The world’s largest publicly traded company holding Bitcoin, MicroStrategy (NASDAQ: MSTR ), may report an impairment loss of $3.4 billion in the second quarter as bitcoin collapses.
The data shows that as of the end of the first quarter, MicroStrategy’s bitcoin holdings were worth about $5.9 billion, which means that if Bitcoin’s closing price on the last day of the second quarter is planned at $18,900, MicroStrategy’s bitcoin holdings are worth about $5.9 billion. To shrink by 58% to $2.45 billion, that is, an impairment loss of $3.4 billion.
The drop in bitcoin’s price is a paper loss for the company under U.S. accounting standards, and MicroStrategy won’t register investment gains until it finally sells.
On Wednesday, MicroStrategy CEO Michael Saylor said the firm spent another $10 million on 480 bitcoins at the height of the cryptocurrency market crash.
According to MicroStrategy’s SEC filing, between May 3 and June 28, the firm bought the bitcoins at an average price of $20,817.
Michael Saylor remains adamant that he will not seek to sell his bitcoin holdings.
Mark Palmer, head of digital asset research at BTIG, gave MicroStrategy a “buy” rating in a recent report with a price target of $950. He said his price target is based on bitcoin reaching $95,000 in 2024.
There are only 21 million bitcoins, so the supply of bitcoins is certain, according to Mark Palmer . “This means that the bitcoin price will be driven by demand rather than supply and demand.”