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BTC price gains 4% pre-Fed as MicroStrategy vows to protect Bitcoin from $21K crash

WikiBit 2022-05-04 22:41

Abstract:Worries over capitulation see MicroStrategy give away key insights into what it would do should Bitcoin price strength deteriorate.

  Bitcoin (BTC) saw classic “choppy” price action on May 4 with hours to go before fresh Federal Reserve cues.

Bulls pin hopes on history

  Data from Cointelegraph Markets Pro and TradingView followed BTC/USD as it bounced between support and resistance after hitting $37,600 on the evening of May 3.

  A subsequent bounceback saw the pair clip $39,000 at the time of writing, providing relief to low-timeframe traders at 4.1% off the lows.

  More broadly, however, Bitcoin stayed rangebound and beholden to macro triggers as markets braced for Fbrace for Fed-induced volatility.

  The two-day meeting of the Federal Open Markets Committee (FOMC) and press conference was due to begin at 2:00 pm EST on May 4.

  With little to comfort bulls, some turned to historical comparisons. The start of the Feds previous cycle of key interest-rate hikes in 2015 proved a turning point for BTC price strength, thus culminating in the December 2017 blow-off top.

  “BTC is now testing a multi-week resistance,” popular trader and analyst Rekt Capital, meanwhile, concluded about the daily chart following the uptick above $39,000:

“Break this and the multi-week downtrend is over and $BTC will enjoy upside.”
MicroStrategy plans for BTC to “never get” to $21,000

  Elsewhere, amid growing calls for a “capitulation” style event to put in a fresh macro bottom on BTC/USD, contingency plans were also becoming conspicuously more vocal.

  Related: ‘More likely’ BTC price will hit $100K before Bitcoin sweeps $30K lows, forecast says

  MicroStrategy, the company with the worlds largest Bitcoin corporate treasury, went as far as to say that it would up its Bitcoin buys in such a scenario.

  Speaking on its Q1 earnings call, Phong Le, the firms president and chief financial officer, also revealed the conditions under which it would receive a margin call on its Bitcoin-collateralized loan.

  “As far as where Bitcoin needs to fall, we took out the loan at a 25% LTV, the margin call occurs 50% LTV. So essentially, Bitcoin needs to cut in half or around $21,000 before we'd have a margin call,” he said:

“That said, before it gets to 50%, we could contribute more Bitcoin to the collateral package, so it never gets there, so we dont ever get into a situation of March call also.”

  MicroStrategy thus appeared to state that it would actively support Bitcoin markets during a major capitulation. As Cointelegraph recently reported, BTC price forecasts currently call for between $25,000 and $30,000 as a worst-case scenario.