Kategorie: Bitcoin News

• MicroStrategy registered $34 million in its first-ever bitcoin sale.
• The company registered a paper loss of over 1 billion in 2022.
• MicroStrategy made its first bitcoin purchase in August 2020.

Despite making a paper loss of about $1.3 billion in 2022, MicroStrategy’s chief financial officer, Andrew Kang, said that the company will continue trading bitcoin. During a presentation for the Q4 2022 financial results webnier, Kang said:

“We may consider pursuing additional transactions that may take advantage of the volatility in Bitcoin prices, or other market dislocations that are consistent with our long-term Bitcoin strategy.”

The company’s stand on digital currencies comes at a time the crypto market is witnessing considerable recovery from last year’s plunge although it is not clear if digital currencies will ever reclaim their previous highs.

Microstrategy bitcoin investment

Microstrategy made its first bitcoin purchase in August 2020 acquiring 21,454 BTC in what it described as a “capital allocation strategy.” The company has been accumulating bitcoins since then and by December 24 2022 it had as much as 132,500 BTC worth $4.027 billion according to Microstrategy bitcoin statistics on the Buy Bitcoin Worldwide website.

In the presentation on February 2023, Kang confirmed that Microstrategy holds 132,500 bitcoin that are worth about $1.84 billion as of Dec. 31, 2022.

In the last quarter, MicroStrategy made a loss of $34 million after making its first-ever Bitcoin sale. The company made the decision to sell some of its bitcoins to recoup some tax losses.

Microstrategy co-founder Michael Saylor said Bitcoin is one of the most important benchmarks that it uses to measure its stock performance against. He said that the company’s stock has risen by 117% since August 2020 compared to the bitcoin price which has risen by 98% in the same period.

In an interview with a popular news outlet, Saylor said:

“The only real safe haven for an institutional investor is Bitcoin. Bitcoin is the only universally acknowledged digital commodity, and so if you’re an investor, Bitcoin is your safe haven in this regard.”

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Key Takeaways

• Crypto banks best January in nearly a decade
• 68% of the Bitcoin supply in profit, compared to 50% at the start of January
• Correlation between Bitcoin and risk assets is close to all-time highs, with Federal Reserve’s interest rate policy continuing to hold the key

It’s important to celebrate the wins, huh? And wow, did crypto investors need a win. Following a year filled with bankruptcies, arrests, layoffs and red charts, the new year has got off to a nice little start. 

In fact, January is crypto’s best month since 2013. Let’s dig in and look at summary statistics from the banner month, and get the lay of the land as we turn the page into February.

Funding rate positive

Opening the month at $16,600, Bitcoin closed out January trading at $23,100 for a cool 39% gain. 

The funding rate is the price which traders pay to either long or short an asset on the futures market. If the funding rate is positive, it means long trades are dominant and long traders are paying short traders for positions. The vice-versa also holds, meaning a negative funding rate implies short traders are paying long traders. 

This means that, while far from perfect, it is a decent gauge of market sentiment. Looking at the rate throughout January, it was positive on all but two days, as bulls ruled the roost. 

Bitcoin traders are back in profit

The best way to sum up the fortunes of the crypto market this month is to look at the amount of supply in profit. Things ended pretty acrimoniously last year, with half of the 19.3 million circulating supply of Bitcoin in profit. 

Fast forward 31 days and this figure is now up at 68%. 

Road back is long

Of course, I wrote only yesterday about how severe the damage caused in 2022 was. This is not the case of a little tender care flipping the fortunes of the market around. The industry is still besieged by bad news, with layoffs and bankruptcies far from over, if the past couple of weeks is anything to go by. 

Crypto, more than ever, is simply following macro. There is nothing else causing this rally. And with the US Federal Reserve meeting this afternoon to outline its latest interest rate policy, the bounce could be reversed pretty quickly, or even boosted further, depending on the words of chairman Jerome Powell. 

Correlations remain sky-high

Don’t take my word for it. A quick look at the correlations at play here shows quite how much Jerome Powell is holding Bitcoin’s hand. 

There’s an irony in there somewhere; a legion of crypto traders waiting nervously on the words of the chairman of a central bank to discover where Bitcoin, and the rest of the market, is headed. What was that about a hedge narrative?

And if the correlation between the market and Bitcoin was steep, you can bet your bottom satoshi that its even higher between Bitcoin and the rest of the market. Ever since we transitioned into this new era of increased interest rates around April 2022, the Fed has been holding Bitcoin’s hand ever tighter, and Bitcoin has been holding the hand of every other crypto.

Final thoughts 

It’s been a stellar month for crypto, throwing up memories of the explosive runs it was capable of back in the good old days of the bull market. 

With the Federal Reserve announcing its latest interest rate policy this afternoon, markets could show volatility, with impetus to this latest rally, alongside an abrupt curtailment, both on the cards depending on the tone that chairman Jerome Powell strikes. 

In the long-term, the space is still reeling from the numerous negative events of the past year, and Bitcoin trading like a levered bet on the Nasdaq is far from ideal. 

Despite fundamentals appearing similar to a commodity, and big dreams about the future, Bitcoin remains a highly speculative asset for now. And as for the rest of the crypto? Just copy and paste the Bitcoin analysis, while ramping the volatility up a notch (or three). 

The post January recap: Bulls back on top, but all eyes on the Federal Reserve appeared first on CoinJournal.

• Core Scientific is seeking emergency relief from the bankruptcy court for it to secure a replacement loan facility.
• According to court documents, the miner has agreed to a $70 million credit facility from investment banking firm B. Riley.
• The company will use the funds to pay off an existing loan to avoid defaulting,

Core Scientific, a Bitcoin mining firm that filed for Chapter 11 bankruptcy orotection in December last year, says it’s agreed to a $70 million financing facility from B. Riley Commercial Capital, LLC.

Court documents the Bitcoin miner filed on Tuesday reveal that the crypto company seeks to use the loan facility from the investment bank to pay off an existing debtor-in-possession (DIP) facility.

Core Scientific seeks emergency relief

The miner seeks an emergency relief from the bankruptcy court, which it says is needed no later than 11:30 am CET on Wednesday, 1 February, 2023. As noted in the filing, the crypto miner would be in default under the terms of the original DIP facility.

The Core Scientific team says if approved, the first part of the facility will be $35 million before the rest follow. Securing the new credit facility from B. Riley is key to the miner continuing its operations as it navigates its bankruptcy process.

The past year proved to be particularly brutal for crypto mining companies, with the crash in Bitcoin prices and surging energy costs combining to hurt business. Core Scientific was one of the largest miners to seek bankruptcy protection as Bitcoin price collapsed once more following crypto exchange FTX’s implosion.

At the time of its bankruptcy filing, Core Scientific revealed liabilities of $1 billion to $10 billion.

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Key Takeaways

• Bitcoin is up close to 50% from its lows, but is still down over two-thirds from all-time highs
• Some on-chain metrics show how much the rally pales in comparison to the prior fall 
• Positive news from the industry remains few and far between, as market prepares for latest interest rate policy, to be revealed at FOMC meeting Wednesday

Let us start with a riddle. How much profit/loss have you made if an asset you own rises by 47%, having previously fallen by 77%?

The answer is a gruesome 67% loss. 

That is the predicament facing Bitcoin investors who bought at all-time highs in late 2021. While markets have kicked off the year in scintillating fashion, it is important not to lose perspective. 

Humans have short memories, though. With Bitcoin up nearly 50% from the lows post-FTX collapse, crypto markets have that giddy feel about them again. It’s amazing what hope can do for people, huh? And by hope, I mean hope that interest rates will come down again.

Federal Reserve controls the Bitcoin price

I wrote a piece last week about how this latest rally, if it shows anything, simply proves once and for all how much Bitcoin is trading as an extreme risk-on asset. 

Bitcoin was crushed last year as central banks worldwide flipped hawkish for the first time in Bitcoin’s existence. With the cheap money of the last decade no longer available, and stout yields available on other investments such as T-bills, high-risk assets collapsed. 

The tech sector, also notoriously sensitive to interest rates, has been sacking employees left, right and centre – Meta, Salesforce, Twitter, Google, and the list goes on. 

This latest rally now comes as inflation begins to cool, with hope renewed that the pain of suffocating monetary policy will, in fact, one day come to an end. 

Market remains ravaged

While the picture undoubtedly looks rosier than this time two months ago, the crypto market is still in a world of pain. 

Bankruptcies are still flowing – see Genesis filing last week – while there are numerous other potential downside catalysts as the market still delves through Sam Bankman-Fried’s chaotic mess: DCG still present a lot of uncertainty, for example.

While prices have been running, there is no particularly good news to explain this rally. As I said, it’s all macro, with investors staring squarely at the Federal Reserve. 

A couple of charts paint a good picture of the pain still present in markets. Despite the recent upturn, the net realised profit marker, which is an on-chain metric calculated by comparing the price of recent coins moved to the price at which they previously moved, shows how much the recent rally pales in comparison to the scale of the fall last year. 

In truth, there is no need to complicate things. Despite the bluster of “hedge” narratives and “uncorrelated investment” that floated around through COVID, it is as clear as night and day that Bitcoin is trading off interest rate expectations right now. 

The below chart is perhaps the most important one in all of crypto over the last couple of years. 

That little bounce at the end could reverse very quickly depending on how things shake out at the upcoming Fed meeting. It could also do the opposite if things end up being more hawkish than the market has currently priced in. 

Either way, it is clear what is moving markets right now.

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