By Sam Boughedda
In a word to purchasers on Wednesday, Bernstein analysts mentioned the likelihood that Microstrategy (NASDAQ:) tokens will must be bought for debt compensation is intently tied to BTC value efficiency.
Whereas analysts do not assume MSTR’s place is not giant sufficient to skew costs per se, they do imagine it poses a sentiment threat to BTC costs throughout bearish cycles.
“MSTR’s means to repay debt is just tied to BTC costs. Its debt is ~$2.2 billion (BTC held ~$4 billion) with debt repayments solely than in/after 2025 and 15,000 BTC pledged, out of 140,000 held Excessive BTC costs imply a stronger stability sheet, increased inventory costs and simpler debt compensation (because of the conversion of 2025/27 notes or issuance of latest debt/fairness) with out promoting its BTC holdings,” the analysts wrote.
They assume MSTR provides reflexivity however shouldn’t be a spotlight threat. Nevertheless, in a bear market, the corporate’s potential BTC sale is an overhang.
“Like all leveraged longs, MSTR provides some reflexivity to BTC markets,” the analysts added. “Nevertheless, it solely holds about 0.7% of the overall BTC in circulation, and its holdings symbolize about 20% of the common each day quantity traded within the BTC spot markets. The small proportion of the overall market capitalization / each day volumes implies that MSTR doesn’t essentially pose a focus threat, even contemplating that buying and selling volumes fall throughout crypto bear markets.”
“MSTR’s giant place could possibly be an overhang throughout bear markets (H2CY22). In a possible bear market, MSTR’s stability sheet might look weak and it could not be capable of elevate capital to repay its debt, the forcing it to promote its BTC tokens. The potential liquidation of MSTR’s BTC throughout bear markets creates an overhang for BTC in a bear cycle.”
