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PLUS: Incentive To Sell
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GM to all 49,894 of you. Crypto Nutshell #257 tickin’ down. 🧨 🥜
We’re the crypto newsletter that's less mysterious than a detective solving crimes in a small town filled with peculiar characters... 🕵️♂️ 🏞️
What we’ve cooked up for you today…
💰 MicroStrategy at it again
📈 Wild ride ahead
🌊 The incentive to sell
💰 And more…
MARKET WATCH ⚖️
Prices as at 5:40am ET
Only the top 20 coins measured by market cap feature in this section
MICROSTRATEGY AT IT AGAIN 💰
BREAKING: MicroStrategy Upsizes Convertible Debt Offering to $700M to Buy Even More Bitcoin
MicroStrategy is buying more Bitcoin. 😱
Who didn’t see that coming…
Saylor’s MicroStrategy is looking to raise $700 million through the sale of convertible senior notes at an interest rate of 0.625%.
A convertible note is a type of debt security that has the option of being converted into a predefined amount of shares.
MicroStrategy’s goal is pretty clear:
“MicroStrategy intends to use the net proceeds from the sale of the notes to acquire additional bitcoin.”
MicroStrategy currently holds 193,000 Bitcoin.
At today’s prices, $700 million would net you around 10,609 Bitcoin.
This would bring their total holdings to 203,609 Bitcoin.
To reach 1% of Bitcoin’s supply, they would only need an extra 6,391 Bitcoin.
No big deal right?
That’s only $422 million at todays prices…
The flywheel Michael Saylor & MicroStrategy have created is pretty insane:
And if you’re wondering just how well this Bitcoin strategy is going…
Currently, MicroStrategy is up 108.84% on their investment.
That’s an unrealized profit of $6.68 billion. 🤑
Which public company will be next to adopt a Bitcoin strategy?
It clearly works. 😎
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WILD RIDE AHEAD 📈
An insatiable wall of money is coming for Bitcoin.
On-chain Bitcoin analyst Dylan LeClair broke it down in his latest market update.
2022 & 2023 were the years of accumulation.
But now, long-term holders have began to sell. 😱
“As is tradition with the ever-cyclical Bitcoin market, with the rise to new heights comes the distribution of coins to new entrants from the old guard.”
The chart below breaks down the 30-day net position change in long-term holders.
But LeClair explains that this is completely normal. 😅
Distribution began at ~$1,000 in 2017 and ~$13,000 in 2020. Both times Bitcoin proceeded to run up to new highs.
Distribution can become extremely strong in a bull market while the price is still going parabolic.
As long as there is sufficient demand to match sell-side pressure the price will still go up. (with the ETFs there is)
Also, some of this selling can be attributed to Grayscale outflows. So in reality, distribution from true long-term holders is actually less than it appears to be.
Moving on, take a look at the chart below.
Bitcoin is the best performing asset in absolute and risk adjusted returns. 💪
Due to this, LeClair believes that portfolio managers cannot ignore Bitcoin anymore.
“Portfolio managers and financial advisors have zero excuse to ignore the best performing asset in absolute and risk adjusted returns after the BlackRock stamp of approval and subsequent ETF rollout.”
This is why many analysts are predicting that the ETF flows will continue to grow in scale.
Imagine sitting back, watching your direct competitors reap the rewards whilst you do nothing…
There will be institutional FOMO.
“In summary, yes, incumbent HODLers have begun to slightly distribute, but they are currently being met by an insatiable wall of money. It's going to be a wild ride ahead.”
THE INCENTIVE TO SELL 🤑
Following on from the previous section, let’s dive a little deeper into why long-term holders are selling.
To do that we’ll be taking a look at the On-chain Cost Basis chart.
Here’s how to interpret this chart:
🟠 The Realized Price: average purchase price for the entire Bitcoin supply
🔴 Short-Term Holder Realized Price: average purchase price of coins moved within the last 155 days
🔵 Long-Term Holder Realized Price: average purchase price of coins NOT moved within the last 155 days
🟪 Current price is below all three cost basis models: bottom of the bear market
Here’s the current breakdown:
🟠 The Realized Price: $25,255
🔴 Short-Term Holder Realized Price: $48,621
🔵 Long-Term Holder Realized Price: $20,646
⚫️ Current Price: ~$66,000
On average, all Bitcoin investor cohorts are currently in profit.
But let’s just focus on the long-term holders.
With Bitcoin’s price currently at ~$66K, long-term holders are sitting on unrealized profits of ~220%. 🤯
That is huge.
When you break it down like that it makes sense that some would consider selling their coins.
Profit is profit at the end of the day. 🤑
But remember, as we broke it down in the previous section, only a small percentage of long-term holders are actually selling.
Prices will have to go much higher before many long-term hodlers even consider selling… 😎
CRACKING CRYPTO 🥜
SEC uses insider trading judgment to enhance case against Coinbase, Binance. Legal battle heats up as SEC cites insider trading verdict in case against crypto trading platforms, including Coinbase and Binance.US.
El Salvador Bitcoin holdings hit record $164M as BTC profits pass $50M. Bitcoin buying by El Salvador has delivered 50% gains on its 2,380 BTC stash.
MicroStrategy ups convertible note sale to $700M to buy more bitcoin. MicroStrategy's stock was up over 20% in intraday trading after bitcoin hit a new all-time high Tuesday morning.
WHAT WE’RE READING 📚
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CAN YOU CRACK THIS NUT? ✍️
Select your answer below and you’ll be redirected to the results page. (answer explanation can be found after “Meme Corner”)
What was Bitcoin's initial block reward? |
MEME CORNER 😂
Because what would the crypto world be without its share of memes?
Trivia Answer: B) 50 Bitcoin 🥳
The initial block reward was 50 BTC. However, the reward decreases by 50% every 210,000 blocks (which is called halving) and will reach 0 in 64 halving’s.
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DISCLAIMER: The content of this newsletter is not financial advice. This newsletter is strictly educational and is not investment advice. Please be careful and do your own research.
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