The blatant loss of the publicly circulated Bitcoin (paper) whale

The enterprise software company that invested $4 billion in bitcoin on Tuesday will publicly share how much damage the cryptocurrency market has done to its balance sheet.

why does it matterMicroStrategy is a bitcoin whale, owning the most of any public company. So bitcoin enthusiasts big and small will be keenly interested in what founder and CEO Michael Saylor has to say when the company reports second-quarter earnings.

  • Saylor is a Bitcoin influencer who is credited with promoting the holding of Bitcoin in the company’s budgets.

Quick take: Many will be concerned about the company’s bet on bitcoin and how things have gone awry. (MicroStrategy paid, on average, $30,664 per bitcoin, much more than prices are now paying.)

  • Meanwhile, the company will calculate its stockpile of 129,699 bitcoins lowest price In that time period, exacerbating the pain on paper.
  • The price of the world’s largest digital asset fell by nearly 60% from peak to trough in the months from April to June.

Yes, but: clouds On earnings is a balance sheet exercise in phantom pain, because these losses are theoretical until the company changes its buy-and-hold strategy.

what are they saying: “Honestly, it doesn’t really matter. It has no bearing on the inherent value of the company,” Mark Palmer, research analyst at BTIG, tells Axios.

  • What many professionals are interested in is how the company will continue to buy digital assets.

The Big Picture“MicroStrategy’s stock price has become closely correlated with the price of bitcoin, so outside of the bitcoin price rally, the company will have to find a way to continue funding its buy-and-hold strategy,” Ballmer said.

contextMicroStrategy has accessed every leverage available to the public company to fund the bitcoin buy-and-hold strategy it announced in August 2020.

the other side: However, Jeffreys analyst Brent Thiel recently downgraded MicroStrategy’s stock to a “underperformer” from a previous hold rating, saying the company was suffering a “$1 billion unrealized loss.”

From the note: Now that the market environment and crypto-currencies have turned negative together, analysts and traders are watching to see if MicroStrategy will sell its shares at ultra-low prices to continue buying bitcoin tied to a multibillion dollar shelf register set up in June 2021.

What’s Next: The MicroStrategy conference is expected on August 2 at 5 PM ET.

bottom lineMicroStrategy’s stock in the imperfect play on Bitcoin is the same as the world’s largest Bitcoin fund Grayscale Bitcoin Trust.

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