MicroStrategy has added another 14.5M worth of Bitcoin after adding 12,333 in June.
The company says it plans to raise upwards of 750 million dollars to invest in the currency, among other corporate duties.
MicroStrategy’s Bitcoin buying spree continues as the company bags 14.5 million dollars worth of Bitcoin amid a bigger plan to invest over $ 750 million more in the coin. The increased interest from MicroStrategy comes as its chair Michael Saylor thinks the next wave of institutional investments is imminent.
Saylor keeps filling MicroStrategy’s Bitcoin bags
Saylor’s MicroStrategy now holds 152,800 bitcoins worth over $4.53 billion after adding 467 more coins at $14.5 million. The company has also released a filing indicating that it plans to raise as much as $750 million via share sales to invest in the coin, among other general corporate purposes.
The $750 million would be allocated to Bitcoin investment and other roles like working capital deployment and debt repurchase. Saylor has been vocal about investments in Bitcoin for multiple years now. He started buying Bitcoin in 2020, citing the need for the company to hold cash due to an eroding threat of inflation.
He was bashed for the company losing millions in unrealized losses over the bear market from November 2021 through 2023. However, MicroStrategy continued “filling its bags” till Q2 2023, when it added over 12.3K bitcoins. It has now added 467 more coins and plans to keep buying as it is raising money to add to its capital.
Saylor is a strong believer in Bitcoin, and now that BlackRock and other TradFi institutions have started flocking into Bitcoin ETFs, he thinks that it’s “the best thing that ever happened to Bitcoin,” meaning he would keep buying the coin. Keep watching Fintech Express for more updates on this and other fintech-related developments.
Over the past 30 days, Decentralized Finance has managed to maintain the Total Value Locked in it, recording a slight dip of 0.8%
Ethereum still dominates DeFi Total Value Locked, taking over 71% of the whole, while the TRON network follows closely with 6.4%
Ethereum has outperformed TRON and BNB Chain in DeFi Total Value Locked, taking a 71% market share, while the two follow closely with 6.4% and 5.6%, respectively. In total, the whole market had a slight dip of 0.8%.
DeFi Total Valued Locked dips 0.8% in the past 30 days
Despite unfavorable global macro-economics and the crypto market battling an extended bear market, DeFi Total Value Vocked (TVL) has managed to maintain stable levels.
According to data captured from the on-chain analytics platform, Coinrank, Ethereum was dominant, leading with 71% ($63.8B) of the whole TVL, while the TRON network followed closely with 6.4% ($5.7 B). BNB Chain came third with 5.6% ($5.06 B) of the market share.
Other notable performers were Arbitrum, with 3.49 billion dollars, and Avalanche, with 1.72 billion dollars in TVL. Polygon also followed closely with 1.4 billion dollars in TVL.
This market performance came when regulatory uncertainties continued in the US and other parts of the world less strongly than in June. In the month, the crypto space scored major boosts as Ripple partially won against the US SEC, making primary markets for crypto assets not under securities laws.
At the same time, TradFi organizations like BlackRock filed with the US SEC for spot Bitcoin ETF. As such, the pressure for investors to seek alternatives from CEXs was much lower. Keep watching Fintech Express for more market updates and other Fintech-related developments.
Disclaimer: All views expressed below are not to be considered a financial advice
Overview
The crypto market is in a momentary green zone, but traders continue to walk on thin ice despite the recent gains and promising industry developments, among which we can distinguish the Ripple court win over the United States SEC and the potential ETF listings in Europe and the United States.
The European Union continues to be one step ahead of the competition regarding digital asset legislation, while the Middle East countries, Hong Kong and the UK are closely following behind.
Fundamentals, though, are only one side of the coin. The other one, the more important, is the market cycles, represented by charts of all sorts.
ETHBTC
One such chart is the ETH vs BTC or ETHBTC as it is more popular on the major trading platforms:
As seen on the Weekly chart above, the ETHBTC pair, which reflects the relative price of ether vs that of bitcoin, has been locked in the same range since May, 2021.
The initial low of that range was marked early, around 0.057 – that low that was swept in June 2022 in a liquidity grab event right below the established support. It is quite possible that we see the 0.057 level re-visited in the coming weeks or months as the former demand zone will attract the price. Such an event might mark the bottom of the ether coin vs BTC.
The Falling Wedge pattern on the chart is another argument for that thesis. A breakout in the upward direction can serve as a confirmation for switching to a long ETH bias.
All that being said, it doesn’t mean BTC will experience a catastrophic decline. It means, it simply means there is a high chance it underperforms as compared to ETH during a particular period.
DeFi revival to further boost Ethereum
The rise of Layer 2s, the inception of Layer 3s and the growing thesis of modular blockchain structures can only benefit ETH in the long term. Yes, new data availability layers are entering the race, but in the end, Ethereum will always be part of the equation as the base security layer.
data by L2beat.com
DXY weakness – main support line lost
The weakness in the US dollar index can only benefit risk assets, be it stocks or crypto. What makes stocks much more attractive at this stage, though, is that the market doesn’t like uncertainty, and this easily results in lack of liquidity which is reflected on the charts by the much lower than the average trading volumes. The pressure from regulators, and geopolitical and economic turmoil made investors even more cautious.
But going back to DXY, it has been making lower after lower low as the market structure on the Weekly chart continues to be clearly bearish.
The index broke below the lower boundary of the Falling Wedge and lost the important 100 support. If we are to see a bearish re-test of the support line from below is yet to be seen. For now, the March 2022 order block remains the next step for traders.
Cryptorank recently released a report on the crypto market’s performance in Q2 2023. Uncertainty was the theme of this period, with major regulatory and institutional happenings.
Most high-cap crypto projects barely gained
Cryptorank’s heat map depicts misfortune in crypto between April and June. While some high-cap projects registered stellar performances, there was mediocrity in most of the market.
Bitcoin relished a momentary triumph in the period, closing at $30.5k, a 10% gain from the opening value of $28.3k. Of course, the period was not characterized by all upsoars. There were also moments of descent.
As the quarter faded away, Bitcoin increasingly gained more dominance. Dawning the quarter with 46.39% dominance, the coin gently attracted more crypto investors closing at 50.47%. The dominance growth can be partly attributed to price gains as other cryptos plummeted.
Ethereum markets displayed a similar demeanor to Bitcoin’s. It earned a rise of roughly 7% between April and June. At the quarter’s dawn, Ethereum traded at $1821, but towards the end, this coin was valued at $1948. In a similar taste but more hyper price performance, Bitcoin cash surged by 129%.
There was a transmission of the small gains seen in large-cap to lower-cap tokens in the period. For instance, Air Protocol, a crypto service platform, surged 302%. OMAX, a DeFi network, surged 294%. Other big gainers were STAIKA (143%) and Games for a Living (138%).
Bitcoin’s performance versus traditional assets. Source: Cryptorank
Then come the losers. The ambiguity of crypto markets was disclosed as more top-cap coins recorded losses. Red and darker shades of red were the most prevalent market patterns in Q2.
The market negativity cost SOL, XRP, LINK, ETC, DOT and ATOM some minute percentage of their value. MATIC and ALGO were also subject to mass plummets dropping by 37% and 41%, respectively.
The turmoil that hit crypto markets in Q2 was way less than that reported in preceding periods. In Q2 2022, Bitcoin’s return dropped by over 56%. In a similar period in 2021, Bitcoin’s return plunged by 40%.
Despite Bitcoin and Ethereum seemingly gaining, the numbers from the report suggest punctured investor confidence as most of the crypto space lost value.
Bitcoin vs traditional assets
The ambitious crypto coin has rivalled some of the best traditional investment assets since its birth. Born to offer payments, Bitcoin is gradually becoming a gold substitute.
Bitcoin’s performance versus traditional assets. Source: Cryptorank
In the first half of the year, Bitcoin thrived against many of its rivals. Based on data, the coin has gained 84% in value since the year dawned. In this period, NASDAQ gained 31%, S&P gained 15%, Gold 4% and Silver -5%.
A Trendy quarter?
Q2 had no shortage of big developments and unique trends. Some industry-shifting developments include;
Bitcoin Spot ETF
The world of Bitcoin products was rejuvenated with a new bigger player joining the race for spot ETFs. Blackrock, the largest investment manager, filed for a Bitcoin spot ETF in mid-June.
Blackrock’s filing triggered a market frenzy, with several other companies, including Ark Invest, Invesco, and Valkyrie Investments, going for such applications. Grayscale’s Bitcoin Trust saw a massive valuation rise in Q2. This was a consequence of rumours that Fidelity Investments would purchase the trust.
Bitcoin ordinals mania
The ordinals’ craze brought a recharge to Bitcoin markets. Although ordinals gained life in Q1, the second quarter gazed at the peak of these new assets.
Bitcoin’s activity reached new heights when BRC-20 tokens came into the picture. In early May, the Bitcoin-based meme coins hysteria impeded transaction processing. Accordingly, Binance was forced to halt Bitcoin transactions twice, citing network issues.
Consequently, Bitcoin transaction fees climaxed to about $30. The fee surge revived long-dead conversations about Bitcoin transaction charges.
Shanghai upgrade aftermath
Ethereum completed its Shanghai upgrade in April, opening the gates for investors to withdraw staked ETH. Initially, many expected the upgrade to trigger lumpsum withdrawals. However, three months later, the staked ETH’s value only increased to about $23 million.
The regulatory onslaught continues
Regulatory ambiguity persisted with the SEC hastily attacking crypto projects. The US ombudsman has maintained a negative attitude towards cryptocurrency. The regulators seemingly accelerated their crypto attacks in Q2.
In a shocking turn of events, the SEC filed lawsuits against Changpeng Zhao, Binance and Coinbase, all within 24 hours. Imagine the crypto community’s reaction ensuing the events.
While attempting to bring assets under its umbrella, the SEC labelled several more crypto coins as securities. This is an attempt to bring these assets under its umbrella.
CBDCs are still the talk of the town, but the development remains stagnated in the US, China, the UK, and Nigeria.
Balaji Srinivasan, an ex-coinbase executive, has reacted to an Invesco research citing investors and Central Bankers flocking into gold.
The research spans 85 sovereign wealth funds, and 57 central banks, all collectively managing $21T in assets.
Balaji Srinivasan has reflected on central banks buying gold as fiat money continues to weaken globally as economic factions grow, showing worrying times ahead that inflation may continue for a while longer. He claims that the cited central bankers are relocating funds from riskier investments as a strategy to brace against a de-dollarisation impact.
Balaji Srinivasan sheds light on central banks flocking to gold
In his summary, Balaji Srinivasan cites ten points on central bankers’ actions.
1) Flight to gold. “Amid volatile [bond] yields, 2022 saw a flight to gold, questions around the US dollar’s future as the world’s reserve currency, and increased diversification of currency holdings.”
2) Gold hedges inflation. “Reserve portfolio managers identified inflation as a key risk…69% of central banks countering global inflation through gold allocations.”
3) Gold as a safe-haven. “96% of central banks increasing gold allocations cited its status as a ‘safe-haven’ asset”
4) Sanctions are a major factor. “A substantial percentage of central banks are concerned about the precedent set by the US freezing of Russian reserves, with the majority (58%) agreeing that the event has made gold more attractive.”
5) Physical gold in vaults only. “Consequently, central banks now prefer to hold physical gold rather than gold ETFs or derivatives…”
6) Not even London is trusted. “We…had it held in London…but we’ve now transferred our gold reserves back to our own country to keep it safe – its role now is to be a safe-haven asset” said one central bank based in the West.
7) Yuan rising as a trade currency, not a ‘reserve’ currency. “A considerable proportion do expect a shift towards renminbi (27% of central banks), but expectations differ based on the region.”
8) India now the #1 emerging market to invest in, over China. “India has now overtaken China as the most attractive Emerging Market for investing in Emerging Market debt.”
9) Dollar is being hedged with EM currencies (!). “While the US dollar is expected to retain its dominance, central banks are increasingly exploring diversification into Emerging Market currencies to hedge against volatility.”
10) Everyone wants to de-dollarize. “People have been looking for alternatives to the dollar and euro for a long time and they would’ve gone to them already if there were any suitable alternatives.”
CENTRAL BANKS ARE BUYING GOLD
Invesco just released its annual global survey of 85 sovereign wealth funds and 57 central banks, collectively managing $21T.
And what does it say?
1) Flight to gold. "Amid volatile [bond] yields, 2022 saw a flight to gold, questions around the US… pic.twitter.com/w3TPre6OKI
This report comes when the tension between economic powers is increasing. The United States has been under fire for their continued misuse of money and overprinting. As a result, nations are rising against the dollar, believing it is no longer the strong world reserve currency.
In June, the US hit its debt ceiling, resulting in emergency house proceedings to suspend it. That means the underlying problem was not addressed. A month later, the US spending has risen by a trillion dollars pushing the total debt to over $32.67T.
This debt trend has been discouraging to international economic powers. It has also worsened as the US has long been weaponizing the dollar against nations like China and Russia. As a result, these two nations and other 25+ interested ones have allied to develop the BRICS+ economic bloc.
BRICS+ will unveil a gold-backed currency that will replace the US dollar when the member states trade. The new report from Invesco shows that the reserve power that the US Dollar shortly held is being taken up by hard assets like gold and its alternatives (Bitcoin, now that even BlackRocks admits Bitcoin is a digital gold).
According to Balaji Srinivasan:
“The dollar is getting unbundled. When there’s an alternative in every situation, much of the dollar’s coercive power goes away. And that’s the theme of this report — sovereigns are seeking an exit from the dollar, and a hedge against its uncertain future”
Keep watching Fintech Express for more updates on finance and other fintech-related developments.
