MicroStrategy is a Bitcoin company ??♂?; The Squid Game token scam ??; Bitcoin whales are accumulating ??
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Last week (1-5 November) was a really hot and super exciting week in Blockchain and Cryptocurrency world.?We will understand?why MicroStrategy is a Bitcoin company; look at The Squid Game token scam; why Bitcoin Whales are accumulating more coins, and other interesting news and developments.
Without further ado, let us dive into what has happened in the financial technology sector last week. Let’s connect the dots.
MicroStrategy is a Bitcoin company ??♂?
Big bags???MicroStrategy, the business-intelligence software company holds so much Bitcoin on its balance sheet that it has recently become something of a proxy for the world’s biggest cryptocurrency.
But it’s not going to stop anytime soon as the firm has said it added almost 9,000 Bitcoins to its holdings in the third quarter this year, bringing its total to a whopping 114,042 ??
The paradox ??♂??Microstrategy said it purchased the bitcoin by “successfully raising capital in the quarter through our at-the-market equity offering.”
At current prices, the value of its Bitcoin holdings is just over $7B while MicroStrategy’s entire market capitalization is less than $7B ?? This makes it more of a Bitcoin holding company rather than a business intelligence firm…
Don’t stop even at a loss! ???One must note that the carrying value of MicroStrategy’s bitcoin was $2.4B, which reflects cumulative impairment losses of $754.7M. Under accounting rules for digital assets, companies must report an impairment if the asset’s price goes below the company’s purchase price at any time during the quarter.
Yet, the company said it will “continue to evaluate opportunities to raise additional capital to execute on our bitcoin strategy.”
?? THE TAKEAWAY
Keeping all eggs in one basket???MicroStrategy is a Bitcoin company, and thus far this strategy has paid off. Especially given that its Bitcoin holdings are worth more than the company’s entire stock. But that didn’t seem to please investors a lot as MSTR have fallen immediately after the Q3 earnings. This might become even more worrisome given that its stock is down around 30% since its latest peak in mid-February this year. On the other hand, recent developments have been very positive for Bitcoin - more institutional adoption, continuing regulatory discussions, Bitcoin-linked ETF’s, among others - hence fueling its price to reach new highs.
The Squid Game token scam ??♂?
The crash ???The price of the Squid Game token crashed to near-zero as the developers behind the project sold their tokens on the market for 22,328 BNB ($11.9M).
The price of the token fell from $2,856 to $0.00079 instantly as 70M tokens were dumped on the market.
Easy come - easy go ???As I’ve?written just yesterday, SQUID popped onto the scene on October 20, purporting to be a pay-to-earn currency for an upcoming online game based on?Squid Game. But, there were several red flags: grammatical and spelling errors in the white paper, the fact that the project’s website was registered less than a month ago, and users’?inability to reply to its Telegram and Twitter posts.
By Friday, the coin had skyrocketed in price and was widely covered in the media for its huge gains and (unofficial) tie to the wildly popular Netflix series. The token’s price peaked Sunday night at $2,861.80 before dropping 100% to lose virtually all of its value.
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?? THE TAKEAWAY
Paying the price for the risk.?In retrospect, this seems like a?classic scam. Various sources say that there was a lock-up function in the smart contract that was designed to prevent sales, which meant that whenever money was poured into the market on the decentralized exchange PancakeSwap, it was locked up. Since there was little to no selling pressure, the price of SQUID rose astronomically. Mainstream news articles only put more fuel to the fire. Once there was enough money in the pot, the developers behind the project who held a large number of tokens in a single wallet, decided to dump them on the market, taking nearly all the liquidity and driving the token’s price to $0. Was it worth it? If you were early, you could have made some $$$, but apart from the scammers, everyone else was left holding the empty bags…
Bitcoin whales are accumulating ??
Inflation fears ???Bitcoin whales, or large investors with sufficient spare cash, appear to be buying again primarily because of inflation fears. The fears of inflation getting out of hand strengthens the case for investing in store of value assets such as Bitcoin.
Data ???Large investors holding at least 1,000 BTC bought 142,000 coins last week alone, taking the cumulative tally to nearly 200,000 BTC. This is the highest in 2021, according to blockchain analytics firm Chainalysis’s recent market intel report.
Opposite directions ???The US 10-year breakeven rate, which depicts how the market foresees long-term price pressures, recently rose to a decade high of 2.64%, according to the Federal Reserve Bank of St. Louis. Bitcoin, on the other hand, surged nearly 40% in October, hitting a record high of $66,975.
At the point of writing, BTC is changing hands at circa $62,000 per coin.
?? THE TAKEAWAY
Digital gold.?Recent moves are yet another illustration of the hypothesis that Bitcoin is digital gold. It also further suggests that investment is the primary use case for bitcoin. An important point to note here is that the uptick in whale holdings suggests the recent rally is backed by strong hands and is sustainable. Yet, Bitcoin needs to expand its footprint into crypto sub-sectors like Web 3.0 and decentralized finance to remain relevant relative to Ether in the long run. And that’s a big challenge to tackle
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About: I am?a business developer, sales professional, FinTech strategist, as well as Cryptocurrency and Blockchain enthusiast. I'm highly passionate about Financial Technology and Digital Innovation, and strongly believe that it will change the world for the better. Apart from my daily job at a global payments startup where I'm leading the company's expansion into Europe, I'm an active member of the FinTech community and a TechFin evangelist.
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