Crypto Gamblers: How Are the Firms Who Bet Big in Digital Assets Doing?

Key Points

  • Firms who have made big bets on crypto got burnt in Q2, recent corporate earnings releases have revealed.
  • Coinbase, Block and MicroStrategy all declared significant impairment charges on their crypto investments in Q2.
  • But with crypto’s long-term prospects looking healthy, analysts suspect better times lay ahead.

Crypto Winter Chills Industry

While the cryptocurrency market rally over the past few weeks has lifted spirits, 2022 has so far undoubtedly been an ugly year for the crypto industry. At just under $1.15 trillion, the total market capitalization of cryptocurrency markets is still over 60% down from its November 2021 peaks above $3 trillion. At current levels in the $24,000s, Bitcoin is close to 65% down versus its 2021 highs around $69,000.

The drawdown in prices, largely as a result of a deterioration in macroeconomic factors (elevated inflation forcing central banks like the Fed to pursue aggressive monetary tightening), has had a chilling impact across an increasingly leveraged cryptocurrency space.

The collapse of Terra’s algorithmic stablecoin UST and LUNA token in June resulted in the blow-up of one of the largest crypto hedge funds Three Arrows Capital, which was subsequently followed by a chain of crypto lending services halting withdrawals due to market conditions, the most high profile of which being now bankrupt Celsius Network.

According to court filings made in Celsius’ bankruptcy proceedings, the sharp decline in crypto prices has inflicted a more than $1 billion hole on the company’s balance sheet. But should cryptocurrency prices post a sharp recovery into the year’s end, Celsius could easily see its balance sheet return to the green.

Big Crypto Bets: Are They Paying Off?

A series of publicly traded US crypto firms have been reporting earnings as of late and the picture has, unsurprisingly, been ugly. According to earnings released earlier this week, the largest US-based cryptocurrency exchange Coinbase saw its revenues plunge 61% in Q2 given a sharp decline in trading volumes as well as the decline in prices. Coinbase reported an after-tax loss of $1.1 billion in Q2.

A large portion of this loss was a result of a $446 million impairment charge on its crypto and venture investments. Coinbase is not the only crypto firm to have revealed significant losses on its crypto investments in Q2.

Jack Dorsey’s digital-payments-focused company Block saw profits surge 29% YoY to $1.47 billion in the second quarter. However, the Bitcoin payments side of the business performed poorly. Cash App which supports BTC saw revenues fall 34% YoY to $1.79 billion, with profits coming in at just $41 million.

The company’s quarterly accounts revealed a $36 million impairment charge on its Bitcoin holdings in Q2 and said that it ended the quarter holding Bitcoin worth $160 million (as of 30 June).

Coinbase’s share price is down 65% this year, while Block’s is down 45%.

But Coinbase and Block’s crypto impairment charges pale in comparison with the losses reported by business software development and Bitcoin hodling firm MicroStrategy. The company lost $1.062 billion in Q2, with $917 million of this coming as a result of its paper losses on its Bitcoin holdings.

At the end of Q2, MicroStrategy was holding $1.988 billion worth of Bitcoin (129,699 BTC). Former MicroStrategy CEO Michael Saylor essentially turned the company into a Bitcoin holding vehicle when he announced the company’s first $250 million Bitcoin purchase back in 2020.

He has since stepped down from his role as head of the company in order to take on the role of executive chairman and focus on the firm’s Bitcoin acquisition strategy. MicroStrategy’s share price is down around 37% this year.

Long story short, crypto firms’ big digital asset bets haven’t gone well so far this year. But for most involved, the current cryptocurrency bear market isn’t their first rodeo. Global crypto adoption trends continue to move in a positive direction and regulations that will help crypto become “legit” in key markets like the US, EU and UK seem only a few years away at most.

Business strategists at the likes of Coinbase, Block and MicroStrategy, as well as their investors, will likely remain confident that better times are coming as macroeconomic conditions improve in 2023 and beyond.

Bitcoin (BTC) Price Prediction 2030: Is $1,000,000 Too Conservative?

Key Insights:

  • On November 10, bitcoin (BTC) struck an all-time high of $68,979 before sliding to a June 18 current year low of $17,601.
  • However, an extended crypto winter has not materially impacted BTC price projections, despite crypto market defaults and bankruptcies.
  • More hawkish projections have bitcoin at just shy of $1 million by 2030.

Since the early days, the bitcoin (BTC) story has been one of highs and lows. However, not too dissimilar to other riskier assets, the general trend has been upwards, with bitcoin printing new highs while avoiding new lows.

In December 2017, BTC struck a high of $19,871. A year-long bull run, driven by a hot ICO market, saw BTC surge from a January low of $740. BTC ended the year up by 1,338% to $13,850.

A late December pullback marked the beginning of the first real crypto winter, with BTC tumbling to a December 2018 low of $3,170.

However, the great bull run of 2020 that culminated in the November 2021 ATH followed an uneventful 2019.

From a March 2020 low of $3,949, BTC surged by an impressive 1,648% to the ATH $68,979 before the latest sell-off.

The great bull run was pivotal for bitcoin and the crypto market. Bitcoin etched its name into the list of great investment stories alongside names such as Intel (INTC) and Microsoft (MSFT). Significantly, the bull run also led to a material shift in sentiment towards bitcoin and the broader market.

Stickier institutional money entered the space, delivering a downside cushion once missing. This cushion supported a jump in interest from the retail side, comforted with the knowledge that even institutional investment strategies have embraced the digital asset space.

While bitcoin price projections over shorter time horizons are abundant, there are fewer projections looking further out.

Bitcoin (BTC) Price Action

For the current year, BTC is down 53% to $21,909. Four months in the red from six that included a 37.4% slump in June delivered the downside, with BTC falling to a low of $17,601 before finding support.

Technical Indicators for 2022

Looking at the Major Support and Resistance Levels calculated based on calendar year movements, BTC needs to move through the First Major Support Level (S1) at $26,800 and the $47,900 pivot to target the First Major Resistance Level (R1) at $67,280 and the ATH $68,979.

A sustained market rebound is needed to support a return to $50,000.

In the event of a momentum-driven rebound and extended rally beyond R1, the bulls will target the Second Major Resistance Level (R2) at $88,374.

A run at R2 aligns with the FX Empire price prediction for 2022, which pointed to a move beyond $80,000 by year-end.

Failure to move through S1 and the pivot would bring the sub-$10,000 and the Second Major Support Level (S2) at $7,420 into play.

However, a drop below $10,000 would unlikely have a material impact on 2030 price projections.

BTC
BTCUSD 190722 Monthly

Looking at the EMAs and the daily candlestick chart (below), it is a bearish signal. This month, bitcoin sits below the 50-day EMA, currently at $23,366.

The 50-day EMA pulled back from the 100-day EMA, with the 100-day EMA falling back from the 200-day EMA, both negative BTC indicators.

A BTC move through the 50-day EMA and S1 would bring the 100-day EMA, currently at $27,800, into play. From $27,800, BTC will need to break out from the 200-day EMA, currently at $33,600, to target the pivot and bring about a bearish trend reversal.

Key resistance levels, therefore, include $23,366, $26,800, $27,800, and $33,600.

BTC EMAs bearish
BTCUSD 190722 Daily EMA Chart

On a trend analysis basis, bitcoin would need a move through S1 to target the June high of $31,956. From $32,000, BTC should have a clear run at the May high of $40,004 to target the start of the year open of $46,197.

However, breaking resistance down at the above levels would be the key to supporting a sustained BTC uptrend.

For the bears, the June 18 low of $17,601 would be the next target, with a fall through the July low of $18,919 likely to test investor resilience.

Trends
BTCUSD 190722 Trend Analysis

Bitcoin 2030 Price Prediction Bullish with $1,000,000 the Target Price

By carrying out a rudimentary extrapolation of BTC price movements since 2017, BTC is on a run rate to hit $191,000 by January 2030.

BTC Price Extrapolation
BTC Monthly Chart 2030 Price Extrapolation

When considering the price impact of bitcoin halving on a four-yearly basis, a step mechanism needs to be included in the extrapolation to reflect the impact of each event on BTC.

Between now and 2030, two halving events will occur, one in May 2024 and the second in May 2028.

Looking at the historical halving events,

First Halving – November 28, 2012 – BTC surged from $12 to a November 28, 2013, high of $1,050 (+8,650%).

Second Halving – July 9, 2016 – BTC surged from $664 to a July 9, 2017, high of $2,556 (+285%).

Third Halving – May 11, 2020 – BTC surged from $8,721 to a May 11, 2021, high of $55,831 (+540%).

Based on the above, bitcoin has surged by an average of 3,158% in the one year after each halving event. By removing the 2012 anomaly, the average increase is 412.5%.

Using the extrapolation from January 2017 to an extrapolated May 2024 projected price of $108,000 and incorporating a 1-year price increase of 413% between May 2024 and May 2025, BTC could hit $446,000.

Incorporating the estimated 413% increase between May 2028 and May 2029, BTC would be on target to hit $2.08 million by May 2029, giving BTC a January 2030 value of $2.11 million.

2030 Price Prediction
BTC Monthly Chart 2030 Price Extrapolation and Steps

The projection considers the following assumptions:

  • Bitcoin mining support remains firm.
  • Crypto market regulatory framework supports innovation and the evolution of cryptos as an alternative asset class.
  • Bitcoin Whales numbers hold steady while increasing bitcoin holdings.
  • Crypto asset adoption continues to grow at current rates.
  • There is no catastrophic crypto market event.

Upward Trend in Bitcoin Whale Numbers Support Bullish Projections

Over the years, Bitcoin Whales have been the key to the sustainability of bitcoin and the broader market.

Prominent companies are also among the largest hodlers of bitcoin, including MicroStrategy Inc (MSTR), Tesla (TSLA), and Block Inc (SQ).

An increasing number of Bitcoin Whales favor the more hawkish price projections floating around the crypto market.

Two reasons for this include,

  • A higher number of Bitcoin Whales holding more BTC means lower BTC supply. Stable or increasing demand supports a continued upward trend in BTC price.
  • Bitcoin Whales provide investor comfort by providing price support and strength in numbers. Whales deliver price support by not flooding the market with BTC during bearish trends.

Therefore, the downside support and continued upward trends support the loftier projections, which aren’t as unreasonable as the more skeptical investor may suggest.

MicroStrategy Buys The Dip With Another $10M In Bitcoin

Key Insights:

  • Michael Saylor’s firm has purchased another 480 Bitcoins for $10 million.
  • MicroStrategy is currently down $1.38 billion on its Bitcoin purchases.
  • It is the largest corporate holder of the asset with 129,699 BTC. 

The largest corporate holder of Bitcoin still has plenty of appetite for the asset, having purchased another batch, as revealed in a regulatory filing on June 29.

On the same date, Bitcoin proponent and company CEO Michael Saylor tweeted the news that his firm had bought a further 480 BTC for around $10 million. The assets were purchased between May 3 and June 28, according to the filing.

He added that the average purchase price was $20,817 per BTC, and the company now holds 129,699 Bitcoins.

Underwater Holdings

The move has bought the average purchase price of MicroStrategy’s Bitcoins down to $30,664. Its aggregate total purchase price to date is $3.98 billion. However, those holdings are currently worth just $2.6 billion, meaning that the firm would have lost $1.38 billion or 35% should it sell them today.

However, Saylor has no intention of selling his stash and is committed to the long-term future of the asset and its position as leader of the crypto industry. MicroStrategy (MSTR) started adding BTC to its portfolio in August 2020, when the asset was priced at around $11,000.

The crypto market slump spurred speculation that the company would be forced to liquidate some of its BTC holdings to cover losses. However, Saylor dismissed those concerns as “much ado about nothing,” claiming the asset price would need to drop below $3,500 before any additional collateral would be required, according to CNBC.

Bitcoin detractor and gold investor Peter Schiff couldn’t resist taking a swipe, commenting, “So MSTR [MicroStrategy] is down $1.4 billion on Bitcoin, yet you continue to average down, throwing not so good money after incredibly bad.” Schiff has been trolling the crypto community on social media since BTC traded in three figures.

In a counterargument, Messari founder Ryan Selkis pointed out:

“Why anyone would bet against an asset that’s taken repeated 90% beatings & responded with 20-1000x rallies is beyond me.”

The second-largest corporate holder of Bitcoin is Tesla (TSLA) which has 43,200 coins, according to BitcoinTreasuries. With a dollar-cost basis of $1.5 billion, Elon Musk’s firm is currently down 42% on the investment, which is now worth $866 million.

There have been no recent purchases by El Salvador, which last loaded up on BTC on May 9, buying another 500 for around $15 million.

Bitcoin Beats Another Retreat

Crypto markets have retreated a further 2.6% on the day resulting in Bitcoin dipping below $20,000 again on June 30. At the time of writing, the asset was trading just above that psychological level at $20,094.

Analysts expect another final flush out before markets hit their cycle floor and enter a more extended consolidation phase.

Crypto Market Daily Highlights – June 13 – DOGE, ETH, and BTC Slump

Key Insights:

  • Cryptocurrency market conditions deteriorated further at the start of the week, with the broader market seeing red for a seventh consecutive day.
  • While market apprehension toward Fed monetary policy continued to weigh, news of DeFi lender Celsius suspending withdrawals added to the bearish mood.
  • The total crypto market cap tumbled by $121 billion to sub-$1,000 billion for the first time since February 2021.

It was a bearish start to the week for the crypto market, with the broader market seeing red for a seventh consecutive day. According to CoinMarketCap, Theta Network (THETA) was the only altcoin in the top one hundred to avoid a loss, with a 6.41% gain.

Investor apprehension ahead of Wednesday’s Fed monetary policy decision and forward guidance continued to weigh on the crypto market.

Adding to the market angst, however, was news of DeFi lender Celsius suspending all withdrawals, swaps, and transfers. With the dust yet to settle from the collapse of Terra LUNA and TerraUSD, the prospect of another market event came at the wrong time.

The extended sell-off led bitcoin (BTC) to sub-$22,000 for the first time since December 2020.

Crypto Market Cap Slides to sub-$1,000 Billion Amidst Panic Selling

A particularly bearish Monday saw the total crypto market cap slide by $130.6 billion to end the day at sub-$1,000 billion.

The total crypto market cap last stood at sub-$1,000 billion in February 2021. By contrast, however, the crypto market was in a bull run in February 2021, culminating in a bitcoin November all-time high of $68,979.

Year-to-date, the total crypto market cap has fallen by $1,268 billion.

Crypto market cap slides to sub-$1,000 bn.

With regulators looking to expedite efforts to roll out more stringent policy measures, the news of Celsius suspending withdrawals will likely draw more government ire.

The latest news raises the risk of more collapses in the wake of TerraUSD Classic (USTC) and Terra LUNA.

From the top ten cryptos, ETH and BTC led the way down, with losses of 15.7% and 15.5%, respectively.

BNB (-12.6%), DOGE (-14.8%), and XRP (-9.1%) also saw heavy losses.

ADA and SOL fared better than most, falling by 5.3% and 6.6%, respectively.

From the CoinMarketCap top 100, Aave (AAVA), CurveDAO Token (CRV), NEO (NEO), NEXO (NEXO), THORChain (RUNE), and Zcash (ZEC) saw the heaviest losses.

Tracking gold spot (XAUUSD) into the red, PAX Gold (PAXG) failed to provide comfort, declining by 3.01%. On Monday, gold spot slid by 2.80% to end the day at $1,819.

Total Crypto Liquidations Remain Elevated

Following a rise over the weekend, total crypto liquidation spiked going into today’s session.

According to Coinglass, 24-hour liquidations stood at $1,070 million, well above any levels in recent weeks. Early in the Monday session, 24-hour liquidations had stood at $359.7 million,

One-hour liquidations pointed to a steadying in market cap conditions, with one-hour liquidations at $15.53 million.

Crypto liquidations sky rocket.
Total Crypto Liquidations 140622

Crypto Daily News Highlights

  • DeFi lender Celsius suspended withdrawals, swaps, and, transfers to add to the crypto market ire.
  • JPMorgan announced plans to tokenize US Treasuries to embed them into its crypto strategy.
  • US investors filed a lawsuit against Binance US for illegally selling TerraUSD and Terra LUNA.
  • Former Twitter CEO Jack Dorsey challenged Elon Musk to develop a DOGE-based Web69.
  • XRP investors await a court ruling that could decide the direction of the SEC case against Ripple Labs.
  • MicroStrategy (MSTR) share price tumbled by 25.18% on Monday, with Coinbase (COIN) sliding by 11.41%.

MicroStrategy Stock Plunges, as BTC Struggles Above $31.6K

Key Insights:

  • MicroStrategy, the largest corporate bitcoin (BTC) holder, drops 60% since the beginning of the year.
  • Bitcoin evangelist Michael Saylor-run company holds 129,218 BTC as of April 4.
  • The company could face a margin call if the price of bitcoin falls below $21,000.

Bitcoin holding firm MicroStrategy (MSTR) was tumbling around 60% year-to-date (YTD), even below bitcoin (BTC), which was down by 31%.

Michael Saylor’s company MicroStrategy, the largest corporate bitcoin holder, is trading in red in the stock market, a move directly proportional to bitcoin’s steep plunge, closing in on $30,000.

Surprisingly, this drop was recently correlated with tech stocks. The most popular cryptocurrency has lost more than half its value since reaching its highs near $69,000 in November.

Microstrategy

MicroStrategy and subsidiaries hold 129,218 BTC

The business-intelligence software firm has been accumulating bitcoin for its balance sheet since August 2020. Company filings on April 4 showed that it holds 129,218 bitcoins. The company had purchased BTC funded with a bitcoin-backed loan.

In March, the company turned to Silvergate Bank to borrow $205 million in order to buy more BTCs. However, the bitcoin-backed loan was interest-only, with the principal to be paid at the end of the loan term period.

Per a Bloomberg report, other crypto-centric stocks also showed a sharp decline, including crypto miner Marathon Digital Holdings which dropped 19% with its YTD losses to 63%. Riot Blockchain, another bitcoin holder in its balance sheet, plummeted to its lowest since November 2020.

Steven McClurg, chief investment officer of Valkyrie Investments, told the publication:

“The correlation between the two asset classes has grown more pronounced in recent months because the number of publicly traded companies involved in blockchain and digital assets continues to grow, and is not likely to reverse course.”

Risk factor

The approach of taking loans to finance more of a speculative asset, comes with a risk. It can trigger a margin call if the price of bitcoin falls below $21,000.

This means that the company could be forced to sell its bitcoin holdings at a depreciated price, which would result in more losses for shareholders.

According to MicroStrategy CFO Phong Le, the company holds “quite a bit of uncollateralized bitcoin,” which can be used to support if a margin call occurs. He noted that it is very unlikely that BTC would touch $21,000, which was seen in December 2020.

He noted during MicroStrategy’s first-quarter earnings call:

“As you can see, we mentioned previously we have quite a bit of uncollateralized bitcoin. So we have more that we could contribute in the case that we have a lot of downward volatility. I think we’re in a pretty comfortable place where we are right now.”

 

US Labor Department Raises Concern Over Fidelity Crypto Investment Product

Key Insights:

  • Fidelity Investments announced plans to enable Bitcoin investment with 401(K) plans in the US.
  • News of the option to include Bitcoin in its 401(K) accounts has raised concerns.
  • Last week, Fidelity Investments launched Web3-focused ETFs targeting younger clients.

It has been a busy final week of the month for the financial industry and the crypto market.

This week, US investment bank Goldman Sachs announced it was exploring the tokenization of financial securities. Last month, Goldman carried out its first over-the-counter (OTC) trade with Galaxy Digital.

On Thursday, Wall Street’s crypto first-mover Goldman offered its first Bitcoin (BTC) backed loan facility on Thursday.

Also taking strides into the crypto world is Fidelity Investments. Fidelity’s latest move, however, has caught the eye of the US Labor Department.

US Labor Department Raises Concerns over Fidelity’s 401(K) Plans

On Thursday, the Wall Street Journal reported concerns among Labor Department officials about Fidelity Investment’s plan to allow investors to put Bitcoin (BTC) in their 401(K) accounts.

According to the report, acting assistant secretary of the Employee Benefits Security Administration, Ali Khawar, said,

“We have grave concerns with what Fidelity has done.”

Khawar reportedly also discussed the hype around Bitcoin and the broader crypto market and the speculative nature of cryptocurrency investments.

The US Labor Department responded to news of Fidelity’s plans to widen the crypto net.

This week, Fidelity Investments announced plans to offer digital asset investment as part of US retirement plans.

According to the report, MicroStrategy has already signed up for the offering. It remains to be seen whether the Labor Department will scupper Fidelity’s goal to offer crypto to a wider investment audience.

Fidelity Investments Goes All in on Crypto and Web3

Last week, Fidelity Investments launched two web3 ETFs to target a younger customer base.

Fidelity Investments launched the Fidelity Crypto Industry and Digital Payments ETF (FDIG) and the Fidelity Metaverse ETF (FMET).

Both ETFs have a net expense ratio of just 0.39 and provide investors an easy opportunity to gain exposure to cryptos and web3. The latest offering followed some bullish projections on the metaverse.

US banking giants Citi and JPMorgan have drawn headlines with bullish projections for the metaverse.

In March, Citi projected a $13 trillion metaverse by 2030, with JPMorgan projecting a $1 trillion in metaverse-related yearly revenues.

Fidelity To Offer Digital Asset Investment as Part of Retirement Plans

Key Insights:

  • Fidelity will soon enable the option of investing in Bitcoin with their retirement plans.
  • This month the company had also launched a crypto payments ETF and a Metaverse ETF.
  • The company recently also launched the world’s cheapest Bitcoin ETP in the European region.

As investment plans go, most people choose to put their money into safe options that are government regulated, centrally held, and stem from traditional finance options.

However, the emergence of crypto in the mainstream financial world has changed that, with companies such as Fidelity now offering cryptocurrency for investment to the masses.

Invest in Bitcoin Before You Retire

Known to be the largest provider of 401(k) plans in the United States of America, Fidelity, announced that it would soon be enabling the option of investing in Bitcoin and eventually into other cryptocurrencies as well. However, the decision is subject to the employers’ choice. 

In an interview with The New York Times, the Head of workplace retirement offerings and platforms at Fidelity Investments, Dave Gray, stated,

“We started to hear a growing interest from plan sponsors, organically, as to how could Bitcoin or how could digital assets be offered in a retirement plan.”

And in response to that, they brought this option where individuals could directly invest in Bitcoin and other assets without going through the trouble of making a separate account on a cryptocurrency exchange. 

Although in doing so, Fidelity will charge between 0.75% to 0.9% in fees for every Digital Asset Account. On top of that, an additional trading fee will be implemented that the company has not yet revealed but will apparently be “competitively priced”.

According to Gray, the biggest public holder of Bitcoin, MicroStrategy has already signed up for this service, which isn’t surprising since Michael Saylor is pretty much building the company on the back of Bitcoin.

This announcement comes after Fidelity already announced its efforts to make strides in the crypto space with its offerings.

As reported by FXEmpire, Fidelity International recently announced the launch of its spot Bitcoin exchange-traded product (ETP) in Europe, which is also the cheapest Bitcoin ETP globally, with a total expense ratio (TER) of 0.75%.

Furthermore, just this month, Fidelity Investments launched a Crypto Industry and Digital Payments ETF (FDIG) and a Metaverse ETF (FMET) to target a younger client base.

Coming at the Right Time?

The question of security constantly nags investors since the crypto market’s volatility is unpredictable and unrelenting.

In the last couple of weeks, the total market cap of all cryptocurrencies has been fluctuating around $2 trillion. After breaching the level in April and touching $2.16 trillion, the total market cap is back at $1.83 trillion.

The total market capitalization of cryptocurrencies | Source: TradingView

This might keep employers skeptical about providing Fidelity’s new services to their employees.

Why Bitcoin’s Navigation of Recent Global Economic Downturns Shows that Crypto is Here to Stay

Around the world, venture capitalists have collectively invested $30 billion in cryptocurrency or Web 3.0 startups throughout 2021, with institutions like Tesla, Block, and MicroStrategy all incorporating Bitcoin into their balance sheets.

These astronomical figures are made all the more impressive considering that Bitcoin, the world’s first cryptocurrency, has only existed since 2008 – and has since accumulated a value of $41,000 per coin, at the time of writing.

2021 represented a boom period for Bitcoin, as decentralized finance and NFTs grew into the ecosystem, presenting fresh opportunities for investors and enterprises alike, but the year also ended with brand new challenges for the asset as global inflation rates hit the pockets of investors hard.

(Image: CoinGecko)

As geopolitical tensions in Eastern Europe spilled over, it represented an unprecedented test for the staying power of Bitcoin. Although it’s early days, we can see evidence of Bitcoin trending upwards in the wake of Russia’s invasion of Ukraine – suggesting that the asset is still regarded as a safe haven asset for investors amidst a testing economic landscape.

Institutional Interest Ensures Growth Prospects Stay Intact

Institutional interest in Bitcoin and the wider cryptocurrency landscape is rife. Besides leading trading platforms like Coinbase, a growing number of institutions are investing in various crypto projects. In the case of software developer MicroStrategy, the company is simply purchasing BTC with the intention of holding it on its balance sheet.

Others have developed tools to enable the broader integration of cryptocurrency into the economy. Silvergate Capital, for instance, operates a network that enables the around-the-clock remittance of dollars and euros – a key capability as cryptocurrency markets never close. To facilitate this, Silvergate acquired the stablecoin assets from Diem Association.

Elsewhere, financial services company, Block, has been looking at developing applications for everyday use as a digital alternative to fiat currency. Google Cloud also launched its own blockchain division to help customers accommodate the emerging technology.

As more institutions look to develop blockchain and cryptocurrency solutions, it’s highly likely that it will result in considerably better staying power for the likes of Bitcoin and other crypto. In turn, better institutional interest is likely to help to keep cryptocurrencies anchored in spite of their famous levels of extreme volatility.

Emerging use cases in the field of blockchain have also paved the way for NFTs and DeFi projects to gain prominence, broadening how cryptocurrencies can influence the world.

Bitcoin’s Utility Amidst Geopolitical Tensions

Perhaps most significantly of all is how Bitcoin has recently demonstrated that its technology is capable of becoming a mitigating force against factors that can cause economic downturns.

To illustrate this, Maxim Manturov, head of investment advice at Freedom Finance Europe, notes how Bitcoin was swiftly made legal tender in Ukraine in the wake of the Russian invasion in February 2022:

“Ukraine has legalised cryptocurrency. President of Ukraine Volodymyr Zelenskyy signed the law ‘on virtual assets’ adopted by the Verkhovna Rada of Ukraine on 17 February 2022,” Manturov noted.

“The National Commission on Securities and Stock Market (NSSM) and the National Bank of Ukraine will regulate the market of virtual assets. What provision does the adopted law on virtual assets make? Foreign and Ukrainian companies will be able to work officially with crypto-assets, open bank accounts, pay taxes and provide their services to the people.”

Significantly, the move also helped Ukraine to set up an avenue to receive humanitarian aid in BTC.

Due to Bitcoin’s decentralized nature, the asset may help during national emergencies throughout countries around the world – particularly when economic complications lead to the devaluation of fiat currencies through hyperinflation.

The Road to the Mainstream

Despite Bitcoin still sitting some 40% adrift from its all-time high from November 2021 today, institutional faith in the cryptocurrency remains. Deloitte figures suggest that 88% of senior executives believe that blockchain technology will eventually achieve mainstream adoption.

It’s worth remembering that it wasn’t until recently that Bitcoin’s blockchain framework finally began to achieve the levels of global recognition for its technological framework that it deserved. Since then, we’ve seen the rise of DeFi and NFTs as a taster of what distributed digital ledgers can achieve.

Although it’s hard to predict just how the adoption of cryptocurrency will grow, and whether it may take another NFT-style emergence to act as a catalyst for more mainstream applications, the fact that Bitcoin’s technology is playing an active role in aiding economies in the face of an economic crisis shows that there’s enough potential for the asset to not only outlast its expectations but to outperform its benchmarks during downturns.

Although there are likely to be more twists ahead before the global economic outlook recovers, Bitcoin is already showing that its use cases can ensure that crypto is very much here to stay in one form or another.

Binance.US Adds Terra UST Stablecoin As Base Pair for Cryptocurrencies

Key Insights:

  • Binance.US officially listed UST as the base trading pair for Bitcoin today.
  • The stablecoin has had everyone’s attention ever since the $10B Bitcoin reserve announcement.
  • LUNA is nearing a new all-time high once again.

Terra, LUNA, and UST, these three words have been noticing a lot of attention from investors, developers, analysts, and traders for a while now in the crypto space.

The bullish storm that the DeFi chain has created will not slow down anytime soon. Especially not after today’s development.

UST Becomes a Base Pair

Being a base pair, other cryptocurrencies will be trading against UST as they currently do with USD, provided the option is available for them.

Earlier this month, Binance announced this development as it also announced that it would be delisting the UST/BTC trading pair closing all open trading orders. Currently, UST is only available as a base pair for Bitcoin.

However, Binance isn’t the first to do this since, at the beginning of this month, OKX, one of the top 20 cryptocurrency exchanges in the world, also added UST as a base pair for Bitcoin, Ethereum, Solana, and Avalanche.

TerraUSD has gained prominence in the space owing to its CEO Do Kwon’s statement about creating a $10 billion+ UST reserve in Bitcoin.

At its current value, $10 billion worth of Bitcoin translates to about 253183.79 BTC, which, if acquired by Terra, would make it the biggest holder of Bitcoin then, even higher than MicroStrategy’s current holdings, which is approximately 129,218 BTC.

LUNA, at the Moment

Terra’s native cryptocurrency LUNA is currently the best performing asset of the year, which gains between February to April, reaching 142.22%, marking a new all-time high of $119.5 at the same time.

Although trading at $93.5 LUNA is below forming a new ATH, it is on the way to breaching the $120 level gradually, thanks to the 23.5% rally observed three days ago.

LUNA is climbing the charts again after marking a new ATH this month

With MicroStrategy Stacking More Bitcoin, Can the Rally Heat up?

Key Insights:

  • Microstrategy has bought more BTC.
  • The pro-bitcoin software firm now holds approximately 129,218 bitcoins.
  • BTC’s recent rally has been fueled by institutional buying.

MicroStrategy, the US-based enterprise software firm led by bitcoin (BTC) permabull Michael Saylor, has stacked more BTC in its portfolio. Its recent BTC buys have taken its total bitcoin holding to approximately 129,218 BTC.

Stacking Sats

On Tuesday, the Nasdaq-listed pro-bitcoin software firm announced that one of its subsidiaries had obtained a bitcoin-backed loan to purchase additional BTC.

MicroStrategy CEO Michael Saylor tweeted,

“MacroStrategy has purchased an additional 4,167 bitcoins for $190.5 million at an average price of $45,714 per bitcoin. As of 4/4/22 MicroStrategy Hodls 129,218 bitcoins acquired for $3.97 billion at an average price of $30,700 per bitcoin.”

MacroStrategy, a subsidiary of Microstrategy, closed a $205 million bitcoin-collateralized loan with Silvergate Bank to purchase over 4000 BTC. The purchases took place between February 15 and April 4.

In a detailed statement, it was revealed that Silvergate Bank ‘has issued a $205 million term loan under its Silvergate Exchange Network (SEN) Leverage program to MacroStrategy LLC.’

As per the agreement, MacroStrategy will use the loan proceeds to purchase bitcoins, pay fees, interest, and expenses related to the loan transaction, or for its or its parent company’s general corporate purposes.

SEN Leverage was launched in 2020 and provides institutional-grade access to capital through US dollar loans collateralized by bitcoin.

About the partnership, Saylor commented by saying,

“The SEN Leverage loan gives us an opportunity to further our position as the leading public company investor in bitcoin.”

BTC Rally to Heat-Up?

Bitcoin’s upward momentum has been supported by institutions buying bitcoin, which has added to the much-needed buying pressure in the market. At the time of writing, bitcoin traded at $46,674.09.

The news of MicroStrategy buying BTC gave its trajectory a minor push as its prices went up by 1.31% on the daily chart. In March, BTC’s price reached $48,200, the highest level seen in 2022.

FXempire, BTC, Crypto, bitcoin
BTC Price Action | Source: FXEmpire

Part of the recent rally has been fueled by large institutions accumulating BTC. BTC buying by the Terra community also contributed to BTC’s current strength. As of April 1, the Terra community had bought 30,727 BTC to give a push to their stablecoin reserves.

If institutions continue to stir buying pressure for BTC in the market the king coin could see a decent push in the near term.

Here’s Where Bitcoin Could Go While The Wyckoff Accumulation Pattern Is Unfolding

The downtrend of Bitcoin (BTC) started in November 2021 as an up thrust (e.g. false breakout) followed by a marking down until a Wyckoff change of character (this concept is applicable in Gold and crude oil as explained in the video) showed up in late January 2022. The change of character was the biggest up wave, broke out from the down channel, which stopped the downtrend into a trading range.

Bitcoin’s Wyckoff Accumulation Pattern Explained

Within the trading range between 33000-45500, the pullbacks of Bitcoin in February and March 2022 were accompanied by increasing of supply. Despite the excessive supply, Bitcoin formed a higher low suggested supply absorption according to Wyckoff’s law – efforts vs results, where increasing of supply (effort) fails to generate a meaningful downward result. Refer to the chart below:

It was worth to note that the test of the reaction in March formed a slightly higher low with decreasing of supply, which was considered as a successful test. A rally could be anticipated after the test with decreasing of supply.

The rally of Bitcoin started on 14 March 2022 broke above the resistance level 45530 followed by a backup action (BU) testing the axis line (unfolding now) where the previous resistance-turned-support. The rally could be classified as a sign of strength rally (SOS) when the backup action (BU) can commit above 44000, which was where the breakout initiated.

Since the backup action is still on-going, it is essential to considered the bullish case when the Wyckoff accumulation pattern is completed for Bitcoin and also the failure case.

Should Bitcoin break above 48000, it is likely to test the upper target near 54000, which is the level where the breakdown happened on 4 December 2021.

Although the tell-tale signs above point to a bullish bias for Bitcoin, it is essential to consider how the accumulation pattern will be violated. In order to maintain the bullish accumulation pattern, Bitcoin is to commit above 44000. Should Bitcoin break below this support level at 44000 with increasing supply followed by inability to rally back above, Bitcoin could test the immediate support level at 42500 followed by 38000.

Should a failure happen, the characteristics of the price action such as the price spread, velocity together with the volume are to be analysed using Wyckoff trading strategy as discussed in the video in order to derive the direction bias of Bitcoin.

4 Outperforming Bitcoin And Crypto Stocks For Swing Trading

Instead of trading or investing in Bitcoin, there are many Bitcoin and Crypto related stocks suitable for swing trading while taking advantage of the strength in Bitcoin. Refer to the chart of Silvergate Capital (SI), MicroStrategy (MSTR), Riot BlockChain (RIOT), Marathon Digital Holdings (MARA) below:

The trend for these 4 stocks is very similar to Bitcoin as they track the performance of Bitcoin closely. SI outperforms the rest as the current backup action is still a lot higher above the axis line (resistance-turned-support) followed by MSTR and RIOT, which are currently testing the axis line. MARA failed to break above the resistance, which is considered a laggard among the 4 stocks.

When the Wyckoff accumulation pattern for Bitcoin is completed, these 4 Bitcoin-related stocks are expected to start the markup phase to test higher price targets. Visit TradePrecise.com to get more stock market insights in email for free.

MicroStrategy’s Michael Saylor Says “Bank Loan > Bitcoin Bonds” for Now

Key Insights:

  • Michael Saylor believes that the market isn’t ready for Bitcoin-backed bonds.
  • The comment was in context with El Salvador offering $1 billion worth of Bitcoin bonds.
  • MicroStrategy recently took a $205 million loan against $850 million of its Bitcoin holdings.

El Salvador led the revolution of digital asset-based finance last year after making Bitcoin a legal tender.

But the president of the country, Nayib Bukele, did not stop there as he intended on building a whole economy on the back of Bitcoin, including a Bitcoin city.

For the same, last year, El Salvador began offering 10-year Bitcoin bonds at an interest rate of 6.5% per annum. However, as per Michael Saylor, it may not be the best idea.

Michael Saylor Doesn’t Believe in Bitcoin Bonds

In an interview with Bloomberg, the Co-founder, and CEO of MicroStrategy, Michael Saylor, stated that while he dreams of a day when Bitcoin-backed bonds would find the same demand as a mortgage-backed security, he feels that at the moment, selling Bitcoin bonds is not a good idea.

This is because, in his opinion, the market isn’t ready for that. The comment was in reference to El Salvador’s Bitcoin-backed bonds, which have become a necessary instrument for the country to relieve itself from its financial hole.

The country is dependent on Bitcoin enthusiasts and retail investors worldwide to tap into these bonds, which will help El Salvador repay its debts.

But according to Michael, that may not be the most effective strategy given the state of the market. Commenting on the same, he said,

“That’s a hybrid sovereign debt instrument as opposed to a pure Bitcoin-treasury play. That has its own credit risk and has nothing to do with the Bitcoin risk itself entirely.”

What Saylor Suggested Instead

Bank loans. According to Michael, currently, taking out a term loan from a major bank instead of being dependent on retail investors infused Bitcoin bonds is a better idea.

And it feels like the comment came as a justification of MicroStrategy’s recent decisions over an actual suggestion.

Two days ago, it was reported that MicroStrategy had borrowed a three-year term loan worth $205 million from a unit of Silvergate Bank. As collateral, the company used $820 million of its Bitcoin holdings.

This is a relatively small amount for MicroStrategy, which is the biggest Bitcoin holding public company with a stash of 126,164 BTC worth over $5.9 billion at the moment.

And the company will be increasing its BTC treasury further using this $205 million. Given the state of the king coin at the moment, there is a fair chance that the bullishness exhibited by MSTR might fuel the rally further.

As a result, Bitcoin’s 25.48% rise could flip into a bigger number to push BTC towards $50k from its current price of $47,236.

Bitcoin’s price is inching closer to $50k every day

 

Italian Banking Giant UniCredit Gets Sued by Crypto Firm for $144m

Key Insights:

  • UniCredit (UCG) gets fined $144m for closing crypto-related accounts.
  • A Bitminer Factory subsidiary sued UniCredit in Banka Luka, Bosnia and Herzegovina.
  • UniCredit joins several banks that have taken a hard line on crypto-related firms.

UniCredit SpA (UCG), Italy’s largest commercial bank, is the world’s 34th largest by assets and is headquartered in Milan. The bank offers services primarily in Italy, Germany, and Central and Eastern Europe.

In recent weeks, UniCredit Group has been in the news, with the Russian invasion of Ukraine and resulting sanctions leaving the bank with a possible €1 billion write-off of its Russian business.

Earlier this year, UniCredit Bank threatened to close the bank accounts of banking customers who buy crypto including Bitcoin (BTC). There was no u-turn on the threats made with the bank maintaining its anti-crypto stance.

UniCredit Hit Sued by Crypto Miner for €131 Million

This week, a court in Banja Luka, Bosnia and Herzegovina fined a UniCredit branch €131 million ($141 million) for illegally closing current accounts belonging to a Bitminer Factory subsidiary.

UniCredit closed the accounts held in UniCredit’s Banja Luka branch, preventing a reported ICO related to projects in the crypto mining sector. Bosnia and Herzegovina start-up projects are reportedly using renewable energy.

According to today’s news, UniCredit Bank stated that it is not permitted to service crypto-related firms.

While other banks have a similar stance to UniCredit Bank, the banking environment is becoming more crypto-friendly.

UniCredit Aligns with HSBC while Other Banks Embrace Crypto

In 2021, news hit the wires of UK commercial bank NatWest announcing it does not want to do business with clients and customers dealing in crypto. At a shareholder event, Morten Friis stated,

“We have no appetite for dealing with customers, whether taking them on as new clients or having an ongoing relationship with people, whose main business is backed by an exchange for cryptocurrencies, or otherwise transacting in cryptocurrencies as their main activity.”

The NatWest news followed reports of the UK’s HSBC blocking customers from buying MicroStrategy stock in early 2021.

The banking environment has changed over the last 12-months. Certain jurisdictions have become more crypto-friendly in support of innovation.

Last week, FX Empire reported Australia’s ANZ Bank becoming the first Aussie bank to mint an Aussie Dollar (AUD) pegged stablecoin.

Ahead of the ANZ news, Australia’s Commonwealth Bank of Australia also hit the crypto airways. The bank reportedly plans to double the department responsible for the crypto industry.

While ANZ and the Commonwealth Bank of Australia are leading the way, UniCredit Bank has reportedly appealed against the court decision. It remains to be seen, however, whether the appeal will be successful. According to reports, the bank could not provide any policies against dealing with crypto-related companies.

Dogecoin Jumps 10% As Elon Musk Says “Won’t Sell My DOGE, Bitcoin”

Key Insights:

  • Elon Musk replied to Michael Saylor’s inflation comment, saying he won’t sell his crypto.
  • Last month’s inflation rate broke a 40-year old record after rising by 7.9%
  • Bitcoin is being treated as Gold by Elon, given his statement.

In a Twitter conversation with the CEO and Co-Founder of MicroStrategy, Michael Saylor, Elon Musk stated that he still owns and will not be selling his Dogecoin, Bitcoin, or Ethereum.

The comment came after Saylor discussed his thoughts on the rising inflation rate over the next couple of years.

No to USD, Yes to Dogecoin

Replying to the aforementioned question by Elon, Saylor stated,

“USD consumer inflation will continue near all time highs, and asset inflation will run at double the rate of consumer inflation. Weaker currencies will collapse, and the flight of capital from cash, debt, & value stocks to scarce property like Bitcoin will intensify.”

Since Michael is known to be a Bitcoin enthusiast, it’s not surprising that his first thought following the collapse of fiat currency is crypto. His company MicroStrategy is famous for being the biggest public holder of Bitcoin with 125,051 BTC (worth $4.8 billion) in its treasury.

But as for Elon Musk, his statement of not selling his Bitcoin holding is surprising since last year, his company Tesla stopped accepting Bitcoin as payment which resulted in one of the biggest crashes of 2021.

But the thought of HODLing comes as a solution to a much bigger problem than personal preferences.

Inflation vs. Investment

The rising inflation has become a cause of concern for not just Americans but people around the world as it affects the markets around the world.

Until last year the highest rise inflation witnessed was 6.8%, but the previous two months broke that record consecutively. The inflation rate rose by 7.5% in January, followed by February, registering 7.9%.

Annual Inflation Rate United States | Source: USInflationCalculator

This is the highest spike witnessed in 40 years, since January 1982. Thus as once Gold was considered a preferable investment as an inflation hedge, it is now passing on the baton to crypto in the eyes of Saylor and Musk.

Despite the volatility of the asset, Bitcoin is still considered a store-of-value owing to the same reason as Gold’s appeal – Scarcity and popularity. The only difference is one is more scarce than the other.

As of September 2021, the total Gold historically estimated to have been extracted is over 201k tonnes, and more remains in underground reserves. This means that there is no existing cap on Gold.

Whereas Bitcoin is limited to 21 million BTC, which will never change, and thus its scarcity will never change either.

But at the end of the day, its value comes from demand, and as long as people want a Bitcoin, its prices will remain as high as they are. If not, it could lose its value and fail as an inflation hedge.

As of today, Bitcoin is trading at $39,056, Ethereum is trading at $2,585, and Elon’s favorite Dogecoin was up by almost 10% at its high today but is currently trading around $0.1145.

Is It Too Late To Begin Adapting To Higher Volatility In The Market?

Now is the time for traders to adapt to higher volatility and rapidly changing market conditions. One of the best ways to do this is to monitor different asset classes and track which investments are gaining and losing money flow. Knowing what the Best Asset Now is (BAN) is critical for consistent growth no matter the market condition.

With that said, buyers (countries, investors, and traders) are panicking as the commodity Wheat, for example, gained more than 40% last week.

‘Panic Commodity Buying’ in Wheat – Weekly Chart

Chart Description automatically generated

According to the US Dept. of Agriculture, China will hold 69% of the world’s corn reserves, 60% of rice and 51% of wheat by mid-2022.

Commodity markets surged to their largest gains in years as Ukrainian ports were closed and sanctions against Russia sent buyers scrambling for replacement supplies. Global commodities, commodity funds, and commodity ETFs are attracting huge capital inflows as investors seek to cash in on the rally in oil, metals, and grains.

How does the Russia – Ukraine war affect global food supplies?

The conflict between major commodity producers Russia and Ukraine is causing countries that rely heavily on commodity imports to feed their citizens to enter into panic buying. The breadbaskets of Ukraine and Russia account for more than 25% of the global wheat trade and nearly 20% of the global corn trade.

Last week, it was reported that many countries have dangerously low grain supplies. Nader Saad, an Egypt Cabinet spokesman, has raised the alarm that currently, Egypt has only nine months’ worth of wheat in silos. The supply includes five months of strategic reserves and four months of domestic production to cover the bread needs of 102 million Egyptians.

Additionally, Avigdor Lieberman, Israel’s economic minister, said on Thursday (3/3/22) that his country should keep “a low profile” regarding the conflict in eastern Europe, given that Israel imports 50 percent of its wheat from Russia and 30 percent from Ukraine.

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The longer-term potential for much higher grain prices exists, but it’s worth noting that Friday’s close of nearly $12.00 a bushel for wheat is not that far away from the all-time record high of $13.30, recorded 14-years ago. According to Trading Economics, wheat has gone up 75.08% year-to-date while other commodity markets like Oats are up a whopping 85.13%, Coffee 74.68%, and Corn 34.07%.

How are other markets reacting to these global events?

Year-to-date comparison returns as of 3/4/2022:

-9.18% S&P 500 (index), -7.49% DJI (index), -15.21% Nasdaq (index), +37.44% Exxon Mobile (oil), +20.08% Freeport McMoran (copper & gold), -20.68% Tesla (alternative energy), -24.49% Microstrategy (bitcoin play), -40.51% Meta-Facebook (social media)

As stock holdings and 401k’s are shrinking it may be time to re-evaluate your portfolio. There are ETFs available that can give you exposure to commodities, energy, and metals.

Here is an example of a few of these ETFs:
+53.81% WEAT Teucrium Wheat Fund
+41.79% GSG iShares S&P TSCI Commodity -Indexed Trust
+104.40 UCO ProShares Ultra Bloomberg Crude Oil
+59.32% PALL Aberdeen Standard Physical Palladium Shares

How is the global investor reacting to rocketing commodity prices and increasing market volatility?

We can track global money flow by monitoring the following 1-month currency graph. The Australian Dollar is up +4.25%, the New Zealand Dollar +3.72%, and the Canadian Dollar +0.30% vs. the US Dollar due to the rising commodity prices like metals and energy. These country currencies are known as commodity currencies.

The Switzerland Franc +0.96%, the Japanese Yen +0.35%, and the US Dollar +0.00% are all benefiting from global capital seeking a safe haven. As volatility continues to spike, these country currencies will experience more inflows as capital comes out of depreciating assets and seeks stability.

We also notice that capital outflow is occurring from the European Union-Eurodollar -4.55% and the British Pound -2.22% due to their close proximity (risk) to the Russia – Ukraine war.

Table Description automatically generated with medium confidence source: finviz

Global central banks will need to begin raising their interest rates to combat high inflation!

Due to the rapid acceleration of inflation, the US Federal Reserve may have been looking to raise interest rates by 50 basis points at its policy meeting two weeks from now. However, given Russia’s invasion of Ukraine, the FED may become more cautious and consider raising interest rates by only 25 basis points on March 15-16.

What strategies can help you navigate current market trends?

Learn how I use specific tools to help me understand price cycles, set-ups, and price target levels in various sectors to identify strategic entry and exit points for trades. Over the next 12 to 24+ months, I expect very large price swings in the US stock market and other asset classes across the globe. I believe the markets have begun to transition away from the continued central bank support rally phase and have started a revaluation phase as global traders attempt to identify the next big trends. Precious Metals are starting to act as a proper hedge as caution and concern start to drive traders/investors into Metals and other safe-havens.

Now is the time to keep your eye on the ball!

I invite you to learn more about how my three Technical Trading Strategies can help you protect and grow your wealth in any type of market condition by clicking on the following link: www.TheTechnicalTraders.com

Chris Vermeulen
Chief Market Strategist
Founder of TheTechnicalTraders.com

 

Can Morgan Stanley Be the Largest Bitcoin Owning Institution in 2022?

Key Insights

– Analysts’ speculations suggest that Morgan Stanley may be planning to increase exposure to Bitcoin and the cryptocurrency market.
– Morgan Stanley could potentially become the largest Bitcoin-owning institution in 2022.
– However, the American multinational investment bank’s stance on BTC and BTC mining counters the claims of stacking more Bitcoin.

Despite concerns around BTC’s energy consumption, American multinational investment bank Morgan Stanley could be inching closer to becoming the largest Bitcoin-owning institution, as per speculations.

MacroScope’s Twitter account claims that as per data, Morgan Stanley could potentially become the largest Bitcoin-owning institution in the industry by the end of this year.

Institutional Interest in Bitcoin Grows

The year 2021 was a stellar time for BTC as institutional money poured in with firms like Microstrategy, Tesla, Galaxy Digital Holdings, and others stacking SATS. In addition, over the last year, several major firms, like Square and Coinbase, have collectively purchased hundreds of millions of dollars worth of cryptocurrency.

On February 28, analyst MacroScope highlighted that in 2021, Morgan Stanley purchased millions of shares in the Grayscale BTC (GBTC) fund. Notably, GBTC was one of the first instruments that gave exposure to the digital assets market for institutional players like Morgan Stanley.

The analyst further suggested significant increases in Morgan Stanley’s ownership in many of its institutional funds. According to balance sheets, the gains are primarily double-digit, with up to a 26% increase on the high end.

Data from December 31, 2021, highlights that the investment bank’s growth portfolio had 4.29 million shares, an 18% increase. Since then, Morgan Stanley has added more GBTC shares to its balance sheet, increasing its exposure.

Morgan Stanley is already one of the largest institutional Bitcoin investors, and they are most likely to increase their exposure. For now, however, there was no clear indication from the firm about adding more BTC to their wallet.

A Perplexing Stance

While according to speculations, Morgan Stanley was preparing to add more BTC to their account. A recent report stressed how ‘Bitcoin cannot escape energy requirements.’

The American banking giant further said that mining for cryptocurrencies could be highly energy-intensive.

Furthermore, the firm noted that ‘Bitcoin mining alone requires the same amount of electricity as the Netherlands’ annual total power generation, or 0.5% of total global electricity consumption.’ Seemingly, the bank’s stance around cryptocurrencies appears skewed.

That said, institutional interest in BTC has kept on rising. Large firms’ first significant steps towards BTC adoption happened when cloud software company MicroStrategy bought $425 million worth of Bitcoin in August and September 2020. Soon after, other firms followed suit, including payments processor Square and EV manufacturer Tesla.

Super Bowl Host’s CEO: “Crypto Adoption Necessary in Public Companies”

The 10-year-old personal finance company gained the attention of the masses thanks to the Super Bowl LVI.

During the event, many cryptocurrencies witnessed rallies for different reasons and now the very host of the Super Bowl SoFi Technologies Inc.’s CEO also made a comment about cryptocurrencies.

SoFi Says Yes to Crypto

In an interview with CNBC’s ‘Squawk Box’, CEO of SoFi Anthony Noto made some definitive statements about his perspective on cryptocurrencies and what role they play in the bigger picture.

He said that going forward it is important for companies to integrate cryptocurrencies into their system since these digital assets could determine the dynamics of businesses in coming years. Adding to the same notion, he said:

“If you don’t innovate, and you don’t use cryptocurrency as a technology platform, you’ll get left behind. Your business will be smaller. You’ll be less competitive. You will have less innovation and less of a value proposition for consumers and you lose ground.”

When asked about whether or not SoFi itself practiced the preach, Noto said:

“We’re invested in cryptocurrency. We own Bitcoin, we own Ethereum, we own some of the more obscure and different cryptocurrencies, but it’s a very small part of what we own”

But Noto did not disregard the potential drawbacks that crypto investments stir up. He said that while cryptocurrencies are an incredible technology, ensuing volatility is always a significant concern.

For the same reason, every purchase from SoFi comes with a warning that cryptocurrency is an “unproven asset”, “highly volatile” and that “you can lose all your money”.

Crypto in Public Companies

While SoFi revealed its ownership of cryptocurrencies yesterday, there are many major public corporations that have been forthrightly buying cryptos.

The most famous name on the list is MicroStrategy which holds the highest number of Bitcoin (125, 051) which are presently worth about $5.5 billion. 

Other well-known names include Tesla, Square, Galaxy Digital Holdings, etc. Although not a public company per se the most recent well-known name to join the mix was the Canadian arm of one of the ‘Big Four’ organizations, KPMG.

Earlier this month the company announced the allocation of crypto assets to its treasury marking the first direct crypto investment by the firm.

BlackRock is Reportedly Ready to Offer Crypto Trading Services

Asset manager BlackRock may soon start offering crypto trading services if people familiar with the matter are believed. 

Per Coindesk‘s report, three of those in the know have claimed that the world’s largest asset manager will soon start offering Bitcoin trading services to its clients.

BlackRock to Begin Crypto Trading

If this should happen, it would represent a landmark moment for the burgeoning crypto space. As the largest asset manager, BlackRock manages over $10 trillion worth of assets for its clients. It has over 1500 institutional clients ranging from sovereign wealth funds to public and corporate pensions.

According to close sources who’d rather remain anonymous, BlackRock would let clients use cryptocurrency as collateral for loans through client support trading and its credit facility. 

They also would be able to trade Bitcoin using the New York-based firm investment software, Alladin.

Another of those familiar with the matter added that the firm had established a working group of around 20 people. This group evaluates Bitcoin and other digital assets on how the firm could profit from the space.

BlackRock’s Previous Pro-crypto Moves

Already, BlackRock has made several moves showing its interest in cryptocurrency. Last year, Reuters reported that the firm’s CEO, Larry Fink said that the asset manager was studying Bitcoin to see if it could offer countercyclical benefits. 

He also compared Bitcoin to Gold, stating that it has the potential to be a key asset class for long-term investments.

The firm also explored Bitcoin investments in 2021 with derivatives-based products on the Chicago Mercantile Exchange (CME). Also, being one of the major shareholders in the largest corporate holder of Bitcoin, MicroStrategy, its decision to go into Bitcoin trading is not entirely surprising.

A previous FXEmpire report revealed that the company had filed for a blockchain exchange-traded fund (ETF) to invest in companies within the blockchain and crypto technology space

After a rocky start to the year, Bitcoin’s price has gradually shed the losses it accrued earlier into the year. The asset is currently trading for $44,000 after rising by over 20% within the last 14 days.

How Does The US Government HODL More Bitcoin Than Tesla?

It could be said that there’s hardly anyone who doesn’t like to have a big fat Bitcoin wallet and this holds true even for the US Government which has had mixed views about digital assets in the past. 

US Govt’s Filled Bitcoin Pockets

Data shared by co-founders Negentropic of on-chain analytics platform Glassnode shows that despite offloading a good amount of the Bitcoin which the US government had obtained through seizures, it still owns $4.08 billion in BTC holdings as of February 2022. 

FXempire, Bitcoin, Crypto, US, News
Source: Negentropic Twitter

Interestingly, the amount of cryptocurrency seized by the US government in 2021 alone surpassed $1 billion (stood at $1.2 billion), which marked an eightfold increase from 2020. 

The primary agency responsible for auctioning off the government’s cryptocurrency assets, the US Marshals Service, had seized and auctioned off more than 185,000 Bitcoins amounting to $8.6 billion at the time, as of December last year. 

It is worth noting that the US government’s holdings are more than twice that of both Ukraine, with $2.01 billion, and Tesla with $1.86 billion. The government’s funds come next to the Grayscale Bitcoin Trust, which has $27.93 billion, and MicroStrategy, which holds $5.43 billion worth of BTC. 

The New Big Seizure

In a February 8 announcement by the Department of Justice (DoJ), Ilya Lichtenstein, and his wife Heather Morgan, were both arrested for ‘alleged conspiracy to launder $4.5 billion in stolen cryptocurrency.’ It also stated that the law enforcement agency had seized over $3.6 billion in cryptocurrency linked to that hack so far. 

Over the last few years, the rise in cryptocurrency-related crimes has led the government to seize and thereby HODL extraordinary amounts of crypto. Analysts are of the opinion that as long as such crimes continue to grow, the US government’s crypto pockets will get bigger too. 

The recent Bitfinex seizure of the hacked BTC, which is now worth $3.6 billion, is also the largest finance bust ever in the department’s history which led to their heavy crypto wallets.

While the US government’s big fat crypto wallets add to the positive narrative for cryptocurrencies in general, there is skepticism and worry about the government liquidating their position triggering bearishness in the market. 

That said, US bankers still remained skeptical about cryptos, in fact, Alkesh Shah of Bank of America in a recent note said that Bitcoin has traded as a risk asset since June of 2021. He further said that although its (BTC) price volatility has fallen since 2013, it is still very volatile compared to S&P 500, Nasdaq 100, and Gold.

Will Averaging Down on Bitcoin Work for MicroStrategy?

MicroStrategy, a firm famous for its Bitcoin buying strategy, has recently released its fourth-quarter report and announced that it bought 660 BTC for $25 million in cash.

MicroStrategy Remains a Loyal Buyer of Bitcoin

MicroStrategy has already accumulated 125,051 Bitcoins at an average price of $30,200 per Bitcoin. The company’s recent report shows that MicroStrategy has started to accumulate Bitcoin at an average price of $11,111.

As Bitcoin moved higher, MicroStrategy kept buying. In the first quarter of 2021, the company bought 19,452 Bitcoins at an average price of $52,765 per Bitcoin. Bitcoin purchases continued in the following quarters, while the average price of MicroStrategy holdings moved higher, which is not surprising as the price of the original purchase was close to $11,000.

There’s No Turning Back for MicroStrategy

MicroStrategy’s CEO Michael Saylor has “bet the farm” on Bitcoin, and his company’s fortune depends on the success of this bet despite the fact that MicroStrategy has a real-life business.

The emergence of such buyers, who are basically “bound to hold” and buy more Bitcoin is certainly bullish for the world’s leading cryptocurrency. However, traders should keep in mind that MicroStrategy will be viewed as a “proof of concept” stock.

Given Bitcoin’s volatility, MicroStrategy’s average Bitcoin price is not that far away from the current levels near $38,000. In case Bitcoin moves below the psychologically important $30,000 level, a massive sell-off in MicroStrategy stock will likely follow, and the company may have problems raising more money for additional Bitcoin purchases. Such a scenario will also hurt general market sentiment, and other companies will think twice before adding Bitcoin to their balance sheet.

At the same time, a move back towards the $50,000 level will show that regular purchases of Bitcoin could be profitable. In this scenario, other companies may look to diversify their holdings into Bitcoin, creating a wave of corporate buyers and pushing Bitcoin back to highs.