MicroStrategy’s Massive Premium Implies Bitcoin Price of $122k, says Investment Firm Short on MSTR

The price of the MSTR shares have crashed 60% in less than a month since company executives started selling some stocks.

Bitcoin bull Michael Saylor, the co-founder, and chief executive officer of publicly-traded business intelligence company MicroStrategy, has been betting big on the leading digital currency.

The company bought another 205 BTC on Friday, bringing its total holdings to 91,065 BTC, representing 0.488% of Bitcoin’s circulating supply.

While the company continues to bet more and more on Bitcoin, its share prices are not feeling the same bullishness. MSTR share prices have crashed nearly 60% in less than one month from their all-time high of about $1,314 on Feb. 9.

On Friday, the MSTR shares fell as low as $537 before recovering to $620. Interestingly, MSTR is suffering from losses more than Bitcoin.

During the same period, the price of Bitcoin went from $46,500 to an ATH of $58,300, only to see a correction of 26% to almost $43k. Currently, BTC is consolidating in the $40k-$50k range.

The losses in the cryptocurrency market have actually been the result of the weakness in the stock market, which has been reacting to the rising bond yields. “The bond market selloff is showing some signs of stability, and that could mean the bitcoin pullback is nearing its end,” said Edward Moya, a senior market analyst at OANDA.

In related news, MicroStrategy President and CFO Phong Le sold 10,000 shares of MSTR on March 2nd, at an average price of $802.46 a share. Company CTO Timothy Edwin Lang sold 10,000 shares of MSTR stock on Feb 22nd.

Moreover, General Counsel Wei-ming Shao sold 5,000 MSTR shares on March 3rd. Director Jarrod M Patten and Stephen X Graham also sold 1,150 shares and 2,000 shares respectively on Feb. 24.

Distorted from fundamentals

The traditional media and funds have voiced their opinion against the company’s increasing Bitcoin bet. This week, WSJ called MicroStrategy’s Bitcoin buying spree “irresponsible,” based on Marc Lichtenfeld, chief income strategist at The Oxford Group’s view, who calls Bitcoin a “very speculative and volatile asset.” He said,

“I have never seen a company do this. This is beyond the excesses I have seen during the dot-com boom, and I think it makes them very, very vulnerable.”

According to Lichtenfeld, MSTR shares are “completely distorted from (its) business fundamentals” and simply linked to Bitcoin.

Another criticism came from investment management firm Bireme Capital which published its Q4 2020 Investor Letter, revealing that it is short on MicroStrategy, declaring $450 as its fair value.

The fund that had a net return of 47.1% for the year ending 2020 said MicroStrategy has a massive premium, its market cap increasing by $9 billion on a ~$3b windfall on its bitcoin purchases.

According to Bireme Capital’s calculations, MSTR’s current share price implies a bitcoin price of $122,000. The letter reads,

“MicroStrategy (MSTR) is the latest firm with shrinking revenues and negligible profits to pivot to the blockchain. Rather than attempt to start a cryptocurrency business, MSTR pivoted in the most straightforward way possible: it simply bought hundreds of millions of dollars worth of bitcoin overnight. In one light, this is an utter abdication of all the principles of corporate finance. Why not return the money to shareholders, who can decide for themselves whether or not they want to own bitcoin? But in another light, this was a brilliant end run around the SEC, who has been denying bitcoin ETF proposals le and right for years. MSTR went from being a mere stagnant software business to the de facto bitcoin ETF.”

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Author: AnTy

Bloodbath: Bitcoin Crashes & Altcoins In Free Fall, Stocks Plunging as USD Gains Strength

Volatility is back in full force. Today, in a violent move down, Bitcoin crashed hard, going as low as $10,500. On Tuesday, the leading digital asset made a failed attempt at $12,000, and today, it dumped hard.

For now, we have found support at $10,700 with ‘real’ trading volume, also jumping to $3 billion. According to analyst PlanB, this correction is “to shake out weak hands that entered May-Aug.”

Altcoins followed bitcoin with Ether breaking the psychological level of $420, briefly falling to $390 but for now, is around $400 level.

However, this is not the time to wallow in the losses but a good opportunity to buy the dips. And this is why “cash should always be a dedicated part of your crypto portfolio” so that one can use that dry powder to buy these dips.

“Larger bull trend still intact… just lots of descending triangles breaching support. Wouldn’t mind a more degenerate washout so I can load up for some bounce plays,” noted one trader.

While majority of the crypto market is suffering losses, with notable mentions including AMPL (37%), BAL (21%), BAND (20%), CRV (19%), KAVA (15%), MLN (14%), REN (13%), OMG (13%), TOMO (13%), KNC (12%), UMA (11%), Matic (10.36%), and VET (10.26%) Justin Sun’s Tron is up 30% and Just 13% among other assets.

Red Everywhere

Bitcoin hasn’t been alone in this, given that “BTC has been highly correlated with FX since late July.”

Today’s move in markets is due to a US dollar comeback to above 93 level, up from Tuesday’s fresh lows at 91.75. The US dollar might be strong today, but it isn’t showing any huge surge.

“Rather than dollar strength, we can probably say that this is a fiat rebound play,” noted analyst Mati Greenspan. As such, not just bitcoin but spot gold also fell but just 1.5% while spot silver dropped 4.4%.

But the stock market went down hard, especially Tesla, which has been dropping for three consecutive days, down 18% since Sept. 1st.

S&P 500 has taken a fall of 3%, tech-heavy Nasdaq, which rallied the most, fell 4.3%, and the Dow Jones Average slid 2.5%. Ryan Detrick, chief market strategist for LPL Financial said,

“Although there is no single driver for the weakness, it seems as if investors all of a sudden realized how overbought stocks are and sold. Someone yelled fire in a crowded theater and everyone left at once.”

But the eerie similarity of this drop with that of 1929, the markets could be in a lot of pain ahead. SentimenTrader tweeted,

“A near-record % of NASDAQ 100 stocks are overbought (RSI > 70). In the past, this ALWAYS led to a stock market pullback over the next 2 weeks. Looking at the past few years more closely, this occurred near the market’s top in January 2018 & January 2020.”

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Author: AnTy

Bitcoin will be Just Fine, Here’s Why a 45% Crash is Still a Buy the Dip Opportunity

  • Bitcoin price crashed 45% in a single day and the volume went 10x the normal size
  • BTC bulls just betting that framework is correct, will boom like anything once the dust settles – Travis Kling
  • BTC is the only truly free market that doesn’t need govt intervention to stabilize – macro analyst

In a crypto carnage yesterday, Bitcoin price lost about 45% of its value, falling to one year low of $3,850. Currently, we are back above $5,200, nearing $5,500 but the market still remains fearful of what’s to come now, go another leg lower, range at current levels or make our way back.

As Michael Arrington, founder of TechCrunch, and CrunchBase noted, “This was like all of 2018 in one evening.”

Interestingly, this volatility saw a massive amount of BTC move on-chain. In blocks 621358 and 621259, over 200,000 BTC and 600,000 BTC moved respectively.

Since the price drop, 10k-100k BTC per block, 10x the normal volume, were moved.

“Too much panic and too little reason”

On Feb. 13, Bitcoin price climbed to 2020 high at above $10,500 but the black swan event coronavirus (Covid-19) and oil price war that rocked the global stock markets, experiencing their worst days since 2008 financial crisis and losing trillions of dollars in the process also hit the crypto market hard.

However, what had the digital asset in free-fall was the massive liquidations on the crypto derivatives platform BitMEX.

Interestingly, while Ethereum followed Bitcoin to deep losses, altcoins didn’t fall as hard this time.

There is bloodbath on the crypto street and investors are trying to maintain the confidence to buy the dip and according to some industry commentators it’s the right opportunity for that.

According to Edward Snowden, Wikileaks founder, and a bitcoin proponent, this has been too much panic leading the prices down which had him tempted to stack some sats.

Bitcoin Price cointegration with S2F Model Intact

Macro investor Dan Tapiero, Gold Bullion International co-founder also has some soothing words for the bitcoin investors and holders who point out within a day the digital asset lost about 45% of its value only to stabilize later in the day, that too without the help of central banks and government. Tapiero said,

“BITCOINERS: Hearing guys whine that btc is krap, not a hedge, not digital gold, it’s going to zero etc..stfu. Btc is the only true free market in the world. Btc is the only asset that can go down 50% in one day and doesn’t need govt intervention to stabilize. It will be fine.”

On the current market condition Travis Kling, former equities portfolio manager, now running crypto fund Ikigai feels once the dust settles and economic activity resumes, central banks inject trillions of new dollars, “off that bottom, there is no other asset on the planet that will move like Bitcoin.”

“Bitcoin is either antifragile or it isn’t. If it is, by definition it will come out of this stronger than it went in. There is a framework to evaluate “antifragility”. It’s not evaluated haphazardly, but with sound logic. So BTC bulls today are betting that framework is correct,” said.

To further boost your confidence, the bitcoin price is still following the stock-to-flow model.

“Doesn’t look like a real black swan to me, red dot still very much in the blue zone,” said the analyst on the digital asset being Black Swanned!

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Author: AnTy

After Black Thursday, MakerDAO Opens Voting Proposal And Will Hold First-Ever Debt Auction

As Ethereum (ETH) price crashed by 30-40% on “Black Thursday”, the decentralized finance world (DeFi) showed signals of collapse with the largest DeFi protocol, Maker (MKR) contemplating shutting down in response to the value tanking.

However, following talks in the community with MakerDAO –governing council – and a revival of the price of ETH over the early morning on Friday, March 13, 2020, the community will vote on changes of the protocol to further carry out its first-ever debt auction.

Maker (MKR) is a platform that gives out collateral-based loans by producing Dai (DAI). The DAI is minted by users taking up collateral-based positions, mostly in ETH, and the ETH is stored on a smart contract. Once the collateral is locked, the contracts mint out a portion of the collateral value in DAI to give to the borrower.

Maker to carry out the first-ever Debt Auction

If the borrower cannot fulfill their debt obligations, then the collateralized ETH (asset) enters the liquidation phase allowing the smart contract to auction it off to pay the debts. However, as the crypto market exhibits an extremely bearish structure and the heightened pandemic of the COVID-19, the auctions were shortly not very attractive with some investors paying a total of ZERO DAI to gain the ETH.

One Maker community member said,

“Some vaults were liquidated with 0 DAI coming back in the system, resulting in a net loss for the system. The MakerDAO had a +500k$ surplus before the price drop and now has a -4M$ surplus that needs to be filled.”

With the Maker platform facing a $4 million deficit in debt obligations, the contract will self-execute on March 15 to open up the first-ever Maker Debt Auction. This means the contract will print out extra MKR tokens to reimburse the 44 million USD in DAI which will then be publicly available for auction.

The community is, however, remaining positive after the current carnage on Maker, stating the platform has become stronger. One member said,

“It was a trying day for #Ethereum, Maker, investors, and lots of other ppl in #defi — great to see the system prevail and while not perfect, it lives to see another day.

MakerDAO teams already reacting to work with $MKR governance to modify the system state.”

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Author: Lujan Odera

Bitcoin Cash Price (BCH) Tumbles 35% In A Harsh Crypto Market Crash

Today, the crypto market crashed, with a strong decline in bitcoin cash below $250.00 and $200.00. BCH to USD is down more than 35% and it is now trading well below the $200.00 support.

Key Takeaways: BCH/USD

  • Bitcoin cash price is down more than $100.00 and it broke the key $200.00 support against the US Dollar.
  • BCH/USD dived below a major declining channel with support near $247.50 on the 2-hours chart (data feed from Bitstamp).
  • Bitcoin is also down more than 25% and it broke the $6000 support area.

Bitcoin Cash Price Analysis

Today, it was a bad day for most traders as the crypto market crashed more than 25%, including bitcoin cash price, ethereum and XRP. BCH/USD broke many supports near $250.00 and $200.00 to enter a bearish zone.

Bitcoin Cash Price

Looking at the 2-hours chart, bitcoin cash price gained bearish momentum after it settled below the $250.00 support area and the 50 simple moving average (2-hours, purple).

More importantly, the price dived below a major declining channel with support near $247.50 on the same chart. It opened the doors for more losses below the $200.00 support.

The price is down more than 35% and it even broke the $180.00 level. A new multi-month low was formed near the $166.83 level and the price is currently trading in a nasty downtrend. An initial resistance is near the $191.40 level since it is close to the 23.6% Fib retracement level of the recent dive from $270.81 to $166.83.

The first major resistance is near the $200.00 handle, above which the price correct towards the $220.00 level. The 50% Fib retracement level of the recent dive from $270.81 to $166.83 is also near the $218.82 level.

Conversely, the price might continue to move down below the $166.00 and $165.00 levels. In the mentioned case, bitcoin cash price could even test the $150.00 support area in the near term.

Any further losses could lead BCH price towards the $132.00 and $125.00 support levels. Overall, the market is super red and it could dive further.

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Author: Aayush J

Crypto Analysts Calls For A BTC Price Drop Below $4k Are Resurfacing As Bitcoin Crashes

Bitcoin price has lost more than 23% of its value in the last 5 days, as it crashed from about $10,100 on Sept. 23 to $7,733, today’s lowest point.

Every other day we have been breaking a new level, on this basis before this week is over we would be in the $4,000 price range. And this BTC crash has brought about those bears back on the CT.

First, gold proponent Peter Schiff took to Twitter to share his two bits about Bitcoin which he believes would go to $4,000 or lower.

“Bitcoin has finally broken below the support line of the large descending triangle it has been carving out for months. This is a very bearish technical pattern, and it confirms that a major top has been established,” said Schiff.

“The risk is high for a rapid decent down to $4,000 or lower!” he added.

Schiff’s bearish statement about BTC price propelled Tone Vays, a New York-based cryptocurrency analyst and blockchain consultant, to share his beloved BTC price prediction.

Agreeing with Schiff, he said, “once it finds a bottom: above, at or below $4k, I will be going ALL IN on BTC w/ whatever I can sell that’s not nailed down!”

You might think that’s a bold prediction. Umm, No! It’s not. Vays’ previous prediction before BTC broke all records and surged 200% in 2019 was $1,200. Back in December 2018, when BTC hit its bottom at $3,200, Vays said BTC would trade at $1,200 for over a year.

Well, we all know how that went. At the time of writing, Bitcoin has been trading at $7,879 with 24 hours loss of 5.45 percent. Now it’s to be seen how low we would actually hit this time before BTC flies high yet again.

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Author: AnTy