial accounting measures it had touted to investors."

The company took a total loss of $90 million, which is worth $8.43 per diluted share. At the same time last year, the software company lost $26.5 million in Bitcoin, while earnings also went up by 2.4%, equaling $134.5 million.

Shares of MicroStrategy, a company based in Tysons Corner, Virginia, didn't change much after the market closed. The stock has dropped 31% this year because of a drop in the price of cryptocurrencies and worries about impairments. After Saylor backed Bitcoin, MicroStrategy's value went up by 40% last year and by 172% in 2020.

Cryptocurrency Volatility

MicroStrategy made its most recent bitcoin acquisition in early April, which was financed using a bitcoin-backed loan. At the time, the software analytics company purchased 4,167 bitcoins for around $190.5 million, representing an average price of approximately $45,714 per bitcoin.

As numerous traders and investors know, the value of cryptocurrency is known to be extremely volatile. Due to the structure of the loan, the corporation runs the danger of having its margin called if the bitcoin price falls below $21,000. However, when MicroStrategy deposits additional bitcoin as collateral, it can avoid being called on for margin and having to sell a portion of the bitcoin that serves as security for the loan.

The last time Bitcoin was trapped below $40,000 was in early March, when it soared in price by 10% to over $42,000 as a result of President Joe Biden's signing of a comprehensive executive order on cryptocurrency regulation.

Increased market volatility can be attributed to a number of factors, including rising inflation, geopolitical events, and concerns about the Federal Reserve's tightening monetary policy.

In addition, CoinDesk reported that the sell-off in crypto happened at the same time that stocks, especially in the tech sector, were still under a lot of pressure. The Nasdaq index of stocks went down by another 4.3%, the S & P 500 fell by 3.2%, and the DJIA went down by 2%.