Strategy warns "Bitcoin (BTC) faces potential liquidity crisis in case of sharp decline"

JH Kim

Summary

Strategy warned of potential corporate profitability deterioration and increased tax burden due to Bitcoin's expanding volatility.
The company stated that a sharp decline in Bitcoin value could lead to a liquidity crisis.
They revealed that potential taxation on Bitcoin holdings according to IRS policies could impact the company.

According to The Block, a cryptocurrency-focused media outlet, on the 18th (local time), Strategy (formerly MicroStrategy) announced that as Bitcoin (BTC) volatility expands, corporate profitability could deteriorate and tax burden may increase.

Through its annual financial report (10-K) submitted to the Securities and Exchange Commission (SEC), Strategy stated that "due to poor performance in the corporate analysis software business last year, we may need to rely on funding," and warned that "since our funding capability largely depends on the market value of our held BTC, a sharp decline in BTC value could trigger a liquidity crisis."

The company added, "According to IRS policies, unrealized fair value gains from BTC holdings may become subject to taxation," and "in this case, Strategy's tax burden could become excessive."

Meanwhile, as of 01:30 on the 19th, BTC is trading at $95,241.54 on the Binance USDT market, down 0.34% from the previous day.