The Bitcoin investment of MicroStrategy has come under scrutiny due to its Dollar Cost Average (DCA) for the entire investment currently standing at approximately $29,000. However, considering that the current value of Bitcoin is around $26,265, it appears that the company is holding its Bitcoin assets at a loss.
MicroStrategy’s Bitcoin Treasure Grows with $147M Investment
On September 25th, Michael Saylor, the co-founder and executive chairman of MicroStrategy, made a significant announcement on X (formerly Twitter). MicroStrategy has recently invested $147.3 million in cash to purchase 5,445 BTC, with each Bitcoin costing an average price of $27,053.
Currently, MicroStrategy possesses Bitcoin holdings valued at approximately $4.68 billion and holds a total of 158,245 BTC. It’s worth mentioning that on December 22, 2022, MicroStrategy sold 704 BTC.
MicroStrategy’s Bitcoin Investment Isn’t Profitable?
However, it is crucial to acknowledge that MicroStrategy’s financial stability has witnessed turmoil due to a persistent decline in the value of bitcoin. Notably, bitcoin recently experienced a phenomenon known as a “death cross,” resulting in a 3.6% drop since reaching its monthly high of $27,700.
The company can utilize a strategy known as Dollar Cost Averaging (DCA). This approach involves purchasing more Bitcoin when prices are low, ultimately reducing the average cost of their investment over time. By consistently employing this method, they may eventually reach a point where financial losses are minimized.
Even though it might look like MicroStrategy’s Bitcoin investment isn’t making money right now, it’s important to remember that this is just a snapshot of time.
Their strong financial position gives them the freedom to plan for the long term, which is not always easy in the fast-moving world of cryptocurrencies.
Bitcoin’s (BTC) price has steadfastly defended the critical support level of around $27k throughout the early London session on Wednesday. The leading digital asset finds itself in a precarious position, poised to either embark on a bullish breakout toward $32k or face a potential capitulation below $25k in the weeks ahead. Nonetheless, most cryptocurrency experts agree that Bitcoin’s price may be primed for a bullish breakout, supported by a noticeable increase in address activities.
However, the Bitcoin bulls must contend with the substantial selling pressure resulting from daily and weekly death crosses between the 50 and 200 Moving Averages (MA). Nevertheless, the substantial demand for Bitcoin from institutional investors remains a significant bullish factor, particularly in light of the heightened regulatory clarity surrounding cryptocurrencies in various jurisdictions.
Binance Records Decrease in Bitcoin Supply
Binance, being the leading cryptocurrency exchange, wields considerable influence over Bitcoin’s price dynamics. Over the past 30 days, Bitcoin’s supply on Binance has declined by approximately 21,403 coins, equating to roughly 4.41 percent. Consequently, as of Wednesday, Binance held approximately 543k Bitcoins, making it the largest entity holding Bitcoin for its clients.
The decrease in Bitcoin’s supply on Binance indicates that investors may transfer their assets to non-custodial and cold wallets, anticipating a potential future bull market. While not a dominant factor in determining Bitcoin’s price action, changes in supply can aid investors in gauging the broader market sentiment.
Furthermore, a sustained decline in Binance’s Bitcoin supply suggests that more investors are adopting a bullish outlook and are not inclined to sell their holdings at current price levels.
Solana (SOL), a prominent smart contract and DeFi ecosystem boasting over $1.5 billion in stablecoin market capitalization and approximately $305 million in total value locked (TVL), has garnered significant attention in light of the substantial FTX liquidation order.
Solana’s price is hovering around $18.77 during the early London market hours on Thursday, representing a roughly 5.3 percent increase. Speculation regarding Solana’s price movement has intensified over the past few hours, with its 24-hour average trading volume surging by approximately 43 percent to reach about $448 million.
Solana FTX Deal
Solana’s FTX Deal On Wednesday, current officials at FTX, led by CEO John Ray III, received court approval to liquidate the exchange’s crypto holdings as part of an effort to repay creditors. According to FTX documents, the distressed crypto exchange holds approximately $3.4 billion in digital assets, with Solana constituting the majority at about $1.2 billion. Notably, the fact that there is a willing buyer to provide FTX with a secure avenue for liquidating its Solana holdings represents a positive development for the DeFi ecosystem.
SOL Price Analysis
SOL Price Action Solana’s price has experienced a year-to-date gain of approximately 29 percent but has faced significant resistance in surpassing levels seen prior to the FTX situation. The closure of FTX and its association with Solana is anticipated to eliminate short-term uncertainties and potentially catalyze the second phase of the bear market rally, aiming for the next macro resistance zone ranging from $40 to $50. However, for Solana’s bullish momentum to continue, it is imperative that they convert the weekly 50 Moving Average into a support level.
Despite Tether’s recent achievements, storm clouds loom on the horizon for the dominant stablecoin, USDT. Its value has taken a hit, and the reasons are deeper than one might assume.
Analysts and finance experts express concerns over Tether’s ability to maintain its peg to the US Dollar, even as the company highlights its extensive US Treasury bond holdings.
Tether’s Impressive Treasury Holdings
Tether’s accolades in the financial world are hard to ignore. As highlighted by Paolo Ardoino, Tether’s Chief Technology Officer, the company boasts of possessing an impressive $72.5 billion in US Treasury bonds. This achievement propels Tether to a rank among the top 22 global purchasers of these bonds, even surpassing several nations including UAE, Spain, Mexico, and Australia.
The Global Shift in Treasury Debt
The world of treasury debt has seen significant shifts lately. China, for instance, has reduced its US Treasury debt holdings by nearly $481 billion from its peak, a trend noted by Ivan Bayoukhi, the brains behind Wall Street Silver. Such dynamics in the global finance landscape have ripple effects, and Tether, despite its strengths, isn’t immune to these changes.
USDT: A Beacon for Emerging Markets
Tether’s USDT isn’t just another cryptocurrency; for many, it’s a lifeline. Especially in emerging markets grappling with skyrocketing inflation rates, USDT offers a stable financial tool. Ardoino emphasizes its value, noting how USDT helps countless individuals shield themselves and their families from the detrimental impacts of rampant inflation in their native currencies.
The Current State of USDT
However, even with its global significance, USDT is currently facing challenges. It recently experienced a slight deviation from its peg, with its value hovering around $0.99. Moreover, while it did see a minor 1.2% drop in its market capitalization in the previous month, Tether still maintains a commanding lead in the market with a valuation of $82.9 billion, outpacing its nearest competition, USD Coin (USDC).
Matthew Dixon, a notable finance expert, has voiced concerns about the potential vulnerabilities of Tether, especially in the wake of rising interest rates and unforeseen market events.
Are Ethereum Whales Signaling Trouble? ETH Holdings Flood Exchanges, Raising Fears of Sub-$1500 Crash
As Ethereum’s price continues its battle between bullish and bearish forces, recent substantial transfers of ETH by prominent holders, commonly known as whales, have sparked concerns about the cryptocurrency’s future trajectory. The significant scale of sudden whale transactions has sent ripples through the market due to their potential impact on this volatile asset.
Two transactions, in particular, have captured attention: one involving the movement of 15,000 ETH (equivalent to approximately $24.7 million) to the exchange Gate.io, and another concerning the transfer of 21,299 ETH (roughly $35.2 million) to Coinbase. These transactions have ignited debates about the motivations behind these moves and the potential ramifications they could hold for Ethereum’s price and market sentiment.
Noteworthy Whale Transactions:
- 15,000 ETH to Gate.io: A notable transfer of 15,000 ETH, valued at around $24.7 million, has taken place, prompting discussions about its implications.
- 21,299 ETH to Coinbase: Another substantial transaction of 21,299 ETH, amounting to about $35.2 million, has occurred, further intensifying debates surrounding its purpose and potential consequences.
Concerns About Price Impact:
A prominent concern emerging from these whale transactions is their potential to exert downward pressure on Ethereum’s price, which could even breach the crucial support level of $1,500. Presently, Ethereum is trading at $1,647.75, experiencing a minor decrease of less than 1% over the last 24 hours. The cryptocurrency’s market capitalization currently stands at $198.05 billion.
Interestingly, amidst these whale movements, a distinct pattern has emerged. While smaller traders have been observed selling off their holdings, significant bulls are actively accumulating ETH. This accumulation has led to a heightened concentration of ETH supply among the top 10 addresses, indicating a notable disparity in trading strategies.
Whale Activity and Accumulation:
Additional whale activity data supports the narrative of intensified accumulation. As highlighted in a recent tweet, the trend of accumulation appears to be at its peak.
Crypto trading expert Ali Martinez’s analysis introduces an additional layer of caution to the discussion. Martinez suggests that if Ethereum’s price falls below the range of $1,600 to $1,550, this could trigger a substantial correction ranging from 37% to 45%, potentially driving the price down to $1,000. This perspective is grounded in Ethereum’s network fundamentals, as evidenced by a decline in the number of monthly active Ethereum wallets, indicating reduced blockchain activity.
The Ethereum MVRV Ratio, a key indicator comparing Ethereum’s market value to its realized value over a specific period, has also caught Martinez’s attention. The ratio has fallen below the 180-day Simple Moving Average (SMA), a development that Martinez considers a cautionary signal for Ethereum’s bullish outlook.
Anticipating Future Trends:
The question that arises amidst these market dynamics is whether this surge points to another imminent upswing for ETH. Market participants are closely watching for any developments that could shape Ethereum’s trajectory in the days to come.
FTX, once a thriving beacon of the crypto world, faced a catastrophic collapse in November 2022. The debacle was a tragic outcome of human folly and reckless ambition.
FTX’s downfall was not sudden but a slow unravelling. The mishandling of risk, blatant disregard for rules, and a trail of broken promises led to the total annihilation of a once-great dream. Behind the façade of innovation was a grim tale of financial wreckage that left countless customers, investors, and employees in despair.
In the aftermath, the formation of the FTX 2.0 Coalition emerged as a striking reaction. Committed to seeking justice and compensation, their mission seemed both valiant and desperate.
FTX’s Offer to Ad Hoc Committee
FTX has proposed to pay substantial fees to the Ad Hoc Committee (AHC), who previously sued the company for recognition of trust per the terms of service. FTX’s offer includes up to $675k monthly and a $3.5M fee upon plan confirmation. However, there’s a catch: if the AHC pursues litigation regarding the trust, the agreement is off. In the words of the Coalition, this arrangement seems like “a dog on a leash.”
Galaxy Digital – A Friend or Foe?
The choice of Galaxy Digital to manage crypto holdings is more puzzling. Their admission of withdrawing large sums (nearly $76 Million) just before the collapse and the decision to do business with them smacks of something more than mere coincidence. Something is fishy. The creditors are at stake here!
Was there a darker motive at play, or was this just another bad decision in a string of many?
What’s at stake here is more than money; it’s about confidence in an industry that promises transparency and fairness.
After trading successfully on several exchanges in the past three months, digital asset Pepe (PEPE) has maintained the third-largest meme coin by trading volume and market valuation. The Ethereum-based meme coin has seen its liquidity steadily improve on various decentralized financial platforms like Uniswap.
According to market aggregate data provided by dex screener, Pepe has a liquidity of about $6.5 million on Uniswap V3 via WETH. Additionally, the meme coin had total liquidity of approximately $4.2 million via Uniswap V3 with MATIC token.
As a result of the significant Pepe liquidity, crypto whales have shown increased interest in the meme coin.
Pepe (PEPE) Interest on the Rise
As the altcoin market continues to exude a more bullish outlook amid Bitcoin price recovery, Pepe coin has attracted significant attention from investors. According to on-chain data provided by Lookonchain, a crypto whale converted $1 million worth of USDT into PEPE on Wednesday as the price gained about 3.3 percent.
Notably, Pepe token’s daily traded volume increased by about 10 percent in the past 24 hours to approximately $163 million. Essentially, an increase in traded volume is perceived as heightened demand, which is often followed by price gains.
Pepe Price Analysis
Pepe price rebounded from a crucial support/resistance level in the last two days. According to a respected trader and analyst Crypto Tony, Pepe price could continue in a bullish recovery in the coming days if the support level around $0.0000011 holds.
Binance, a leading global cryptocurrency exchange, has seen a substantial surge in its XRP holdings, with the exchange now boasting an impressive stash of 2.8 billion XRP tokens. The latest Periodic Report of Ownership (PoR) reveals an increase of over 100 million XRP in the exchange’s holdings.
This remarkable growth in Binance’s XRP holdings has caught the attention of the cryptocurrency community. Presently, Binance holds a net balance of a staggering 2,806,681,733.985 XRP (roughly 2.8 billion).
A unique aspect emerges when analyzing Binance’s customers’ cumulative XRP holdings, which total about 2,711,777,813.604 XRP (nearly 2.7 billion). It signifies not only Binance’s confidence in the potential of XRP but also the exchange’s commitment to catering to its users’ demand for this digital asset.
It appears that Binance holds more XRP than its customers do. As a result, the intriguing ratio of customer net balance to Binance’s own net balance lands at around 103.5% for XRP.
Moreover, this strategic move serves as a compelling confirmation of Binance’s rock-solid capacity to comprehensively cover its users’ XRP assets in a flawless 1:1 ratio.
Binance’s Commitment to Clarity: PoR Report Highlights Transparency and Growth
The latest Periodic Report of Ownership stands as a testament to Binance’s dedication to transparency and its role in fostering the growth of the crypto landscape.
Unlike FTX’s cryptocurrency exchange, Binance consistently discloses its crypto holdings post-event. The latest report marks the ninth instance where Binance willingly lays bare its most current assets reservoir.
In the prior month, Binance’s XRP riches weighed in at approximately 2.69 billion XRP, with an intriguing customer net balance to net balance ratio of 105%. The recent PoR exposé, signifying that customers now boast 2.7 billion XRP, unveils a fascinating tale of growth.
With its substantial XRP holdings, the Binance customer base has substantially expanded its XRP fortunes, remarkably amassing over 100 million XRP in just a single month.
In a thought-provoking display, Crypto Assets Guy, a well-known XRP community influencer, has presented a visualization that highlights the potential value of XRP investments if the cryptocurrency regains its all-time high (ATH) of $3.70.
The visualization demonstrates potential returns for different XRP holding levels, ranging from 5,000 XRP to 300,000 XRP, using a consistent rate based on the ATH price.
The Potential Gains: How Much Investors Could Make
XRP, the cryptocurrency created by Ripple Labs, has seen its fair share of ups and downs in the volatile crypto market. Suppose XRP reaches its all-time high (ATH) of $3.70, the potential gains for investors could be significant.
For investors holding 5,000 XRP, their investment could surge to an impressive $18,500, compared to its current worth of $3,100. This showcases the potential for exponential growth even with a moderate investment.
Investors with 15,000 XRP could see the value of their holdings soar to $55,500 at the ATH.
Those holding 40,000 XRP might witness their investment skyrocket to an eye-watering $148,000 at the ATH, compared to its current value of $24,800.
With 80,000 XRP, investors could potentially reach remarkable holdings of $296,000 at the ATH.
The visualization also indicates that 150,000 XRP could be worth an astonishing $555,000 if XRP reclaims its ATH.
For those with a substantial investment of 300,000 XRP, the visualization showcases the possibility of achieving $1.1 million if XRP hits its ATH, representing a significant increase of nearly $1 million.
Investors with different XRP holdings not covered in the visualization can easily calculate the potential value by multiplying the number of XRP tokens they hold by $3.70. However, it’s essential to remember that this is not an insured prediction, but rather an illustration of the possibilities.
XRP ATH Contested: Debating the All-Time High
While the XRP community celebrates the potential for significant gains, the actual all-time high (ATH) value of XRP remains a topic of debate.
According to CoinMarketCap, the ATH stands at $3.84. However, Ripple CTO David Schwartz contests this, attributing the discrepancies to variations in South Korea’s exchange rates and claiming the true ATH is $2.80.
The confusion deepens as TradingView data suggests the ATH is $3.3, while other exchanges assert it to be $3.70. CoinGecko reports yet another figure, $3.40. This disparity underscores the challenges in determining a definitive ATH value for XRP.
Presently, XRP is trading at $0.62, experiencing a sharp 33% decline from its yearly high of $0.9380 on July 13. Reaching the elusive $3.70 mark would require an astonishing 496% surge from its current price.
While the potential for XRP to reclaim its ATH excites investors, it’s vital to remember that the cryptocurrency market is highly volatile. There are no certainties, and investors should exercise caution and be aware of the risks before making investment decisions.
Bitcoin’s price has surged amidst the ongoing low volatility in the cryptocurrency market. The catalyst behind this remarkable move is none other than software developer firm MicroStrategy, which has just unveiled its ambitious plan to raise up to a staggering $750 million.
But why? Well, the company intends to use the proceeds to buy more Bitcoin, among other purposes, as disclosed in a filing with the U.S. Securities and Exchange Commission late Tuesday.
Intention Behind This Massive Capital Infusion? To Buy More Bitcoin!
MicroStrategy, led by the visionary Chairman Michael Saylor, has been a vocal advocate for Bitcoin, consistently expanding their cryptocurrency portfolio, regardless of market conditions.
The company announced officially to sell its stock to Cowen and Company, LLC, Canaccord Genuity LLC, and Berenberg Capital Markets LLC. The net proceeds from this offering will be utilized for general corporate purposes, including acquiring more Bitcoin and supporting working capital, subject to market conditions.
However, by selling additional stock, the software company can support its rising Bitcoin holdings. As publicly traded firm MicroStrategy’s stock sales make it easier to raise funds, which should improve its Bitcoin investment.
As of July 31, the company has 152,800 bitcoin, which is currently worth around $4.5 billion. This latest move showcases their unwavering faith in the future of Bitcoin and the transformative potential it holds.
How Crypto Market Reacted to the News?
The market has reacted positively to this momentous announcement, propelling not only Bitcoin’s price higher, but also raising the bar for Ethereum and Dogecoin. The leading cryptocurrency has broken through key resistance levels, gaining momentum and capturing the attention of investors worldwide.
Notably, Bitcoin’s price has surged following the news, breaking through important resistance levels at $29,188, $29,234, and $29,342, turning them into support. The cryptocurrency has also reached a significant barrier at $29,789, which was last seen around June 24.
Overall, MicroStrategy’s bold move is sending ripples through the financial landscape, reaffirming Bitcoin’s status as a viable alternative investment. As more corporations and investors follow suit, the cryptocurrency ecosystem is poised for a potential surge in interest and adoption.
In its Q2 2023 earnings release on Wednesday, Tesla (TSLA), the electric car manufacturer, revealed that it neither bought nor sold any bitcoin for the fourth consecutive quarter. The company’s bitcoin holdings remained at a net value of $184 million, the same as the previous three quarters.
HODLing Strong: Tesla’s Unique Approach to Bitcoin
At the end of the second quarter, the price of Bitcoin stood at approximately $30,400, up from around $28,500 at the end of the first quarter. However, current accounting regulations prevent the valuation of digital assets from being adjusted when prices rise unless the assets are sold. Conversely, valuation reductions can occur when prices decline, even before any sale takes place.
It’s worth noting that Tesla’s bitcoin dealings have been relatively static since the second quarter of last year when the company sold over 30,000 bitcoins, equivalent to approximately 75% of its holdings, for an impressive $936 million. Initially, in early 2021, Tesla made headlines by purchasing $1.5 billion worth of bitcoin, and CEO Elon Musk further fueled bitcoin prices by announcing that Tesla would accept bitcoin as payment for its electric vehicles. However, Musk later backtracked on this decision.
To Buy or Not to Buy?
Despite its unchanged bitcoin holdings, Tesla reported strong Q2 financial performance. The company posted adjusted earnings per share of $0.91, surpassing the consensus analyst estimate of $0.80, according to FactSet. Additionally, its revenue of $24.9 billion outperformed analyst expectations of $24.2 billion.
As the dust settles on Tesla’s earnings, investors have driven the company’s shares up by 1% in after-hours trading, reaching a sky-high $288.96. With an impressive year-to-date growth of over 136%, it’s evident that the market still believes in the power of Tesla’s electric dreams.
As Elon Musk famously said, “The future is already here; it’s just not evenly distributed.”
Tesla’s decision to maintain its bitcoin holdings and its robust Q2 performance seems to embody this futuristic spirit, navigating the twists and turns of the crypto rollercoaster, holding its course, and reaping the rewards.
The post MicroStrategy Will Need To Sell Its Bitcoins Holdings If This Happens appeared first on Coinpedia Fintech News
According to a report by brokerage firm Bernstein, MicroStrategy will only need to liquidate its bitcoin holdings in the case of intense price corrections, especially around its debt expiry due in mid-2025. Strong bitcoin prices would lead to a stronger balance sheet, higher share price, and more effortless debt repayment without the need to sell down its cryptocurrency holdings. However, if bitcoin crashes and the value of MicroStrategy’s cryptocurrency holdings do not cover debt and certain covenants, the corporate structure would come under pressure from “spring forward” clauses. MicroStrategy holds around 152,000 bitcoin with a total cost basis of about $4.5 billion.
Robinhood, the popular trading app, has recently experienced a remarkable increase in Dogecoin (DOGE) holdings among its customers, with the total amount rising by $1 billion, marking an impressive 11.16% surge within just one month.
According to a tweet from @DogeWhaleAlert, a prominent wallet tracker, Robinhood’s total DOGE stash on behalf of its clients has soared by 11.16% since the end of May. In May, the platform’s wallets held 22,641,958,530 DOGE, valued at approximately $1,598,454,346.
Fast forward to the present, and the data reveals a staggering rise in Robinhood’s DOGE holdings, currently standing at 38,317,905,469 DOGE, with a value of $2,579,369,807. This accumulation represents a significant increase of 27.39% compared to the 16.23% recorded on May 25.
The surge in Dogecoin holdings by Robinhood users is indicative of the growing interest and appetite for this meme-inspired cryptocurrency within the platform’s user base. It also highlights Robinhood’s role in facilitating accessibility and ease of trading DOGE for retail investors.
The surge in Robinhood users’ Dogecoin holdings and the overall interest in DOGE highlight the trading app’s instrumental role in popularizing this unique cryptocurrency. Robinhood’s user-friendly interface and accessibility have made it the preferred platform for retail investors venturing into the world of digital assets.
As the Dogecoin phenomenon continues to unfold, it will be intriguing to observe how Robinhood’s expanding user base and its growing DOGE holdings contribute to the overall market dynamics of this popular meme cryptocurrency.
In a surprising turn of events, the U.S Government has solidified its position as the largest Bitcoin (BTC) owner among nations with a staggering $1.8 billion worth of the popular crypto. Holding on to these assets through a series of successful raids and strategic sales, the government has accumulated approximately 69,000 BTC, firmly establishing itself as a prominent player in the crypto world.
Based on Forbes reports, the U.S. has judiciously held onto digital assets, predominantly Bitcoin, acquired through large-scale asset seizures. While the government has participated in auctions to divest some of its Bitcoin holdings, a substantial portion remains under its control, suggesting a strategic long-term approach.
Bitcoin Is On Its Way To The Top: Did Bitcoin Late Shorts Get Rekt Again-Is This the Beginning of a Recovery to $30000?
What Is Their Plan Of Action?
Having said that, the whole genesis of the U.S. Government’s foray into Bitcoin dates back to June 2020 when the Department of Justice (DOJ) seized a colossal 69,370 BTC from an undisclosed dark web marketplace. This initial haul was valued at an astonishing $1.4 billion, laying the foundation for subsequent crypto raids.
Since then, the government has conducted multiple operations, resulting in the retention of a significant portion of the confiscated BTC. While the U.S. Justice Department has previously auctioned off Bitcoin to interested investors, recent times have seen a lull in such large-scale auctions, leaving observers to ponder when the next one will take place.
Crackdowns aren’t slowing down
This trend is further complicated by US crypto rules. The government’s growing participation in crypto has sparked speculation about its Bitcoin holdings.
Will they cling to the digital treasure or become more engaged in the Bitcoin market? The government’s policy and impact on the crypto scene will be revealed over time.
The U.S. Government’s choice to amass such Bitcoin wealth may have been influenced by rising worldwide interest in it along with growing inflation fears. Dr. Sachin Jaitly, a general partner at investment advisor Morgan Creek Capital, suggests that the adoption of Bitcoin at a sovereign level gained momentum as concerns over inflation intensified.
The US govt. seems to be portraying a pessimistic approach to crypto, but also amassing it at the same time. What could this mean for the markets in the longer run? We’ll have to wait to find out.
In a shocking revelation, former Ripple Labs executive Matt Hamilton has hinted that the company may “burn” its XRP holdings by locking them in escrow, effectively rendering them inaccessible to anyone, including themselves.
This comes as the Ripple Labs and XRP community eagerly awaits the outcome of the legal battle between the payments company and the US Securities and Exchange Commission (SEC).
Top Reason Behind XRP Burn
- Ripple may lock its XRP tokens in escrow: Ripple Labs holds a significant supply of XRP tokens, giving the company a major stake in the token. To balance the market, he hinted that Ripple may eventually lock these tokens in escrow by sending them to a particular address and disabling the master key to this designated wallet. This would render the future escrow funds inaccessible to even Ripple.
- The legal battle with the SEC: The legal battle between Ripple and the US Securities and Exchange Commission (SEC) has caused a lot of imbalance in the potential business alignment for the company, which uses XRP as the primary currency in its On-Demand Liquidity (ODL) service. According to him, if the ruling impacts Ripple’s ability to control the portion of XRP coins, the company may have to source the token in the open market, which could prove to be more costly overall.
- Adoption of another digital currency: Moreover, if Ripple cannot use XRP for its cross-border payment offerings, the company may have to adopt another digital currency entirely. This would negate its core proposition of cheaper and faster transactions that it built its RippleNet platform.
On the other hand, the news has already caused a stir on crypto Twitter, with many wondering what the implications of this move could be for Ripple and the XRP token. As one of the largest holders of XRP, Ripple’s control of a significant supply of the token has been a point of contention for the SEC, which argues that it solidifies the common enterprise argument.
Ripple’s Future Hangs in the Balance!
Ripple’s real-time price is $0.428192 USD. However, industry experts forecast that by May 16th, 2023, the value of XRP will have dropped by -2.75 percent. Clearly, this is not the right time to hold XRP as it is below the 50-day SMA and showing a Sell signal.
In a nutshell, this issue illustrates the difficulties and complexity of the task crypto firms have in navigating regulators, winning over investors, and keeping public support. These legal issues are detrimental to the asset’s long-term health. Keep a close eye on assets’ next move.
“Ripple holds the match that could set ablaze their entire future escrow funds, effectively vanishing them into thin air. It’s a daring move that could redefine the company’s destiny.”
PayPal, the popular payment processing company, has been making waves in the crypto market lately. According to their recent financial report for Q1 2023, PayPal’s crypto holdings increased by an impressive 56% over the past quarter, bringing their total holdings to nearly $1 billion.
PayPal Marks A Great Milestone
In a quarterly report submitted to the Securities and Exchange Commission (SEC), PayPal, a financial technology firm, has disclosed its cryptocurrency holdings.
As of March 31, 2023, the company’s combined cryptocurrency assets amounted to $943 million, marking a 56% increase from the previous quarter’s disclosure of $604 million. This quarter, PayPal’s total financial liabilities were $1.2 billion, with crypto assets comprising 77.9%, which is up by over 10% from the reported fourth quarter liabilities in 2022.
In addition, PayPal’s profitability surged in the first quarter of the year. The company reported a per-share earnings of $0.70 on a GAAP basis, which is an improvement from $0.43 in the first quarter of 2022. On a non-GAAP basis, PayPal’s per-share earnings stood at $1.17, up from $0.88 in the first quarter of the previous year.
The report reveals that PayPal views its cryptocurrency assets as a “safeguarding liability” due to the distinct risks associated with digital currencies. Furthermore, the disclosure notes that the company has not altered the specific crypto it holds since the previous quarter. It stated:
“We allow our customers in certain markets to buy, hold, sell, receive, and send certain cryptocurrencies as well as use the proceeds from sales of cryptocurrencies to pay for purchases at checkout. These cryptocurrencies consist of Bitcoin, Ethereum, Bitcoin Cash, and Litecoin (collectively, “our customers’ crypto assets”)”
A 10-Q filing is a mandatory report that publicly traded companies submit to the SEC to disclose their financial performance on a quarterly basis.
According to the filing, the company’s customer crypto assets have grown by $339 million since the end of the previous year. PayPal stated in its 10-Q that it manages the internal recordkeeping of its customers’ crypto assets, which includes tracking the quantity and type of digital currency owned by each customer.
PayPal Insures Crypto Funds Despite Lack Of Regulatory Clarity
Although regulatory safeguards for cryptocurrency investors are yet to be established in the US, PayPal has assured its customers that it will offer protection from any unauthorized purchase or sale activities, subject to its terms and conditions. The company has also stated that it will provide reimbursement for “unauthorized transfers,” capped at $50,000 for a lifetime.
Over the past few years, the payments provider has introduced several cryptocurrency features for its customers, including the ability to transfer to third-party wallets and exchanges, which was launched in July 2022. Additionally, PayPal recently added crypto transfers on Venmo, its mobile payments app, enabling users to move holdings to external wallets and transfer digital currencies to others via the app.
Recent data from Glassnode indicates a surge in Bitcoin (BTC) miner outflow, hitting an 11-month peak of 1.104. This level has not been seen since June 16, 2022, when it reached 1.068. The spike in miner outflow signals that BTC miners are offloading their holdings at the fastest pace in almost a year.
The Cause for Miner Sell-Off
While the exact cause for the negative sentiment among miners is unclear, several factors could be at play. One possible explanation is the recent suspension of Bitcoin (BTC) withdrawals by Binance due to transaction congestion.
Another reason could be that miners are capitalizing on their holdings as miner revenue hits a yearly high. Data from Blockchain.com reveals that on May 8, 2023, Bitcoin’s (BTC) miner revenue reached $41,744, a level not seen since April 2022. Fearing a potential decline in revenue, miners might be cashing in on their BTC while it’s still profitable.
A New Source of Revenue
Interestingly, for the first time since 2017, some Bitcoin (BTC) miners are earning more by processing transactions on the blockchain than by minting new BTC. This change could bring a silver lining to the beleaguered industry, which has faced numerous challenges lately, including multiple bankruptcies.
The Mining Profitability Equation
Bitcoin miners typically profit in two ways: creating new BTC through complex calculations and processing transactions on the network. As intended by the system’s design, the former has become less lucrative over time. Periodically, the mining reward is halved, currently standing at 6.25 BTC, and is set to decrease again next year.
This decline poses a potential long-term threat to mining profitability. Eventually, the mining reward could become insignificant, and ultimately disappear once all BTC has been mined (likely more than a century from now). Consequently, the recent spike in earnings from processing transactions could be a welcome development for the industry, especially considering the hardships faced by miners during the ongoing crypto downturn.
The rise of PEPE and WOJAK meme coins is nostalgic to most Dogecoin and Shiba Inu holders. Crypto investors with a high-risk appetite have made hundreds of ETH in profit from a fraction of the investment. Furthermore, PEPE’s trading volume has spiked more than 128 percent in the past 24 hours to stand at around $452,788,229 on Monday, compared to Shiba Inu which had a reported traded volume of about $129,660,393.
Bitboy’s PEPE Bag
According to a popular social media influencer, Ben Armstrong alias Bitboy crypto, PEPE coin could have some staying power like Dogecoin and Shiba Inu due to its high trading volume. Moreover, Ben argued that the hype and the online searches for the PEPE coin have significantly surged in the recent past. As a result, the crypto influencer revealed that he holds about $35k worth of PEPE coins at the moment.
He highlighted that the WOJAK coin, which has also recently outperformed top meme coins, was also part of his bag before swapping to PEPE.
“I made a bunch of money with this WOJAK coin. I lost a bunch of money with my GENSLR coin. And so I moved it all over to PEPE, which has been killing it,” BitBoy stated in a YouTube video.
Notably, each meme coin community is the sole driver of their success. As a result, centralized and decentralized exchanges want to attract as many traders through these meme coins as possible to keep their trading volume high, to offset the effects of the crypto winter. Currently, OKX, Deepcoin, CoinW, Bitget, and BTCEX are the exchanges that have listed PEPE coins. Binance crypto exchange, through CEO CZ, has announced plans to support PEPE coin if the demand sustains in the coming months.
David Schwartz, Ripple’s Chief Technology Officer (CTO), has confirmed that the majority of the company’s revenue comes from selling its XRP holdings. In a recent Twitter exchange, Schwartz explained that this approach not only generates revenue for Ripple but also contributes to decentralization by reducing the company’s XRP holdings.
Clarifying Misinformation about XRP
The Twitter conversation began when a user with the handle @/ScamDetective5 asked Schwartz to address some misconceptions regarding XRP. The CTO obliged and provided a series of clarifications on various topics related to the digital asset and RippleNet.
Schwartz acknowledged that the XRP Ledger (XRPL) is dependent on the internet for the time being and the foreseeable future. He also confirmed that there are no Central Bank Digital Currencies (CBDCs) on the XRPL at the moment.
Regarding transaction processing, Schwartz admitted that the live XRPL has never seen 1,500 transactions per second (TPS). He estimates that the current configuration could likely sustain between 300-500 TPS.
The CTO clarified that RippleNet does not use On-Demand Liquidity (ODL) and that proposals to allow it all include new sources of liquidity. While he is unsure of the exact percentage of RippleNet volume attributed to ODL, he stated that hearing it was 60% would not surprise him.
Circulating Supply Growth and XRP Sales; No Higher-Priced XRP
Schwartz next confirmed that the circulating supply of XRP is indeed growing, similar to other cryptocurrencies like Bitcoin (BTC) and Ethereum (ETH). He also addressed the topic of XRP sales, stating that if “sell” is broadly defined, then selling XRP accounts for most of Ripple’s revenue.
The Ripple expert explained that the company’s options are either to sell or hold XRP, and many people believe Ripple holds too much of the digital asset. By strategically selling XRP, the company can reduce its holdings and contribute to decentralization.
Finally, Schwartz debunked the notion of a higher-priced XRP existing elsewhere. He argued that if such an XRP could not be easily exchanged for XRP on the XRPL, there would be no reason to call it XRP. Furthermore, if it could be exchanged, nobody would pay substantially more for it unless they were “really dumb.”
Cardano (ADA), which has recorded a significant gain in the last 24 hours and has joined the top market movers today and is currently trading at $0.3869. The bullish surge that has engulfed the entire sector is currently the main factor causing ADA’s rise.
The market appears to be entering another bull run, and ADA whales are profiting from the price movement. This causes a significant increase in their weekly transacted volume, bringing it back to a six-month peak.
However, over the past month, ADA has seen a substantial change in its investor base as large holders and whales reduced their holdings. The number of Cardano whales holding between 100 million and one billion ADA tokens has decreased by 25% over the past 30 days, according to data from IntoTheBlock. The number of holdings in the 10 million to 100 million ADA bracket has also decreased, which suggests that these investors are cashing out in the current rally.
This indicates that the current rally is primarily driven by smaller investors, or “small fish,” entering the market. Cardano’s price has increased 17% in the previous 30 days as a result, showing the influence that individual investors have in the cryptocurrency market.
These important investors have greatly expanded their activity on the blockchain and are now paying attention to the network that is still one of the top rivals for the top smart contract network.
In contrast, Santiment had disclosed that Cardano had recently witnessed a significant increase in interest in whale accumulation. According to the data, addresses with 10,000 or more ADA have amassed over 1.03 billion tokens totaling 3.3% more coins throughout. At the time of writing, ADA is trading at $0.37 and is down by more than one percent.
The Commodities Futures Trading Commission (CFTC) has sued Binance, the biggest cryptocurrency exchange in the world, and as a result, there is a lot of uncertainty right now in the cryptocurrency market. After an impressive rally, Bitcoin is now fighting to rise above the $27,000 level following yesterday’s 5% decline.
Amid the chaos in the market, Bitcoin miners have started to dump their BTC holdings. According to the Bitcoin Miner to Exchange Flow measure, on Tuesday, miners transferred about 1700 BTC to cryptocurrency exchanges. With a sell-off of nearly 3K BTC on January 19, this is the second-largest sell-off by miners YTD.
Also, according to the Bitcoin Miner Reserve statistic, miners’ holdings of BTC have declined. It shows that miners have begun to sell their Bitcoin holdings which will cause a decline in the price of Bitcoin. The Binance mining pool moved 1646 BTC to the Binance exchange, according to data from the Bitcoin Miner to Exchange Flow for Binance Pool.
Will Bitcoin experience a notable decline?
The largest cryptocurrency’s price has dropped 2% in the past day to $26,817, its lowest level since almost two weeks when its most recent surge gained pace and drove prices to approximately $28,500, their highest point since last June.
The latest decline is only a glitch in an otherwise strong trend; Bitcoin has increased from $16,500 at the beginning of the year amid a rally that has given hopes for a new bull market.
Popular analyst Rekt Capital claimed that it would just need a BTC closure below $27,000 within a daily timeframe to start the breakdown process. While the price of bitcoin is now staying at $26,500, uncertainties and the monthly close, however, increase the chance that the price of bitcoin will retake the 200-weekly moving average (WMA).
The cryptocurrency market is known for its volatility, and the past few days have been no exception. Some altcoins have been experiencing a massive sell-off, and the reason behind it may be the whales offloading their holdings. Crypto whales are individuals or entities that hold a large amount of cryptocurrency, and their actions can have a significant impact on the market.
The Altcoins Dumped by the Whales
According to Ran Neuner, the host of the popular YouTube channel “Crypto Banter,” altcoins are currently being dumped by the whales, adding additional supply pressure to the market. He believes that this is the reason why certain altcoins have sold off more than others. Neuner pointed out that the worst-performing tokens right now belong to Voyager, a crypto brokerage firm that owes its creditors $500 million.
The graph indicating Voyager’s Ether balance shows a sharp decline in the last couple of days. They have been sending 7 to 8 figures of crypto to Winter Moon and Coinbase daily. Neuner shared a screenshot of Voyager’s main portfolio, which includes assets like Decentraland (MANA), Phantom (XRP), Apecoin (APE), and Uniswap (UNI).
Neuner stated that the sell-off is putting additional pressure on a lot of these other alts. He warned that it’s much worse for top-end tokens like Shiba Inu (SHIB) and Chainlink (LINK), which are where the majority of the sell volume is happening. However, it’s still putting pressure on many other altcoins.
The Voyager Sell-Off
Voyager has been aggressively selling off its crypto holdings to pay off its creditors. This has put a lot of pressure on the altcoin market, as these assets are getting hit a lot more than other alts. Neuner noted that Voyager-related altcoins are significantly dropping, including Ether, SHIB, and LINK.
The Impact on the Market
The impact of the sell-off is felt more by altcoins that do not have as much volume, do not have as many buyers, and are not as popular. Neuner stated that the sell pressure did not matter when there was enough demand in the market. But with sentiment being so low and buyers not wanting to buy as aggressively, Voyager still needs to sell its assets to pay off its creditors.
Neuner advised investors to be cautious, especially with top-end tokens like Shiba and Link. These tokens are getting hit the most, but other alts are also being affected. The Voyager sell-off is putting additional pressure on the already uncertain market. Investors need to be cautious and keep a close eye on the market to make informed decisions.
Institutional investors are eager to gain exposure to cryptocurrency at any cost, and Ark Investment has set an example. Recently, Cathie Wood’s ARK Holdings reportedly purchased 13,243 shares of Tesla Inc. (NASDAQ: TSLA). The multi-billion dollar exchange-traded fund (ETF) is placing a significant bet on electric vehicles as part of its investment in disruptive technologies.
It’s worth noting that Tesla holds a significant amount of Bitcoin, making ARK Holdings investors indirect holders of the cryptocurrency.
Let’s explore this latest update in greater depth.
Ark Invest Bets Big on Tesla
Since the calendar flipped, Cathie Wood has made several purchases of Tesla shares. The first purchase was made on January 3, of about 144.776k TSLA shares according to data provided by Cathiesark.com. The second batch was announced on January 6 about 24.506k TSLA shares. The third purchase was completed on January 10, of about 75.565k Tesla shares. The fourth purchase was made on January 11, of about 69.060k Tesla shares.
The fifth purchase of Tesla shares by ARK holdings this year was made on January 13 for about 168.989k. The second latest purchase was announced on January 18 of about 32.447k Tesla shares.
The Bigger Picture
According to market data provided by MarketWatch, Tesla shares have risen approximately 16% year-to-date (YTD), but have dropped about 53% over the past year. Despite this, Cathie Wood remains extremely bullish on the electric vehicle company led by Elon Musk. Following the recent purchase, Ark Invest now owns approximately 0.13% of Tesla, which represents a weighting of about 7.67% in the former’s fund. The company is convinced that Tesla will outcompete its rivals due to its cutting-edge technology.
Ark Invest is bullish on the price of Bitcoin and the underlying blockchain technology that supports the cryptocurrency market. Additionally, the firm has made several significant purchases of Coinbase Global Inc. shares in recent times. On the other hand, Ark Invest has adopted a wait-and-see strategy on Grayscale’s GBTC following the issues faced by Genesis Trading, a sister company at Digital Currency Group.
Cathie Wood’s ARKW Next Generation Internet ETF has made a series of purchases on Coinbase Global Inc. shares in the past two months and kept a hold position on Grayscale Bitcoin Trust (GBTC). According to daily updates from cathiesark.com, ARKW Holdings has added more than 112k Coinbase shares since November 9, 2022.
The latest Coinbase share purchase happened on January 5, 2023, amounting to 27.83K shares. However, ARKW Holdings had offloaded over 174k Coinbase shares on July 26, a time when Bitcoin was at its lowest, around $15.5k
On the other hand, ARKW Holdings purchased GBTC shares twice in 2022 in mid-November. Notably, ARKW purchased a total of 450K GBTC shares in November last year, with the previous one on July 20, 2021.
According to Cathie Wood, her investment company is closely monitoring the FTX implosion that has overflowed to DCG through Genesis Trading. Digital Currency Group is the parent company of Grayscale, Genesis Trading, and Coindesk, among others.
Particularly, the United States Securities and Exchange Commission (SEC) filed charges against Genesis Global Capital LLC and Gemini Trust Company LLC for offering and selling unregistered securities to retail investors through Gemini’s Earn product.
“This crisis raises a few vexing questions. Instead of Coinbase’s unlaunched Lend, why didn’t the SEC target Earn, the product that Gemini already had launched, which could have protected 340,000 investors from as much as $900 million in losses? Perhaps more importantly, why didn’t its legal counsel recommend that Gemini unwind Earn in response to Coinbase’s Wells Notice on Lend?,” Ark Invest noted in a recent post.
Notably, Grayscales GBTC is exchanging at 40 per cent below the Bitcoin value according to data provided by ycharts. According to our latest crypto price oracles, Bitcoin is exchanging around $23k on Monday.
The largest cryptocurrency by market capitalization, Bitcoin, extended its winning streak to nine days and hit an intraday high of almost $18,078. The second-most valuable cryptocurrency, Ethereum, rose over 4% to $1,384 as a result of the increase in Bitcoin.
In a recent tweet, Bitcoin critic Peter Schiff requested Bitcoin hodlers to sell before the release of the CPI data, suggesting that a rise in the price of Bitcoin beyond $18,000 would be a great time to sell their holdings.
“Bitcoin is trading above $18K, its highest level in 3 weeks, an excellent opportunity for HOLDers to sell ahead of the release of the Dec. CPI. Gold is only up $10, trading at an 8-month high. While Bitcoin has already broken down, gold has broken out. Time to drop Bitcoin,” Schiff wrote in a tweet.
Cantering Clark, a pseudonymous crypto expert, noted in a tweet that BTC and CPI now have an intriguing relationship.
He wrote, “The way I see it, maybe CPI offers a better entry, but if not and we pop up further, I think it is enough to say momentum and trend systems will begin to shift heavily.That 20 week moving average is really important to me.Big ships turn slowly.”
Some cryptocurrency analysts are still unsure about what to make of the CPI figures, though. CryptoGodJohn advised market participants to be cautious when using the “bull posting.” While acknowledging that inflation may push BTC up to $19–$20k, he pointed out that if expectations are off, traders may suffer significant losses.
In December 2022 (from 7.1% in November), inflation in the US is predicted to have dropped for the sixth consecutive month, reaching 6.5%, its lowest level since October 2021.
The CPI is anticipated to level out in the upcoming months after climbing for four straight months and by 0.1% in November.
Charles Hoskinson recently stated that he has heard “rumors” that the two-year legal struggle between Ripple and the SEC will end on December 15.
“There are reports that the Ripple case will be resolved on December 15. And, well, we’ll have to wait and see what the outcome is; either way, it may be disastrous for the market.”
FOX Business reporter Eleanor Terrett, though, tweeted back, “It’s not true.” According to a follow-up tweet, the reporter confirmed that her sources had advised her there was no truth to the story.
Hoskinson’s rumor has impacted the crypto sector and altcoin pricing negatively and has left the XRP community fuming.
Crypto whales trade over 392 million XRP in one day as reports of a settlement in the case between Ripple and the SEC spread.
Recent days have seen information concerning significant XRP moves being shared by Whale Alert, a cryptocurrency whale tracking service. According to the most recent transactions, the whales are moving huge sums of XRP to and from exchanges.
According to Whale Alert, these high-net-worth cryptocurrency investors have moved a staggering 392,764,221 (392.76M) XRP tokens in the last 24 hours.
The significant XRP movement coincides with the spread of reports regarding a potential resolution to the current legal dispute between Ripple and the SEC.
XRP Whale Transfer
According to the information provided by the crypto whale tracking service, the most recent transaction occurred on December 12 – a withdrawal of 38,893,182 (38.89M) XRP worth $14.4M by an unnamed whale.
In addition, two anonymous whales shuffled 188.5M XRP worth $72.83M. Unknown whale withdrew 30M XRP ($11.67M) from Bitso.
Another Binance user withdrew 37,371,039 XRP tokens ($14.14M) to an unknown address.
XRP whales have flipped huge amounts of cryptocurrency since the news spread.
How Will XRP Be Impacted?
Our next move is to sit tight and watch. While this is going on, there is a lot of conjecture regarding the case’s outcome in the surrounding community.
As the verdict draws closer, we can anticipate a direct effect on the XRP prices. Traders need to move cautiously because of the market’s potential volatility. In theory, XRP’s price may rise between 50 and 60 cents. Conversely, pumps and dumps could happen in response to such news, leading to a significant decline in the XRP price.
For blockchain, this will be the next major disaster. If the claims are true, XRP might be directly impacted by a high-profile legal ruling, which is difficult to foresee.
Bitcoin’s price has been trading above $17,000 since the early hours of the day and has been able to maintain its position. The bears have been unable to put significant pressure on the rally as the selling volume has decreased. However, the token still appears to be under significant bearish pressure, according to on-chain data.
Whales holding large amounts of BTC in their reserves play an important role in determining network confidence. However, in the latest update, the whales appear to have sold a significant amount of BTC and continue to sell. This could potentially impact the future price of BTC.
According to data from CryptoQuant, it is clear that whales have been selling their holdings since the Terra-LUNA crisis. These whales, whose holding and spending behaviors help to identify the Bitcoin market cycle, have sold nearly 367,000 BTC since the LUNA collapse. This has contributed to the continued decline in BTC price since June, and is likely to continue to create significant selling pressure on Bitcoin.
Furthermore, the whales liquidated their BTC holdings during the miner capitulation phase in November. The FTX-fiasco also had a major impact on the BTC price. In a bearish market, whale holdings play a crucial role, and it is evident that around 80% of the Bitcoin selloff since June came from whales. This suggests that more bearish pressure could be imminent for Bitcoin.
The post Elon Musk Reacts on Sam Bankman-Fried’s Twitter Share Holdings appeared first on Coinpedia Fintech News
According to semafor report, 2 weeks after clinching a deal to buy Twitter for $44 billion, Musk texted Bankman-Fried and invited him to roll the $100 million stake he had owned for a few months into a privately held Twitter. An FTX balance sheet prepared after the takeover closed on Oct. 28, and circulated to investors earlier this month, listed Twitter shares as an “illiquid” asset.
The previously unreported message, which was reviewed by Semafo discloses that Bankman-Fried owns a sizable chunk of a now privately held and debt-laden Twitter. Musk, who has publicly distanced himself from the crypto impresario since FTX failed earlier this month, now counts him as a financial partner in his effort to remake Twitter.
Overall, a few hours after the article was published, Musk himself denied the story, calling it false, and denied that the CEO of what was formerly one of the biggest exchanges in the world was involved in the acquisition of the social networking site.
The Bitcoin price continues to trade within the same range, with reduced volatility from the past couple of days. Ever since the price dropped below $20,000, the markets have dropped into a deep bearish well. Therefore, it has become important for the BTC price to reclaim these levels to revive with a bullish trend.
But when will the star crypto rise above these levels? If yes at what levels, one can expect a firm rebound?
The BTC price has undergone a couple of bear markets earlier and marked a new bottom each time. Back in 2015 and 2018, the bear market had squeezed more than 80% from its interim highs. This was where the BTC price rally was triggered that roe high to mark new highs. Therefore, considering the previous price trends, the current bottom is predicted to be around $11,000,
On the other hand, Grayscale is believed to liquidate its BTC holdings as the U.S.Securities, under whose supervision it works, are likely to authorize a one-off redemption for Genesis to meet liquidity needs.
“With all of the SEC’s opposition to GBTC this year, we certainly don’t expect this to happen anytime soon. On the bright side, this also means a low chance of a large one-off BTC selling pressure from this,”
Collectively, Bitcoin price is expected to remain below $20,000 for a long time as the bearish could are set to hover for an extended period. Meanwhile, the bulls may try to keep up the price to some extent but eventually fail as many strong hands may remain away from the markets for a while.
2022 has been disastrous for the crypto space. Yet again, Bitcoin is witnessing one of the most severe crashes and has marked a record as the fifth asset to witness the worst collapse in the history of finance. Bitcoin, which accounts for 41% of the cryptocurrency market, experienced lows that had not been seen since the pandemic’s low two years ago.
When there’s a crash of this magnitude, it’s safe to anticipate that nearly all crypto holders are suffering losses- especially people who joined the game later on. Not only individuals but even firms have also been hit hard. This includes the biggest Bitcoin-owning company, MicroStrategy Inc. It is said to be sitting on unrealized losses from its acquisitions totaling $1.8 billion.
The software firm with headquarters in Tysons Corner, Virginia, and its affiliates, currently control about 130,000 Bitcoin, valued at about $2.2 billion at the time of writing. Each Bitcoin cost approximately $30,369. The total cost of the Bitcoins purchased was close to $4 billion. The corporation is now $1.8 billion in the hole as a result.
Michael Saylor, the executive chairman of the firm, had declared that the business will never sell its Bitcoin. The corporation is sitting on large paper losses as a result of its refusal to sell. Additionally, the business incurred an impairment charge of $917.8 million after reporting losses resulting from the fall in the price of bitcoin earlier this year.
Since Bitcoin is categorized by MicroStrategy as an intangible asset, any decline in its value must be permanently recorded as a loss. If it decides to sell its Bitcoin, it must notify the Internal Revenue Service of any capital gains.
After MicroStrategy reported $1 billion in losses in August 2022, Saylor resigned as CEO to concentrate on the business’s Bitcoin strategy. Since then, the business spent an extra $6 million buying 301 Bitcoins in September 2022. Since then, the average price of Bitcoin has dropped by roughly 15%, meaning that they’re undergoing even larger losses at the moment.
Michael Saylor, however, insisted that compared to cash or gold, cryptocurrencies were less risky investments and shall reap massive profits later.
No Margin Call?
Saylor refuted that MicroStrategy had received a margin call on a $205 million loan with Silvergate Capital that was secured by bitcoin in June 2022. A margin call occurs when an investor borrows money to trade that is a multiple of a predetermined amount known as a margin. The investor must contribute more money to maintain the open position when the value of the margin falls below a certain level.
Saylor stated that unless the price of Bitcoin dropped below $3,500, the business had enough Bitcoin to keep the debt collateralized.
Urgent Need For Crypto Regulations
Saylor stated that the current collapse of FTX is both beneficial for Bitcoin and disastrous for the cryptocurrency industry in an interview with CNBC on November 10, 2022. According to him, unlike exchange-traded tokens, Bitcoin is a commodity that can be self-managed.
He insists that the regulators must provide clearer instructions on how to register a digital security, a digital currency, a digital token, and one’s digital exchange.