Here’s the Bitcoin Price That Could Trigger MicroStrategy’s Liquidation

CryptoQuant founder reveals the Bitcoin price that could trigger a liquidation event for MicroStrategy in an attempt to dismiss concerns.

Business intelligence firm MicroStrategy, led by Michael Saylor, remains one of Bitcoin’s most prominent institutional investors. The company has consistently increased its Bitcoin holdings, despite the potential risks tied to such aggressive accumulation. 

MicroStrategy’s Bitcoin Liquidation Price

While the firm has seen massive gains, some critics like Peter Schiff have expressed concerns over these financial risks. Ki Young Ju, the founder of CryptoQuant, recently highlighted the Bitcoin market conditions that could trigger MicroStrategy’s liquidation. 

MicroStrategy only goes bankrupt if an asteroid hits Earth.

For 15 years, #Bitcoin has never dropped below the cost basis of long-term whales, which currently stands at $30K.$MSTR debt is $7B and its $BTC holdings are worth $46B. Based on BTC alone, the liq price is $16.5K. pic.twitter.com/cTwwTGYif4

— Ki Young Ju (@ki_young_ju) December 17, 2024

In an effort to emphasize how unlikely this scenario is, he stated that MicroStrategy’s financial collapse would only occur in extremely catastrophic scenarios, such as an asteroid hitting Earth.  

At the time of his disclosure, MicroStrategy’s BTC holdings were worth $46 billion. The company’s outstanding debt stood at $7 billion, which places its liquidation price for Bitcoin at $16,500. 

This means Bitcoin would need to plunge to $16,500 for the company to risk losing its massive holdings. Notably, the last time Bitcoin saw this price level was in November 2022, in the aftermath of the FTX implosion.

According to Ju, Bitcoin’s historical price data reassures MicroStrategy of the safety of its position. For over 15 years, BTC’s price has never fallen below the realized cost basis of long-term Bitcoin whales. 

Can BTC Drop Below the Old Whales’ Realized Price?

At press time, Bitcoin has maintained the $100,000 mark, currently trading for $102,268 despite yesterday’s market bloodbath. Meanwhile, the cost basis for long-term whales currently stands at $30,000, much higher than MicroStrategy’s liquidation price of $16,500.

For context, “long-term whales” refer to Bitcoin holders with addresses containing over 1,000 BTC for more than 155 days. These addresses exclude wallets linked to exchanges or miners. Historical data reveals that Bitcoin has consistently traded above the realized price of these whales.  

Bitcoin came close to falling below this crucial realized price metric in November 2022, during the collapse of the FTX empire. At the time, Bitcoin’s price sank to $16,600, perilously close to the $15,407 realized price of long-term whales. Despite the steep drop, market bulls managed to stabilize prices and prevent a further decline.  

This recovery showed the strength of Bitcoin’s support levels, particularly when it nears the realized price of long-term holders. Since then, Bitcoin has remained well above the realized price metric, bolstering confidence in the resilience of its price floor.  

MicroStrategy’s Bitcoin Strategy 

Notably, MicroStrategy’s Bitcoin investment strategy involves leveraging convertible debt offerings to acquire massive amounts of the asset, which has often raised questions about financial sustainability if market conditions turn unfavorable.  

The software company has so far spent $27 billion to accumulate 439,000 BTC at an average cost of $61,694 per Bitcoin, according to data from Saylor Tracker.

The current value of these holdings stands at $44.86 billion, reflecting a gain of $17.77 billion based on the most recent Bitcoin price of $101,000. MicroStrategy’s latest purchase included 15,350 BTC for $1.5 billion at an average price of $100,386.