From Puck, June 24:
Bitcoin has now fallen by more than 50 percent from its all-time high. Does the cryptocurrency’s number one evangelist have an escape hatch?
For reasons that don’t make a lot of historical—or logical—sense, the U.S. stock markets are either at or near their record heights. The Dow Jones Industrial Average remains within a few ticks of 52,000, around its all-time high, reached a week ago. The Nasdaq reached its climax of a little more than 22,000 on June 17—a day after the DJIA’s record, though the tech-heavy exchange had a rough outing on Tuesday. The S&P 500 peaked at 6,144 on June 18. So, you know, it’s basically been risk-off euphoria in the stock market for months now.In an environment where stock indices seem to know no bounds, you might think that Bitcoin—the ultimate speculative asset—would be ascending too. It has no business plan, no income statement or balance sheet, no future cashflows to discount back to a present value. Bitcoin is only worth what a buyer will pay for it. And at the moment, that’s about $60,000 per token, or about half of its all-time high of around $126,000, reached on October 6. It’s down 30 percent so far this year, while the Dow has risen 6.5 percent. Bitcoin has always been a volatile asset, but it still has to sting if you were among the crowd that bought BTC late last year.One person who has been buying all along, at whatever price, has been Michael Saylor, one of my favorite protagonists of this strange era of finance. Saylor is the billionaire former C.E.O. and current executive chairman of Strategy, or what used to be called MicroStrategy, the publicly traded enterprise-software maker that has gone all in on not only buying Bitcoin but also holding it as a terminal asset, sort of the way Peter Thiel is holding on to his end-of-world New Zealand retreat.As faithful Dry Powder readers know, Saylor is one of the world’s leading Bitcoin proselytizers. He is an absolutely mesmerizing advocate for the digital currency and has bet his entire company on the notion that BTC, of which there are only 21 million units, will continue to go “to the moon,” as the kids say. At a Bitcoin conference in Nashville two years ago, Saylor predicted Bitcoin would hit $13 million per coin by 2045, and that this was his base case. In that scenario, Bitcoin’s total value would be $280 trillion “and account for 7 percent of global wealth,” he said. (In his bull case, he said Bitcoin could reach $49 million per coin.)Strategy, the largest corporate holder of BTC, now owns 847,363 Bitcoins, worth roughly $51.5 billion. Unfortunately, Saylor paid an average price of around $75,600 per, meaning that at current prices his stash is about 17 percent underwater. His last big purchase came on May 18, when he bought just under 25,000 Bitcoins for an aggregate purchase price of a little more than $2 billion, or about $81,000 per. Then, on June 1, Saylor did something once unfathomable: He sold 32 Bitcoins at an average sale price of $77,135, generating minuscule proceeds of around $2.5 million.For the ultimate Bitcoin holder, this was quite the shock. On an earnings call, Saylor said that he sold the handful of tokens as a cash-management exercise to pay the dividends on an issue of preferred stock and to “inoculate the market and send the message that we did it.” Whatever the reason, the Strategy stock is down some 40 percent since right before Saylor announced the sale.Not that long ago, I wrote about how Jim Chanos, the famous short seller, had started betting against Strategy. Using a metric that Saylor refers to as mNAV, or enterprise value divided by his Bitcoin holdings, Chanos pounced when Strategy’s mNAV hit a whopping 2.3x. Needless to say, Chanos was spectacularly correct about Saylor’s Bitcoin bet being wildly overvalued, and he made plenty of money on that short bet. Meanwhile, on Monday, Saylor bought another 520 Bitcoins, for $35 million, or $67,000 per BTC.
A Second Crypto Winter...
....MUCH MORE
Possibly related:
June 2021 - MicroStrategy, Bitcoin and Beavers
May 2022 - "Microstrategy chief: 'Bitcoin is going to go into the millions'" (MSTR)
Sadly, there are no pure-play psychiatric hospital stocks left on the market. They've been absorbed into larger organizations. On the other hand, as grandiosity and risk taking are symptoms of the manic phase of bi-polar disorders we may just be in luck with lithium producers SQM and Albemarle.
October 2024 - With The Booming Economy Shortages Are Beginning To Pop Up: "America Risks Running Out of Tickers for Single-Stock ETFs"
November 2025 - "Crypto treasury companies pivot to fringe tokens, stoking volatility fears"
Oh hell no.
Shut 'em all down. They should all be classified as advertent inadvertent investment companies in violation of the '40 Act. (which would have to be preceded by crypto being considered a security, but still)...
November 2025 - "Chanos declares victory in his bet vs. Strategy’s Saylor"
The bet was smart, the timing was fortunate. Ask any number of investors who have bet on the price of closed end funds versus the NAV of the underlying portfolio.
Sometimes the prices converge, sometimes they don't and sometimes they do but it takes so long that you are in a rocking chair at the Old Traders Home before it happens....
