Cryptocurrencies

MicroStrategy’s Bitcoin-Backed Loan Risks Margin Call Amid Fall

Coin tests prices that may trigger a need for more collateral
Firm used the $205 million loan in March to buy more tokens

WATCH: Bitcoin dropped 10% Tuesday before paring much of the slide. Ether and Avalanche also trimmed losses.Source: Bloomberg

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By Joanna Ossinger

June 14, 2022 at 4:40 AM UTC

Updated on

June 14, 2022 at 2:22 PM UTC

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MicroStrategy Inc. may need to post additional collateral for a Bitcoin-backed loan as the price of the world’s largest cryptocurrency tests a key price level of $21,000 flagged by the company.

The software firm controlled by Bitcoin advocate Michael Saylor had used its vast Bitcoin holdings to secure a $205 million loan in March to buy even more cryptocurrency. But as the value of that collateral initially worth around $820 million falls to about half that, the company may need to provide more capital to back the loan.