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Why MicroStrategy’s Latest $400 Million Bitcoin Buy Is Different From the Others

Prices in MicroStrategy stocks and bonds dipped on the news.

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Cloud software company MicroStrategy announced today that it intends to buy an additional $400 million in Bitcoin to add to the 92,079 BTC ($3.3 billion) it already holds in its treasury. It also announced those Bitcoins will be held under a new subsidiary called MacroStrategy.

$400 million would allow the firm to buy another 11,215 at the current price. To raise the money for the purchase, MicroStrategy is returning to its bag of tricks and selling bonds. Bonds are debt people can buy, with the promise of receiving back their principal and interest. In this case, institutions can purchase debt in MicroStrategy, which the company will then use to buy more Bitcoin, which it believes will increase in value (or at least hold its value better than dollars).

In this sale, MicroStrategy is issuing senior secured notes that will mature in 2028. In previous bond sales, MicroStrategy sold convertible senior notes. The basic difference is that convertible notes have an option to convert them into MSTR shares.

But if market data is any indication, investors may have soured on the firm’s aggressive pursuit of Bitcoin, which has left it with little cash on hand. As Bloomberg notes: “The private placement is $23 million higher than the company’s entire operating cash flow since 2016.” MicroStrategy, ostensibly a cloud software and analytics company, has basically become a publicly traded Bitcoin fund.

The company’s stock dipped 3% today on the news, settling at just below $470. Its existing bonds took even larger hits on bond markets, declining in value by 9%. The $900 million in convertible bonds it sold in February at $101.25 are now down to $66.62, according to data from Morningstar.

Bloomberg describes the corporate debt being issued for the latest Bitcoin buy as “junk bonds,” meaning they’re at a higher risk of defaulting. 

As if to underline the point that it’s playing a high-risk game with a volatile asset, MicroStrategy posted SEC filings on its website today indicating that the company was taking an impairment loss of $284.5 million “based on the fluctuations in market price of bitcoin during the second quarter of 2021.” Its total impairments are up to $500 million, per Bloomberg. An impairment loss reduces the value of an asset on a company balance sheet to the lowest price that quarter, meaning MicroStrategy is now officially valued at less than it was last week.

The price of Bitcoin has plummeted from its all-time high of $63,501 on April 12 to roughly $35,600 today. While some of the impairment loss is due to arcane accounting rules, it’s also obvious that MicroStrategy’s Bitcoin bet is no longer as profitable as it once looked.

That said, on paper, it has paid off. According to MicroStrategy, it has purchased its Bitcoin at an average price of $24,450 per BTC. Even with Bitcoin’s humdrum spring, MicroStrategy has made back over $1 billion in unrealized gains (before considering the tax implications).

But MicroStrategy CEO Michael Saylor isn’t about to sell, the way Tesla sold some of its $1.5 billion Bitcoin investment earlier this year in an effort, Elon Musk said, to prove Bitcoin’s liquidity. Saylor has repeatedly made that clear, and made it clear again when he appeared on stage at the Bitcoin 2021 conference in Miami last weekend and hugged Bitcoin podcaster Max Keiser after Keiser screamed, “We’re not selling! Fuck Elon! 

The publicly traded company already has an estimated 72% of its treasury in Bitcoin, making its stock the closest thing to a Bitcoin ETF on the U.S. market. With this additional purchase, it will further tie its fortunes to Bitcoin’s. Expect more purchases to come. 

Coinsmart. Beste Bitcoin-Börse in Europa
Source: https://decrypt.co/72983/why-microstrategy-latest-400-million-bitcoin-buy-differentothers

Blockchain

$71B in crypto has reportedly passed through ‘blockchain island’ Malta since 2017

The Financial Action Task Force, a membership body of 37 jurisdictions and two regional organizations, has flagged Malta’s initial push to attract cryptocurrency business as “problematic.”

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Malta’s strategy to become a global enclave for digital assets appears to be working, though lax regulatory oversight has raised concerns over money laundering and other financial crime. 

Roughly $71 billion, or 60 billion euros, worth of cryptocurrencies have passed through Malta since the tiny Mediterranean state first adopted its “blockchain island” strategy in 2017, the Times of Malta reported Sunday. Although Malta has upgraded its crypto-focused regulations in recent years, financial watchdogs are concerned about whether the nation’s anti-money laundering regime has been robust enough.

The Financial Action Task Force, or FATF, met in Paris last week to discuss whether Malta should be put on a list of countries that have fallen short of their obligations to stop financial crime. Specifically, the financial watchdog is concerned about Malta’s initial push to embrace cryptocurrencies in 2017 and 2018 when the sector was far less regulated. FATF officials also expressed concerns over the country’s law enforcement regime.

Several blockchain companies established operations in Malta in 2018, including cryptocurrency exchange Binance, in anticipation of more favorable laws. Companies that set up shop in the country were allowed to operate without a license for up to one year. An industry source told the Times of Malta that the one-year grace period contributed to “an explosion of high-risk transactions carried out by cryptocurrency exchanges in an unlicensed environment.”

Related: Binance is not authorized to operate in Malta, financial regulator says

Nevertheless, Malta is still considered a favorable destination for crypto-asset firms. As Cointelegraph reported, Crypto.com recently acquired Malta’s Class 3 Virtual Financial Asset License, paving the way for broader recognition of cryptocurrencies across the European Union.

In June 2020, Malta broadened its blockchain ambitions, pivoting to digital assets more holistically as a way to drive adoption and business growth. “We’re moving away from blockchain island, and more towards a digital island because we believe more in this holistic vision that includes all aspects and technological components,” Kearon Bruno, chairman of Digital Economy Think Tank tasked with growing Malta’s economic portfolio, told Cointelegraph at the time.

Coinsmart. Beste Bitcoin-Börse in Europa
Source: https://cointelegraph.com/news/71b-in-crypto-has-reportedly-passed-through-blockchain-island-malta-since-2017

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Blockchain

Every quad witching, this Chainlink price trend can be observed

LINK-powered projects have garnered support from several influencers since the last price rally. Trading at $21.39 level, the market capitalization was at $21.9 Billion level based on data from coinma

The post Every quad witching, this Chainlink price trend can be observed appeared first on AMBCrypto.

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LINK-powered projects have garnered support from several influencers since the last price rally. Trading at $21.39 level, the market capitalization was at $21.9 Billion level based on data from coinmarketcap.com. Based on previous instances, following quad witching, options expiration, LINK’s price rallies consistently every instance.

LINK price moves in this exact way every quad witching

LINK/USD Denominated Closing Price Coinmetrics | Source: Twitter

Based on the above chart from Coinmetrics, LINK’s price is not likely to recover until next week. The concentration by large HODLers is increasing, it has crossed 75% based on data from intotheblock. Besides, with the increase in concentration the percentage of HODLers profitable at the current price level. The percentage of profitable HODLers has increased consistently following a recovery from a dip.

This trend first emerged in the March of 2020, and then it went on for over a year, repetitively. This trend is centered around options expiration, though on-chain metrics suggested that the narrative was bullish based on active traders, and trade volume.

However, it’s interesting that despite new partnerships and updates, LINK’s price has dropped with other alts in the current crash. If the price drops further, it may drop below the psychologically important $20 level. The current price is still mid-way to the lowest that LINK’s price has been in the past 8 weeks. Since there is no hype around DeFi right now, LINK’s price was likely to continue dropping.

A drop in the overall TVL of DeFi is likely to lead to further consolidation in LINK. At the same time, ETH’s increasing strength, volatility, and price rally are likely to have a bullish impact on LINK’s price. LINK was undervalued at a time when sidechains are overvalued.

Traders who held LINK for less than 12 months may consider hedging their position to protect from the drop and consider accumulating as well, while LINK consolidates. It is a bullish narrative for LINK in the long-term since the recovery is expected to be strong, keeping with the trend. LINK is likely to follow, while ETH leads the second altcoin rally in 2021.


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Coinsmart. Beste Bitcoin-Börse in Europa
Source: https://ambcrypto.com/every-quad-witching-this-chainlink-price-trend-can-be-observed

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Michael Burry Predicts Bitcoin Will Follow This Pattern, Has BTC Bottomed Out?

Bitcoin has displayed high volatility during the weekend. The first cryptocurrency by market cap has lost two critical support points and, at the time of writing, trades at $34,312 with a 5.3% loss in the daily chart. Legendary former hedge fund manager Michael Burry has returned to social media. Via his Twitter account, he has […]

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Bitcoin has displayed high volatility during the weekend. The first cryptocurrency by market cap has lost two critical support points and, at the time of writing, trades at $34,312 with a 5.3% loss in the daily chart.

Bitcoin BTC BTCUSD
BTC on a downtrend in the daily chart. Source: BTCUSD Tradingview

Legendary former hedge fund manager Michael Burry has returned to social media. Via his Twitter account, he has made some predictions about the markets. Many are pessimistic and could be bad news for investors with long positions.

Burry is famous for predicting the collapse of the mortgage bond market. His fund Scion Asset Management made a big profit by shorting this market in the mid to late 2000s.

In his latest tweet, Burry compared Bitcoin with NFL player Troy Polamalu. Jokingly, Burry asked his followers what the cryptocurrency has in common with Polamalu and shared the chart below.

Bitcoin BTC BTCUSD
Source: Michael Burry

Here, the former hedge manager predicts BTC’s price will follow a Head and Shoulders pattern. This chart formation usually presents itself as a baseline with three peaks. This pattern suggests a flip from a bullish to a bearish trend.

Many replied to Burry for this prediction, some consider it accurate, and others tried to rebut it. A trader said: “It seems we’re going down to -5000$ on the negative scale. Reasonable”.

Burry has been highly critical of the crypto market’s alleged high number of investors with leverage positions. He is now betting against Bitcoin and other cryptocurrencies, as well as against profitable companies in the traditional market.

When crypto falls from trillions, or meme stocks fall from tens of billions, #MainStreet losses will approach the size of countries(…). If you don’t know how much leverage is in crypto, you don’t know anything about crypto

Bitcoin Outlook In The Short Time, Rebound Incoming?

The bulls stand at the last line of support, Bitcoin must hold above $33,500 or it risks a further retracement towards the $20,000 area. Analyst Ali Martinez has recorded several sales signals for BTC in the past 24 hours.

The first one was recorded by the TD Sequential, an indicator used to measure when a price might have exhausted an up or downtrend, in the 24-hour chart yesterday. At that time, the price dropped below $37,000 and range in the $35,000 area for several hours until Bitcoin went lower to its current levels. Martinez added:

Based on the TD, there is a chance BTC could hold above this $33.5K since this indicator is flashing a buy signal on the BTC 12hr chart.

Bitcoin BTC BTCUSD
Source: Ali Martinez

The area around $31,700 to $33,500, according to Martinez, is a major resistance zone with 1.3 million addresses that bought 643,000 BTC at those levels. The TD Sequential indicator flashed a buy signal in the 12-hour chart, Martinez said. If support holds, BTC could rebound to the $37,000 area.

(…) the most significant support zone underneath #Bitcoin sits between $31.7K and $33.5K (…). Losing this area as support could push BTC to the next critical demand barrier at $23.4K.

BTC BTCUSD
Source: IntoTheBlock via Ali Martinez

Coinsmart. Beste Bitcoin-Börse in Europa
Source: https://bitcoinist.com/michael-burry-predicts-bitcoin-will-follow-this-pattern-has-btc-bottomed-out/?utm_source=rss&utm_medium=rss&utm_campaign=michael-burry-predicts-bitcoin-will-follow-this-pattern-has-btc-bottomed-out

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Stock to Flow Analysis: Worst Case Scenario Could See $135K BTC by December

Worst case price prediction for bitcoin using the stock to flow analysis could see bitcoin hitting $135,000 by December 2021 according to PlanB

The post Stock to Flow Analysis: Worst Case Scenario Could See $135K BTC by December appeared first on BeInCrypto.

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Worst case price prediction for bitcoin using the stock to flow analysis could see bitcoin hitting $135,000 by December 2021 according to PlanB

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Popular crypto analyst PlanB has outlined the potentially bearish situation for bitcoin over the course of 2021. The analysis makes use of the stock to flow (S2F) model to determine the potential price of bitcoin. 

In a recent tweet, PlanB states “Bitcoin is below $34K, triggered by Elon Musk’s energy FUD and China’s mining crack down.” The analyst further reiterates his sentiment using the S2F model, saying “There is also a more fundamental reason that we see weakness in June, and possibly July. My worst case scenario for 2021 (price/on-chain based): Aug>47K, Sep>43K, Oct>63K, Nov>98K, Dec>135K”

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Best case scenario sees $450K BTC

While PlanB reiterates that the current price model is the worst case scenario, the analyst still believes that BTC could break its previous all-time high by October. Also stating that BTC could hit $135,000 before the end of the year. 

PlanB commented further on his tweet, offering a best case scenario price prediction, “my base case and best case scenarios! a hint: best case Dec $450K.” 

PlanB expects in the worst case that BTC should hit $135,000 by December, with a potential to hit $450,000 in a best case scenario. 

The stock to flow model is based on bitcoins valuation model, which was inspired by Nick Szabo’s concept of unforgeable scarcity. The model measures scarcity, and the price of bitcoin over time. 

Other price predictions

Recently Perianne Boring told CNBC that bitcoin could reach $288,000 according to the same model, saying ““Stock to flow says bitcoin should be priced at $100,000 to $288,000 this year. We have 12 years of data on Stock to flow on bitcoin. If you measure with the U.S. dollar, stock to flow is 94% correlated.”

Nexo co-founder Antoni Trenchev recently spoke to Bloomberg and gave his price predictions, saying that BTC would hit $100,000. Trenchev also stated that he expects other countries to follow El Salvador in making BTC legal tender in the future.

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All the information contained on our website is published in good faith and for general information purposes only. Any action the reader takes upon the information found on our website is strictly at their own risk.

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Ryan is a Fintech specialist with a passion for cryptocurrencies and blockchain adoption. A keen trader and investor in the market since 2016, he enjoys keeping up to date with the latest developments within the industry while finding the next 100x altcoin.

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Coinsmart. Beste Bitcoin-Börse in Europa
Source: https://beincrypto.com/stock-to-flow-analysis-worst-case-scenario-could-see-135k-btc-by-december/

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