Bitcoin's plunge spells trouble for the dot-com era entrepreneur who went all in
In this article
Having once lost $6 billion at the height of the dotcom bubble, software entrepreneur Michael Saylor is no stranger to volatility in the financial markets.
In 1999, MicroStrategy, Saylor's software firm, admitted to overstating its revenues and erroneously reporting a profit when it actually made a loss. The fiasco shaved over $11 billion off MicroStrategy's stock market value in a single day.
Now, more than two decades later, MicroStrategy is again facing questions over some of its accounting practices — this time in relation to a $4 billion bet on bitcoin.
The world's biggest cryptocurrency briefly tumbled below $21,000 Tuesday, a key level at which MicroStrategy would be faced with a margin call that investors fear could cost the firm millions.
MicroStrategy was not immediately available for comment when contacted by CNBC.
Saylor first got into bitcoin in 2020, when he decided to start adding the cryptocurrency to MicroStrategy's balance sheet as part of an unorthodox treasury management strategy.
His belief was a common one among the crypto faithful — that bitcoin provides a store of value uncorrelated with traditional financial markets.
That's turned out to be a risky gamble, with digital currencies now moving in lockstep with stocks and other assets plunging amid fears of an aggressive interest rate hiking cycle from the Federal Reserve.
Bitcoin's price plunged 10% to $20,843 on Tuesday, extending a brutal sell-off and dragging it deeper into levels not seen since December 2020. That comes after crypto lending firm Celsius halted withdrawals on Monday, citing «extreme market conditions.»
MicroStrategy has bet billions on the cryptocurrency — $3.97 billion, to be exact. As at March 31, MicroStrategy
Read more on cnbc.com
