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Crypto Biz: Did Michael Saylor buy the Bitcoin bottom for once?

MicroStrategy purchased Bitcoin for an average price of just under $17,200. Meanwhile, Binance’s CZ explains why his exchange has generated so much skepticism.

MicroStrategy, a business intelligence firm, is not backing down from its Bitcoin bet. MicroStrategy was scooping up more Bitcoin right around the time Sam Bankman-Fried was exposed as a fraud. This time, the firm bought as close to the bottom as it’s ever gotten. While Bitcoin can always fall in price, seeing a MicroStrategy purchase around $17,000 is encouraging. Interestingly, MicroStrategy sold some Bitcoin earlier this month as well — but not for the reason you might think (more on that below.)

The final Crypto Biz newsletter of 2022 covers MicroStrategy’s Bitcoin purchase, Fidelity Investments’ foray into the metaverse, Changpeng Zhao’s response to haters, and Bitcoin miners’ collective woes.

MicroStrategy, a business intelligence firm, purchased 2,395 BTC at an average price of $17,181 between November 1 and December 21. (I know the low was under $16,000, but this is pretty close for MicroStrategy). To offset previous capital gains, it sold 704 BTC at a loss. After a few days, the company purchased another 810 BTC, bringing its total holdings to 132,500 BTC. Michael Saylor, MicroStrategy’s chief Bitcoin evangelist, has stated unequivocally that his firm intends to convert its fiat holdings into BTC for the foreseeable future and will hold the flagship digital asset indefinitely. According to Bitcoin Treasuries, the current value of MicroStrategy’s Bitcoin is $2.2 billion, with an overall cost basis of more than $4 billion. That’s pretty harsh.

We raised awareness last week about the impact of crypto contagion on Bitcoin miners. Mining firms are in a worse situation than previously thought. Given the severity of the current bear market, public miners have accumulated more than $4 billion in collective debt. During the 2021 bull market, running debt to fuel business operations and expand capacity sounded like a good idea. These debt levels are now a major risk. Core Scientific, the largest debtor among miners, recently declared Chapter 11 bankruptcy. Check out how much money the other major mining companies owe.

Binance, a cryptocurrency exchange, has been in the news for all the wrong reasons. Its shady proof-of-reserves report and allegations of “fraudulent concealment” in France have all contributed to a coordinated disinformation campaign against the company. (Or is the FUD in response to underlying Binance issues?) Changpeng Zhao, also known as CZ, responded with a series of tweets explaining why his exchange is causing fear, uncertainty, and doubt. According to CZ, the FUD was spread by external factors, including paid shills who were paid to make his exchange look bad. I’m not sure I believe it, but you can read his reasoning for yourself below.

While large institutions may be avoiding crypto investments, one major player is increasing its exposure to the sector. Fidelity Investments, which has long been bullish on Bitcoin and digital assets, recently filed trademark applications in the metaverse for a number of Web3 and nonfungible token products. Fidelity said it is investigating a variety of investment services, including retirement funds, mutual funds, and financial planning services, within virtual worlds.

By most accounts, 2022 was a bad year for cryptocurrency. 2023 can’t possibly get any worse… or can it? On this week’s Market Report, I sat down with fellow analysts Marcel Pechman and Joe Hall to talk about Bitcoin and digital assets for the coming year. While I remain bullish on Bitcoin’s future, 2023 may see a return to basics following the year’s parade of failures and bankruptcies. The full replay is available below.

 

 

Crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions. Crypto is not a legal tender and is subject to market risks. Readers are advised to seek expert advice and read offer document(s) along with related important literature on the subject carefully before making any kind of investment whatsoever. Crypto market predictions are speculative and any investment made shall be at the sole cost and risk of the readers.