Bitcoin's price has officially broken $90,000, marking a historic moment. The breakthrough of $100,000 should come quickly. Many people expect pullbacks similar to when BTC broke through $30,000—waiting for a pullback at $35,000, expecting it at $40,000, only to see it reach $48,000 before starting a pullback. This wave is likely to be the same.
After BTC breaks $73,000, if it does not consolidate and adjust around $85,000, there is over a 90% probability it will exceed $100,000. At the $100,000 price point, many people will still short, and at this time, it is highly likely that to clear contracts, BTC's price will touch around $110,000, then experience a pullback before continuing the next big trend.
However, regarding the altcoin market, many people were driven by emotions in March and are now down about 50%. For the altcoin market to rise, at least for most coins, it needs to effectively break through the daily EMA200, otherwise it will be difficult to rise.
However, behind every wave of bull market frenzy, we must remain clear on one issue: In the financial market, if someone is making money, someone else must be losing money. Don't fantasize that everyone will profit. If you think this way, you are simply handing your money to the bank to earn stable annual interest, but banks can also go bankrupt!!!
What was behind the previous decoupling of Luna and UST?
Is it merely a decoupling event? Just a liquidity problem? Neither; the core issue is still the leverage being too heavy, leading to the liquidation of the $40 billion market value Luna.
Just a week ago, MicroStrategy's financial report was released, showing a company that is not the largest Bitcoin mining company, nor one of the well-known Bitcoin institutional giants, yet it has become one of the world's largest and most unique Bitcoin holders due to its massive investments in Bitcoin, breaking traditional valuation rules.
From a software company to a Bitcoin whale.
MicroStrategy (stock code MSTR) originally built its foundation on business intelligence software, but its founder Michael Saylor recognized the potential of Bitcoin as a core asset in 2020. He began gradually converting the company's reserves into Bitcoin, even putting his own fortune at stake, step by step transforming MicroStrategy into a Bitcoin 'hoarding bank.' In Saylor's eyes, Bitcoin is the gold of the digital world, the anchor point for the future of global finance.
According to the latest statistics, MicroStrategy currently holds 252,220 Bitcoins, with a holding value that has first surpassed $20 billion, reaching $20.47 billion, with a total capital cost of $9.9 billion, and an average purchase price of about $39,266, resulting in unrealized profits of up to $10.57 billion.
However, the founder of MicroStrategy stated on Twitter that they will continue to buy more Bitcoin. The green dots in the image above indicate their buying positions, showing that they have been consistently purchasing without stopping. Next, they will also use leverage to finance $42 billion to buy BTC, which seems quite crazy. It remains to be seen whether this will help push BTC's price above $250,000.
Next, let's take a detailed look at MicroStrategy.
$42 billion, how exactly is it financed?
1. Overview of financial reports and financing plans, capital increase and additional Bitcoin reserves:
The company plans to raise $42 billion over the next three years to continue increasing its Bitcoin holdings, and has already completed the repurchase of previously pledged Bitcoins. MicroStrategy's President and CEO Phong Le stated that this move is to enhance the returns of the company's Bitcoin holdings. He noted, 'As a Bitcoin financial company, we plan to use additional capital to purchase more Bitcoin as treasury reserve assets so that we can achieve higher Bitcoin returns.'
2. Cash reserves and future financing goals:
MicroStrategy currently holds $836 million in cash, providing stable funding support for future purchases of Bitcoin. It will conduct $21 billion in equity financing and issue $21 billion in bonds, raising a total of $42 billion to purchase more Bitcoin. The company has also released phased financing goals:
Planned financing of $10 billion in 2025.
In 2026, it will be $14 billion.
In 2027, it will be $18 billion.
A total of $42 billion.
CEO Michael Saylor's plan aims to strengthen the company's core asset reserves by gradually increasing its Bitcoin holdings, which is undoubtedly viewed positively by the market rather than as negative news. And does this financing entry also signal that Bitcoin will follow a 10-year long bull market like the U.S. stock market?
3. Market value vs. book value:
As of October 29, 2024, MicroStrategy's market value is approximately $18 billion, and its book value is $6.9 billion, a figure that has already deducted $3 billion in accumulated impairment losses. The reason for impairment is not that MicroStrategy sold its Bitcoins, but rather based on current accounting standards' book adjustments.
4. The flexibility advantage of BTC as a core asset:
As a core asset, Bitcoin gives MicroStrategy greater capital operation flexibility compared to spot ETFs. The company operates its Bitcoin reserves.
5. MicroStrategy's principles for holding Bitcoin:
Eight core principles have been established for holding Bitcoin, reflecting its long-term investment strategy and market orientation:
· Continue to buy and hold Bitcoin, focusing on long-term gains;
· Prioritize maintaining the long-term value of MicroStrategy's common stock;
· Maintain transparency and consistency with investors;
· Utilize smart leverage to ensure the company performs better than the Bitcoin market;
· Quickly and responsibly adapt to market dynamics and sustain growth;
· Issue innovative Bitcoin-backed fixed income securities;
· Maintain a healthy and robust balance sheet;
· Promote Bitcoin to become a global reserve asset.
6. The difference between MicroStrategy and Bitcoin spot ETFs:
Compared to Bitcoin spot ETFs, MicroStrategy's uniqueness lies in its financing methods. ETF investors need to actively purchase ETF shares, while MicroStrategy finances through various channels such as equity, unsecured or secured debt, convertible bonds, and structured notes to directly increase its Bitcoin holdings. This 'equity financing' model allows the company to actively raise funds for its long-term strategic holding of Bitcoin.
7. The financing risks of equity and bonds, where do they lie?
In extreme cases, this round of BTC's price could collapse from $300,000 to $60,000!
At this time, equity financing does not require additional capital payments, while the $210 in bonds must pay interest and principal on time.
The maximum return on equity is the appreciation value during this period; if it falls, you must accept it, which is equivalent to high risk and high return, while bond returns are relatively more stable.
Overall:
First, based on the current Bitcoin price, the probability of MicroStrategy going bankrupt is: 0.1%.
Currently, the average holding price of BTC is $40,000, which is relatively low.
If the bond financing cost averages BTC price at $180,000 over the next three years, then at that time, the BTC in hand has appreciated to nearly $100 billion, making it easy to pay the $21 billion bond interest.
In extreme cases, if BTC's price falls back to $30,000, then the capital itself would shrink to about $7 billion. Considering the BTC bought with the $21 billion in financing, its value would shrink by about $3.5 billion, resulting in a total account asset of nearly $10 billion, which would still be sufficient to pay the bond interest.
The company's own profitability and the ability to mobilize large funds provide sufficient risk resistance.
Second: MicroStrategy is more optimistic about Bitcoin's reservoir capability after inflation in U.S. debt.
U.S. debt now exceeds $35.4 trillion, and with the Federal Reserve's interest rate cuts and global low-interest policies, more large funds will need safe-haven assets, and currently only BTC meets this demand.
Bitcoin not only possesses the attributes of currency itself but also has global consensus and excellent liquidity. In the coming years of economic crises and global turmoil, Bitcoin also has a super strong portability and privacy.
The current market value of Bitcoin is $1.7 trillion, surpassing silver, and it is highly likely to surpass gold in the future. Additionally, with the support of spot ETFs and futures ETFs, the number of institutions applying for Bitcoin spot ETFs currently exceeds those for gold ETFs, and major institutions are optimistic, indicating its huge potential.
Third: The market effect of this financing for MicroStrategy.
Retail investors look to institutions. BlackRock, Fidelity, MicroStrategy, these firms are large buyers of BTC in the entire market. In the last round, Grayscale took four years to buy 580,000 BTC, while in this round, institutions have bought over 1.3 million BTC in just 10 months.
American institutions, the Federal Reserve, and Wall Street appear to be performing their respective duties, but in reality, the rich dictate in the U.S. The decision-makers behind these institutions and policies are interconnected. After Trump took office without support from financial groups, do you think he could succeed?
In conclusion: For 98% of retail investors, we must follow the market logic and move with the big players, strictly adhere to our own investment logic, and manage our positions well. The operations of large and small funds are essentially the same, so you can go further in this circle. Next, I will analyze why countries like the U.S. and the U.K. are treating BTC as a strategic reserve and using national pensions to purchase BTC for hedging.
Previous high-quality content:
Key point: What basis do institutions have to predict that BTC price will break $1 million in the future?
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2, Brother, if you hesitate even to buy BTC, please stay away from the crypto world!
3. In this round of the bull market, I only want to achieve tenfold returns; how should I operate? Let me teach you!
4. Are you lacking opportunities to make money in the crypto world? No, absolutely not! What you're lacking is an excellent guide.
5. How has BTC performed before and after the Federal Reserve's interest rate cuts over the past decade? [Did the net inflow of over $11 billion into exchanges in the past month indicate a bottom-fishing strategy?]
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10. Which public chain is the future performance king?
