BitGo: Crypto Water Cooler — Nov 6
GM. It’s Wednesday, November 6.?
Newsmakers
MicroStrategy “Saylors” Further Into Uncharted Waters With $42B Capital Raise
?Since MicroStrategy’s first purchase in 2020 , Executive Chairman Michael Saylor has become Bitcoin’s biggest, most visible, corporate bull. The brand is now better known for Bitcoin than its core product, business intelligence software. Now Saylor plans to raise an unprecedented $42B —$21B via new equity, and $21B via new debt—to add more Bitcoin to the treasury. MicroStrategy’s market cap is currently $46.6B; the company announced a larger than expected Q3 loss the same day.
?With 252,220 BTC worth $17.2B at time of writing, MicroStrategy’s position now accounts for 1.2% of Bitcoin’s maximum supply of 21MM and is more than ten times the size of that of the next largest corporate holder, mining firm Marathon Digital.?
?The job of a public company leader is to create value for shareholders, and it’s hard to argue with Saylor’s results so far. Since 2020, MicroStrategy’s stock has gained ~990% even as revenues have stagnated . At the end of Q3 , the carrying value of its Bitcoin stash stood at $6.85B. The total cost basis stood at $9.9B versus a market value of $16B at a price of $63.5K per Bitcoin.
?Carrying Bitcoin on the balance sheet is not without risks . One big issue is impairment loss. Under U.S. accounting rules, companies must report a loss if the value of Bitcoin drops below the purchase price, which could have a negative impact on financial statements. Treasurers must also grapple with regulatory uncertainty, properly handle valuation, and deal with taxes.
?A handful of public companies have followed in MicroStrategy’s footsteps but, last week, the board of directors of Microsoft made news by advising shareholders to vote against a proposal put forward by a conservative think tank to study adding Bitcoin to its balance sheet, saying it has already studied and decided against it.
?Time will tell if Saylor’s next move will be a stroke of genius that upends the corporate treasury playbook and creates even more value for MicroStrategy—or a bridge too far.?
?Read more →CoinDesk ?
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Eastern Europe Sees Growth Driven by Institutions and DeFi
?Despite the war between the region’s two largest players, Russia and Ukraine, Eastern Europe is holding steady as the world’s fourth largest crypto market. During the year ending June 30, 2024, the region saw inflows of $499.14B, about 11% of global crypto value.?
?About two thirds of inflows went to centralized exchanges, and one third to DeFi, with small amounts going into mixing, mining, and other categories. Institutions and professional investors make up most of the market. Retail transactions account for less than 10% of regional activity.?
?Ukraine and Russia were the only two countries in the region to make the top 20 in Chainalysis’ annual global adoption index , which ranks countries’ activity on a GDP-weighted basis. Ukraine dropped from fifth to sixth place this year while Russia rose six places to claim the seventh spot. Despite their proximity on the list, the drivers of adoption differ in each country.
Ukraine plans to adopt MiCA standards as it works towards EU membership. Institutional and professional transactions have increased. Stablecoin usage has dropped. There’s uncertainty about how they’ll be regulated under MiCA. Moreover, market factors that favor stablecoins, such as high levels of trading, financial exclusion, and inflation are absent. Buyers here tend to be investors, most of the population is banked, and the local currency is relatively stable.
?In Russia, the use of no-KYC exchanges outpaces the use of centralized ones, and sanctions have caused the government to revise its anti-crypto stance. The Russian government in September passed new rules to legalize mining for registered entities and individuals and to allow some large companies to use crypto for international payments . However, in the past week, it capped electricity usage for private miners at 6,000 kWh and banned mining in some regions due to electricity shortages.
?Read more →Chainalysis
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Asia Widens Lead in Blockchain Developers Over North America and Europe
?Developer activity is seen as a harbinger of innovation and growth, and Asia is padding its lead in that department, according to the latest report by Electric Capital, which analyzed more than 110,000 developer wallets and 200 million-plus crypto related GitHub commits over 350,000 data repositories.
?They found that Asia’s share of developers has gone from 13% in 2015 to 32% in 2024. North America’s share dropped from 44% to 24% in the same period. Asia overtook North America during 2021 and Europe in 2023. A 51% drop in U.S. developers since 2015 contributed significantly to the North American drop. Europe’s share of developers dipped and then plateaued while Asia’s has continued to rise.
?The trend reflects the continent’s largely welcoming stance toward the industry and steady progress toward regulatory clarity. A 2024 Chainalysis report shows central and southern Asia and Oceania leading the globe in crypto adoption.?
?Meanwhile, the only thing clear in the U.S. is that “nothing is clear,” Director of Cryptocurrency at Javelin Strategy & Research James Wester told PaymentsJournal . Developers can be reluctant to build in this environment, he said, likening it to not knowing the speed limit until getting pulled over for a ticket. This lack of clarity and the long time frame for full implementation of MiCA in Europe likely make these regions less amenable for pursuing a career in blockchain development.
?Read more →Cointelegraph
News In Brief
Business of Crypto
Regulation and Security
DeFi and Web3?
Midweek Market Pulse
Total Market Cap: $2.33T – 7-day change as of Tuesday 11/5/24 12 PM EST: -4.5%
After several weeks of positive price action, the market has taken on a more cautious tone, falling 4.5% to $2.33T over the past week as participants braced for volatility following the results of the U.S. election.?
?Bitcoin (BTC, -3.4%) posted a 10.8% monthly gain for October but, this week, pulled back from its recent high of over $73,000. On Monday, Mt. Gox moved $2.2B worth of BTC to various wallets in preparation for distributions to the defunct exchange’s creditors, which could create selling pressure.
?BlackRock’s Bitcoin ETF, IBIT, also enjoyed a strong October, briefly surpassing $30B in assets under management—a milestone it hit in just 293 days, surpassing the previous record of 1,272 days set by JPMorgan’s monthly dividend ETF, JEPI. As of the end of October, the 13 U.S. ETFs now collectively hold over 1MM Bitcoin.
?While Ethereum (ETH, -7.7%) tracked lower this week, ETH ETFs had a major milestone of their own. A new 13F filing by the State of Michigan Pension Fund shows it allocated $10MM to Grayscale’s ETHE ETF and $1.1MM of Grayscale’s Mini ETH ETF. It is the first pension fund to buy Ethereum ETFs and is now a top-five holder of both ETFs. It invested $6.6MM in the ARK 21Shares Bitcoin ETF in July ($) .
?Prominent alt coins including BNB (BNB, -6.8%%), Solana (SOL, -7.7%), XRP (XRP, -3.1%), Tron (TRX, -2.4%), Cardano (ADA, -4.5%), and Avalanche (AVAX, -10.3%) were all lower on the week, largely following the top two digital assets.?
?The price of Celestia (TIA, -15.9%) fell sharply with the unlocking of approximately 175MM TIA tokens , which doubled the modular blockchain’s circulating supply.?
?Even large-cap memecoins were unable to escape the risk off mood with Pepe (PEPE, -11.5%), Dogwifhat (WIF, -19.0%), Bonk (BONK, -13.2%), and Popcat (POPCAT, -23.6%) all sinking.
The Last Word
Impairment Loss
: The difference between an asset’s carrying amount and its recoverable amount
/ Impairment losses are reported as operating expenses and recognized immediately in the profit and loss statement.
About BitGo
BitGo provides the most secure and scalable solutions for the digital asset economy, offering regulated custody, borrowing and lending, and core infrastructure to investors and builders alike.
Founded in 2013 — the early days of crypto — BitGo pioneered the multi-signature wallet and later built TSS to improve upon other companies’ MPC offerings. Between multi-sig and TSS, BitGo offers the safest technology on the market and safeguards over 600 tokens across a wide variety of blockchains.
Over the years, BitGo has expanded from offering wallets into providing a full-suite solution that lets clients hold assets safely and then put them to work.
BitGo launched BitGo Trust Company in 2018, providing fully regulated, qualified cold storage to complement BitGo Inc’s original hot wallet solution. In 2020, BitGo launched BitGo Prime, which allows its clients to trade, borrow, and lend. Moreover, BitGo also provides access to DeFi, staking, NFT wallets, and beyond, and serves as the world’s sole custodian for WBTC, or wrapped Bitcoin.
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Time will tell with MSTR. It’s definitely a risky move. More companies, like Microsoft, are set to vote on adding Bitcoin to the balance sheet this December. We shall see. In the meantime, it’s best to self custody Bitcoin and gold as a hedge against inflation.