Summary
TLDR: MicroStrategy has amassed a $14 billion Bitcoin treasury, mostly bought with debt, raising concerns about potential future deleveraging. Despite record-high Bitcoin futures contracts, leverage in the market is currently moderate and not at risk of triggering a crash.
Key Points
1. MicroStrategy has amassed a 205,000 Bitcoin corporate treasury worth nearly $14 billion at current market prices. It’s almost enough to have kept pace with the $15 billion worth of Bitcoin that BlackRock has bought up to back shares of its ‘s iShares Bitcoin Trust.
2. JP Morgan analysts express concerns about the way MicroStrategy has been buying BTC, stating that “debt-funded bitcoin purchases add leverage and froth to the current crypto rally and raise the risk of more severe deleveraging in a potential downturn in the future.”
3. Despite optimism in the market, the leverage used is still at a moderate level of 0.20, according to CryptoQuant. This indicates that there is not yet a high risk of widespread liquidations that could potentially trigger a market crash.