Analyst: MicroStrategy's leverage is lower than you think. BTC needs to fall 80% for the debt alarm to be triggered.

Capital advisor Jeff Walton pointed out in the analysis that MicroStrategy's asset-liability ratio is as high as 5 times, which means the leverage ratio is only about 20%, far lower than the leverage level of traditional giants such as Apple and JPMorgan Chase. In addition, he pointed out that only when the BTC price big dumps by 80%, the value of MicroStrategy's BTC assets will be lower than the liabilities. (Background: Missed out on MicroStrategy (MSTR), the soaring stock, my reflection and upgrade of cognition) MicroStrategy has adopted a BTC reserve strategy since September 2020, with a total investment of $23.427 billion, purchasing 402,100 BTC, currently valued at approximately $38.75 billion, with a return rate of up to 65%. At the same time, this strategy has caused the company's stock price to big pump more than 26 times in the past 4 years, currently around $373.43. With the recent surge of BTC approaching $100,000, market researchers are focusing on MicroStrategy's strategy known as the 'capital perpetual motion machine', attempting to analyze its funding sources and the actual size of leverage. (Extended reading: Deconstructing MicroStrategy's BTC buying behavior and funding source = enhanced version of 'Grayscale + Luna' Expert: MicroStrategy has not fully utilized leverage Yesterday, capital advisor Jeff Walton analyzed the chart and pointed out that MicroStrategy's current leverage ratio is only about 20%, averaging 24% from the end of last year to the present, which is still lower than the following companies: FTX: 110% (i.e., excessive leverage) Apple: 85% JPMorgan Chase: 92% Berkshire Hathaway: 45% TSL (Tesla): 41% Allstate Corporation: 81% Jeff Walton stated that as of December 2 this year, MicroStrategy's assets are 5 times its liabilities. This can be compared to buying a house with a 20% mortgage. With the recent rise in BTC prices and ATM (stock issuance) activities, MicroStrategy's leverage ratio has significantly improved, from 31% at the end of 2023 to the current 20%, allowing more room for debt increase on the balance sheet. Jeff Walton further pointed out that ATM usage takes precedence over convertible debt, allowing the company to have additional space to issuance new debt while maintaining a stable leverage ratio. He concluded: For those who doubt MicroStrategy is a 'Ponzi Scheme' or 'pyramid scheme', they can calculate the data. From the perspective of leverage usage, it is clear that MicroStrategy's balance sheet has not been fully utilized. BTC needs to fall by 80% for the assets to be lower than the liabilities. In addition, Jeff Walton calculated the extent to which the BTC price needs to fall for MicroStrategy's BTC assets to be lower than its liabilities. The result shows that the price needs to fall to $18,826, compared to the current price, a fall of 80%, to achieve this situation. Jeff Walton added: If MicroStrategy's debt is secured by BTC (but it is not actually), then the debt is equivalent to the company holding about 79,000 BTC, while the remaining 322,800 BTC will be considered 'free BTC', i.e., BTC not subject to collateral restrictions. However, he also emphasized that this is only a simulated scenario, in reality: These debts do not have EBITDA (earnings before interest, taxes, depreciation, and amortization) restrictions. The debts are not secured by BTC. All debts can be converted into company stocks, rather than being directly linked to BTC. This statement is only used by analysts to indirectly highlight that MicroStrategy's BTC asset value currently far exceeds its liabilities. Related reports: MicroStrategy again increases the position by purchasing $5.4 billion to buy 55,000 BTC: BTC at $97,000 is not expensive! Rich Dad calls for $13 million for BTC! Supports Michael Saylor's prediction: MicroStrategy is right. Is investing in MicroStrategy better than buying BTC? Three reasons tell you how MSTR can dominate the NASDAQ Trading Volume first Analyst: MicroStrategy's leverage is lower than you think, BTC needs to big dump by 80% to trigger the liability alert This article was first published in BlockTempo, the most influential blockchain news media in the world.