(BTC) Archives

Microstrategy Strategizes to Profits

There has been one tech company that has tied its fortunes directly to the price of Bitcoin ($BTC) and that is MicroStrategy (MSTR).

Gutsy is a word that would describe this direction, and some would even say it’s full out irresponsible.

The daring company has had to deal with fallout when bitcoin crashes and it was brutal in the PR world.

Yet as Bitcoin soars in price today, the co-founder of MSTR Michael Saylor should take a victory lap.

Saylor was on the receiving end of a great deal of scorn and criticism as Bitcoin tanked to $15,000 per coin.

Now the company is levering up some more to go bigger.

MSTR bought another 12,000 Bitcoin for $821.7 million, the second-largest purchase by the enterprise software maker since it began acquiring the cryptocurrency almost four years ago.

The fresh hoard raised MicroStrategy’s total Bitcoin holdings to around 205,000 tokens, or to more than $14 billion.

Saylor started buying Bitcoin in 2020 as an inflation hedge and alternative to holding cash. MicroStrategy has already spent more than $1 billion in Bitcoin in the first three months of 2024, more than half of last year’s total buying. The cryptocurrency is up around 675% since Saylor began buying.

The shift into Bitcoin has led to a revival in the share price of MicroStrategy, which has surged more than 1,000% since Saylor’s pivot.

The company’s market capitalization has increased to around $25.7 billion, topping the level that it previously peaked at in March 2000. MicroStrategy reached a settlement in December 2000 with the SEC over accounting fraud allegations.

The average price for the total holding is $33,706, according to the filing. Bitcoin reached a record high of more than $72,000.

The company also presides over a real software business and they believe that the combination of an operating structure including a bitcoin strategy will succeed.

MSTR’s focus on technology innovation provides a unique opportunity for value creation.

Being an operating company, MSTR’s software business remains a core revenue and cash flow generator.

In addition, it also enables them to acquire bitcoin through the use of excess cash or proceeds from equity capital raises or corporate debt capital raises and to pursue software innovations that leverage the bitcoin blockchain.

They’ve deployed these levers to increase bitcoin holdings in a manner that has created shareholder value.

Bitcoin development includes its Bitcoin acquisition strategy and Bitcoin advocacy initiatives.

MSTR’s software development includes BI, AI, Cloud, or Bitcoin and Lightning-related software development.

In 2024, they are hell-bent to shift focus to grow in AI plus BI, while accelerating a sharp transition to a cloud-centric operating model.

Key strategic goals are to grow cloud, innovate with AI, and increase profitability.

In December, they successfully deployed Google Cloud platform integration, furthering multi-cloud capabilities, and providing greater optionality to their customers.

I won’t say that MSTR’s software and cloud business will compete with the Silicon Valley Magnificent 7, but its existence is to support a risky Bitcoin strategy which is actually working effectively as we speak.

Sometimes risky bets pay off well.

Shares in this company will either skyrocket or go to zero depending on what Bitcoin does.

October 27, 2023

Tech Letter

Mad Hedge Technology Letter
October 27, 2023
Fiat Lux

Featured Trade:

(CRYPTO IS BACK AT IT AGAIN)
(MSTR), (BTC)

Crypto Is Back At It Again

Tech Letter

Cryptocurrency prices have been on a tear lately as bitcoin continues to rally on hopes a spot bitcoin exchange-traded fund will launch soon.

Last week Bitcoin had a 24-hour time period where it exploded 13% to the upside as the digital gold wakes up from its slumber.

Lately, it certainly is odd to see US treasury yield surpassing any type of volatility that crypto can offer proving that volatility is more about a time and place dynamic rather than a certain asset class.

The volatility meant that Bitcoin passed $35,000 for the first time since May 2022 even though it has pulled back a little today.

The rally could be fueled in part by investors who were betting against the crypto asset scrambling to cover short positions as well.

Bitcoin led cryptocurrency prices higher over the past two weeks after the SEC declined to challenge its court loss against Grayscale Investments (GBTC) and its effort to convert its Grayscale Bitcoin Trust into a spot bitcoin ETF on Oct. 13.

A U.S. appeals court ordered the SEC to review Grayscale's ETF application. The regulator could still reject the spot bitcoin application, but it would need a new justification to do so.

Institutional demand for a spot bitcoin ETF is stronger than ever before. For many institutions, it is a matter of when — not if — the SEC will approve a spot bitcoin ETF.

A spot bitcoin ETF would provide a regulated and accessible vehicle for bitcoin exposure, and also mark a major vote of institutional confidence.

MicroStrategy (MSTR) added 21% and the computer software company holds 158,245 bitcoin with an average purchase price of $29,582.

Sooner or later, unless regulation totally wipes out Bitcoin, crypto is likely to find itself finagling its way into 401K’s.

The longer it lingers around, institutional pockets, which are deep, will find a way to onboard it into its business model.

For many years, institutional money has stayed away from crypto primarily because it is built on nothing and most conservative investors want to see cash flow.

At least an asset like gold bullion, there is a physical nature of what one buys.

Yet, as the world becomes more digitized and globalized, institutional money is starting to take the bait.

To Bitcoin’s credit, the absolute collapse of volatility in the past few years has been an interesting talking point because too much volatility used to be the problem for this asset class.

There is a chance that as we begin to start a new economic cycle because of a Fed pivot, that $16,000 per Bitcoin at the end of December 2022 could register the low of the next cycle.

Bitcoin is more appealing as a risk-reward proposition now than it was exactly a year ago as the Fed embarked on an epic tightening cycle.

Throw into the mix that the quality of global government has cratered to a generational low and it makes sense for institutional backers from Blackrock to front-run the next bull market in crypto as capital looks to de-risk from fiat currencies.

This could finally end up being the run-up to $100,000 per bitcoin that everyone expected during the last bitcoin spike.

Readers can play this in the equity market by buying MSTR.

August 21, 2023

Tech Letter

Mad Hedge Technology Letter
August 21, 2023
Fiat Lux

Featured Trade:

(ANOTHER RED FLAG FROM DIGITAL GOLD)
($BTC), ($COMPQ), (TLT)

Another Red Flag From Digital Gold

Tech Letter

When good times roll then the digital gold does too.

More often than not, these good times occur when liquidity gates widen.

Simply put, there’s more cash for alternative assets like Bitcoin ($BTC) to speculate on and that’s what people do.

Bitcoin as a standalone asset possesses no intrinsic value and delivers investors zero cash flow which are serious drawbacks in times of pain.

I wouldn’t go so far as to say this is a time of pain right now, but we are inching closer to it as the US 10-year treasury (TLT) hits 4.35%.

Sometimes, investors need that extra little bit of cash flow from that 50-year-old studio tucked away deep inside their portfolio to survive.

Call it a rainy day fund if you will.

The drawdown in Bitcoin is an ominous sign for tech shares ($COMPQ) because the logic goes that if Bitcoin goes up, so does tech.

The narrative for some time has been that Bitcoin is akin to something like crappy tech so if crappy tech shares deliver, then the good tech companies that offer cash flow and software products will do even better.

Bitcoin has just been jolted by some negative price action as we find ourselves lower than last week, at around $26,000 per BTC.

Longer-term US Treasury yields are around multi-year highs, part of a global bond selloff that reflects the risk of a prolonged period of restrictive monetary settings to bring down inflation.

Such a backdrop portends constrained liquidity that would pose a challenge for riskier assets like tech stocks and crypto.

Higher interest rates mean that assets like Bitcoin don’t look so attractive on a relative basis.

Some of the technical signals followed by chart analysts paint a mixed picture. A gauge of momentum known as the 14-day relative strength index suggests Bitcoin is close to the most oversold level since mid-2022.

Other metrics point to a reluctance among retail and institutional investors to engage with crypto following last year’s rout, blowups like FTX, and an ever-shifting regulatory landscape.

For instance, average daily spot volumes on centralized digital-asset exchanges over the past four months were the lowest since October 2020 — when Bitcoin was at about $10,000.

The last 30 days have been brutal for the Nasdaq index and narrowing the goalposts means that BTC will be one of the first casualties to get heaved into the dumpster.

The price action for tech stocks has been highly disappointing lately and there is a strong chance that we could revert to sell the rallies in the short term.

Numerous times the Nasdaq has started the morning hot out of the gate only to suffer sharp sell-offs as the afternoons rolled around.

Shares trending lower to end the trading day have epitomized tech shares lately.

Momentum is lackluster.

The reason I believe that tech shares will endure a harsher period of consolidation is because the added kick in the nuts is China weakness.

Growth forecasts are starting to get ratcheted back as it appears that China has entered the Japan-style lost decade type of slowdown that is a symbol of economic stagnation.

The Nasdaq is really searching hard under each stone to find some type of tailwind to propel us into year-end, but the window is closing quickly. Let’s hope we find that rocket fuel to get us over the line.

March 22, 2023

Tech Letter

Mad Hedge Technology Letter
March 22, 2023
Fiat Lux

Featured Trade:

(IF BITCOIN THEN GROWTH TECH TOO)
(COIN), (MSTR), (BTC), (DOCU), (TDOC)

If Bitcoin Then Growth Tech Too

Tech Letter

We are closing in on $27,000 and that’s quite the performance for the digital gold Bitcoin (BTC).

It just was last year when Bitcoin was down in the dumps.

I am not here flogging crypto but tech investors should take heed of what is happening in the riskier parts of the asset markets.

Yes, tech growth is quite volatile, but bitcoin even more so.

The price of Bitcoin is already up 72% this year and that will beat most tech growth stocks including the Teledocs and DocuSigns of the world.

This last strong surge is correlated with global banking contagion with even very liberal-based CNBC stating that Switzerland has become a financial “banana republic.”

Bitcoin is often advertised as the alternative asset class to fiat banking precisely because fiat banking has a history of going to zero.

The blowups at Silicon Valley Bank, First Republic, and Credit Suisse offer credible evidence that the strength of the fiat money banking system is trending down rather than up.

Hence the monster rally and this will just make banking more expensive for the unbanked and give the big banks more power and more “too big to fail” status.

Narratives are more powerful in crypto in generating real price movements than any other asset class and no matter what your thoughts on how powerful that narrative is, people actually believe this.

Cryptocurrency initially attracted interest from a niche group of investors following bank failures and government rescues.

While its popularity has grown among speculative investors in the roughly decade-and-a-half since, it has retained a status among some as being an asset more removed from the banking system than stocks and government bonds.

If the Fed decides to slow down the pace of interest rate hikes this is highly bullish for the crypto and tech growth sector.

Crypto investors have been particularly sensitive to regulatory and interest-rate developments.

They tend to pull money from long-bitcoin funds while adding to short-bitcoin products after the Federal Reserve announces interest-rate increases and regulators take action against crypto companies.

Since regulators started to crack down on some of the biggest crypto players, investors have pulled about $424 million from global exchange-traded products.

It’s been a terrible year to short bitcoin as that trade was last year’s rich uncle.

An important part of investing is to avoid searching for that boat that has left the dock.

Investors betting against crypto exchange, Coinbase (COIN), and bitcoin-buying software intelligence firm, MicroStrategy (MSTR), were down 76% and 62%, respectively, this year.

Some investors remain cautiously optimistic about the trajectory of bitcoin’s price, especially as it has surged against the backdrop of a banking crisis.

Although there could be a vicious pullback from the epic surge so far this year, Bitcoin will likely do well along with tech growth stocks in a paused or lower rate interest environment.

Throw in the bank contagion as a supercharger and 2023 is shaping up to be a great year to buy bitcoin and growth tech on the dips.

October 25, 2022

Bitcoin Letter

Mad Hedge Bitcoin Letter
October 25, 2022
Fiat Lux

Featured Trade:

(SAVING CRYPTO)
(BTC), (KPMG)

Saving Crypto

Bitcoin Letter

One can’t help but be appalled to see the former driver of global growth China turn radically inward, preferring a deeply authoritarian economic model.

What they had in the Hu Jintao years between 2002 to 2012 was legendary and might not ever happen again.

Friends of mine who have managed to flee China all mention how it was easier to leave before 2020.

Good luck now navigating Chinese lockdowns.

Authorities have made it impossible to leave and they track everything including a digital yuan now.

China and its backward economy have a lot of problems, and the more problems that add up nudge the people to a crypto solution.

I am not saying that every Chinese person will invest in crypto, but for the wealthy ones that usually immigrate to Singapore or Hong Kong, the data backs up my thesis.

KPMG accounting firm has indicated a colossal interest in the crypto market from the wealthy elite of Singapore and Hong Kong.

In fact, a 2022-survey by KPMG found that 58 % of the 30 family-offices and high-net-worth individuals (AUM US$10 m–500 m) across Singapore/HK were already invested in digital assets and a further 34 % intended to allocate funds to bitcoin, stable-coins, ether, as well as DeFi opportunities.

Of those 58 % who already invested:

100 % held bitcoin,
87 % held ether,
60 % bought NFTs/metaverse tokens,
47 % held DeFi tokens.

Beyond that, most already invested only allocated less than 5 % of their portfolio to the digital-asset class (reflecting caution around regulation/valuation).

But since 2022, things have evolved:

In 2025, the global fintech investment in H1 reached US$44.7 billion across 2,216 deals.
In Singapore, fintech (including cryptocurrency/digital assets) pulled in around US$1.04 billion in H1 2025.
Meanwhile in China, the stance toward cryptocurrencies remains very hostile: crypto ownership, trading and DeFi operations in mainland China are being criminalised and enforcement has stepped up markedly in 2025.
And the digital yuan (e-CNY) is being actively deployed: for example, by end Sept 2025, cumulative e-CNY transactions hit RMB 14.2 trillion (~US$2 trillion) and 225 million personal wallets were in circulation.

So: The good news is that there is a pathway that links rich Chinese to the future of crypto, but it’s largely contingent on whether crypto can get its act together or not.

China is ramping up its control over money supply by advancing the digital yuan that they can track and regulate with fine control.

This is really 1984 in its purest form.

As the crypto winter continues, there are indeed some silver linings.

However, crypto needs to be careful that it doesn’t turn into just another centralized version of what the Chinese are running away from.

Decentralization is hard to pull off in the long term as the government will want its cut.

Rome wasn’t built in one day.