US-based software company MicroStrategy is known as an institution that has managed a large part of its balance sheet with Bitcoin since 2020 and is known for its aggressive BTC investments in the industry. The company announced a net loss of $12.5 billion in the first quarter of 2024, due to the decline in Bitcoin price.
Bitcoin sell signal and changing strategy
Michael Saylor, chairman of MicroStrategy’s board of directors, said that unlike the “never sell” policy that the company has implemented so far, they can sell Bitcoin if necessary in order to break the panic in the markets or reassure investors. At the meeting where the first quarter financial results were announced, Saylor said, “We can probably sell some Bitcoin to find resources for the dividend so that the market becomes immune and this is a message.” He stated:
The company and Bitcoin are in good shape, the industry is solid and there is no danger to the world, Saylor said, following the loss that occurred during the period when the BTC price fell 23.8 percent on a quarterly basis.
In his statement on CNBC in February, Saylor stated that MicroStrategy could pay its debts without selling BTC even in possible price drops and that they would continue to purchase Bitcoin in the long term. The company argued that it had the power to fulfill its debt obligations even if the Bitcoin price dropped to $8,000.
Giant Bitcoin purchases and Stretch strategy
MicroStrategy’s Bitcoin purchases have accelerated especially since 2020. The company has purchased 145,834 Bitcoins since the beginning of the year through a rolling preferred stock issue called Stretch (STRC), which has been paying dividends in recent months. Thus, total BTC assets reached 818 thousand 334, and its value reached 66.7 billion dollars.
Saylor stated that they aim for Stretch to become the largest credit instrument in the world. It is anticipated that as the size of the company’s assets under management increases, liquidity will strengthen, thus increasing interest in and adoption of the product.
A new era in Bitcoin secured financial products
According to the statements, some Bitcoin-focused decentralized finance protocols such as Pendle and Saturn have recently started to offer more liquid products to investors by tokenizing Stretch’s dividend, which provides a monthly return of 11 percent. These steps enabled the Bitcoin-secured loan market to grow rapidly.
Michael Saylor noted that he believes that in the near future, a neobank offering digital yield account services will bring these products to individual investors with Bitcoin collateral. It was stated that nearly three dozen new initiatives have emerged in this field in the last eight to twelve weeks.
Saylor stated that Bitcoin-secured digital yield products can offer investors up to 8 percent returns, which is higher than many stablecoins.
He thinks there will be more exciting developments in the Bitcoin loan market in twelve weeks.
Following the announced financial results, MicroStrategy’s share price lost 4.33 percent in after-hours trading, falling to $178.80.
On the other hand, with Bitcoin gaining almost 20 percent in value since April 1, rising to $81,250, MicroStrategy is preparing to announce stronger results in the second quarter.
