Michael Saylor and the company he co-founded, Strategy (formerly MicroStrategy), have become synonymous with Bitcoin since the company pivoted into a BTC treasury company. Over the years, the company has grown into a major public company with the largest BTC holdings reaching tens of billions of dollars. While the entire Bitcoin stack is currently making big gains, there is speculation about what will happen if the Bitcoin price drops to Strategy’s average purchase price.
Analyzing Strategy’s Bitcoin holdings
Strategy has been steadily purchasing Bitcoin over the past four years since Michael Saylor first introduced the idea in 2020. These purchases have so far been made at regular intervals with varying amounts of BTC being purchased at different points in Bitcoin’s lifecycle, thus causing the average purchase price to fluctuate over time.
As of this writing, Strategy currently holds 641,205 BTC after purchasing it on November 3rd. The company purchased 397 BTC at an average price of $114,771 per Bitcoin, for a total value of approximately $45.6 million. With this purchase, the company’s average purchase price was $74,057 per BTC.
Its total holdings of 641,205 BTC cost $47.487 billion, but years of rising Bitcoin prices have netted the company more than $18 billion in profits to date. According to data from Bitcoin Treasures, the total BTC holdings are currently worth $64.91 billion, which translates to a profit of 36.61%.
Considering the information above, Strategy’s BTC holdings remain solidly profitable and appear to be a good move so far. However, with the price of Bitcoin falling below $100,000 this week, many are asking what will happen if the price of Bitcoin crashes to the Strategy’s average price.
Some crypto community members on X (formerly Twitter) have speculated that this means their entire holdings will be liquidated, but this is not the case. The BTC held by Strategy is actually owned by the company and will not be liquidated even if the price falls below the average price.
If the price of Bitcoin falls below $74,000, your holdings will simply be a loss. That means the price is lower than where you bought it. To liquidate your holdings, you need to sell them on the market at any price to repay your investors.
However, Saylor has said in the past that the company has no plans to sell its significant BTC holdings anytime soon. Despite numerous rumors that the company was selling BTC, which Saylor debunked, the company instead continued to buy, paving the way for other Bitcoin treasury companies in the space.
Featured image from Dall.E, chart from TradingView.com
