Locked And Loaded: MicroStrategy Takes $200M Loan To Buy Bitcoin

BitcoinistPublished on 2022-03-30Last updated on 2022-03-30

Abstract

Software company MicroStrategy is read to buy the Bitcoin dip. According to a press release, the company took a $205...

Software company MicroStrategy is read to buy the Bitcoin dip. According to a press release, the company took a $205 million loan from Silvergate Bank, a financial solution provider for the crypto industry.
The company took the loan via MacroStrategy, a subsidiary created with the purpose of holding its parent company’s Bitcoin funds. As per the release, the $205 million loans were issued under the Silvergate Exchange Network (SEN) and its Leverage program and will mature on March 23, 2025.
The SEN was launched in 2020, the release clarified, to address the demand for BTC collateralized loans. The financial institution claims the program has seen great interest which suggests a growing demand for BTC-backed loans.
Michael Saylor, Chairman, and CEO at MicroStrategy said:
The SEN Leverage loan gives us an opportunity to further our position as the leading public company investor in bitcoin. Using the capital from the loan, we’ve effectively turned our bitcoin into productive collateral, which allows us to further execute against our business strategy.
As collateral, MacroStrategy used “certain Bitcoin” held by the subsidiary and secured with a custodian entity approved by both parties. In addition to buying BTC and increasing one of the largest private holdings by a company, MicroStrategy will use the loan to pay fees, interest, and related expenses.
Alan Lane, Chief Executive Officer at Silvergate said the following:
We’re thrilled to add MicroStrategy to our growing list of SEN Leverage borrowers. Their innovative approach to treasury management is an exceptional example of how institutions can utilize their bitcoin to support and grow their business.
MicroStrategy Rushes To Buy Bitcoin?
The price of BTC continues its upward trajectory as the news about MicroStrategy broke. The first crypto by market cap trades at $47,800 with a 16% profit in the past 7-days.

Bitcoin BTC BTCUSD

BTC with bullish momentum on the 4-hour chart. Source: BTCUSD Tradingview On social media, users discuss MicroStrategy’s potential impact on BTC’s price as some entities could attempt to front-run the software company. This could lead to extended bullish price action.
As mentioned, MicroStrategy is one of the largest BTC holders. Data from BitcoinTreasuries indicates the company holds over 125,000 BTC after investing around $2 billion.
The company has seen an increase in its competitors. Terra’s Luna Foundation Guard is set on becoming the biggest BTC holder and dethroning MicroStrategy.
The entity perceives BTC as pristine collateral and has already begun accumulating it. The objective is to protect the 19% APY offer by the Anchor Protocol, and hedge Terra’s native stablecoin against potential downside periods.
Do Kwon, co-founder at Terraform Labs, the company behind Terra’s development, has publicly challenged Saylor.
The Terra Protocol will be one of the largest holders of $BTC@saylor beware
— Do Kwon 🌕 (@stablekwon) March 2, 2022

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