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Is MicroStrategy about to double down with a $500M Bitcoin buy?

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Is MicroStrategy about to double down with a $500M Bitcoin buy?

Is MicroStrategy about to double down with a $500M Bitcoin buy? Samuel Wan · 16 hours ago · 2 min read

Bitcoin › People

Against a deteriorating macro environment, MicroStrategy is considering a significant Bitcoin buy to increase its hoard.

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2 min read

Updated: June 15, 2022 at 6:29 pm

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Bitcoin-bull Max Keiser tweeted that MicroStrategy has board clearance to make a $500 million BTC buy.

He added that the company’s CEO, Michael Saylor is currently “chilling on his yacht,” and will make a decision on whether to go ahead soon.

.@MicroStrategy has room on the balance sheet to buy another $500M in #Bitcoin

I’m hearing the board has given @saylor the green light to back up the truck and buy size

He’s chilling on his yacht at present but will make a decision soon. pic.twitter.com/5vlLRNAEw4

— Max Keiser: Bitcoin Pioneer 🇸🇻🌋🧡 (@maxkeiser) June 15, 2022

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Bitcoin is faring better than large caps

In April, Bitcoin Magazine Analyst Dylan DeClair spoke of a “global deleveraging event.” This refers to an attempt to reduce debt on a global scale. Entities that are overleveraged and unable to meet debt obligations are at risk of default.

A global deleveraging event is in progress, for those that are not yet aware.

— Dylan LeClair 🟠 (@DylanLeClair_) April 26, 2022

Deleveraging against a landscape of high inflation and rising interest rates creates a perfect storm for financial market instability.

Since May 5, just before the Terra LUNA/UST implosion, total crypto market cap outflows have amounted to $937 billion. And year-to-date (YTD) outflows total $1.327 trillion. The net outcome of this has been tanking token prices.

Bitcoin is down 57% YTD against the dollar, with large caps faring worse. For example, Ethereum is down 72% YTD, and Cardano is down 65% YTD.

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Given that the Fed (and central banks the world over) will likely carry on hiking interest rates, the market carnage will continue for the foreseeable future.

With that in mind, is buying Bitcoin, even at these relatively low prices, the right call to make?

President Bukele hints at doing the same

Data from the website saylortracker.com shows MicroStrategy’s Bitcoin reserves are at 129,218 BTC with an average buy price of $30,695. This puts the company at a $1.316 billion unrealized loss on its holdings at the current price.

Critics argue that MicroStrategy is failing in its fiduciary duties to protect the interests of its stockholders by going Bitcoin heavy. It’s further said that the acquisition of some BTC, through a $205 million loan, puts company collateral at risk of liquidation.

On Wednesday, Saylor addressed these concerns in a tweet that dismissed the liquidation risk. He said MicroStrategy expected volatility and “structured its balance sheet to HODL through adversity.”

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When @MicroStrategy adopted a #Bitcoin Strategy, it anticipated volatility and structured its balance sheet so that it could continue to #HODL through adversity. https://t.co/rPSUVPHUVw

— Michael Saylor⚡️ (@saylor) June 14, 2022

Meanwhile, as market panic ensues, El Salvador’s President Bukele quipped with Bitcoin Magazine about buying more Bitcoin. But given his renowned sense of humor, it’s unclear whether he was joking or not.

You’re telling me we should buy more #BTC? https://t.co/jwvn0A1kTb

— Nayib Bukele (@nayibbukele) June 14, 2022

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A-list celebs remove NFT avatars amid crypto winter

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A-list celebs remove NFT avatars amid crypto winter

A-list celebs remove NFT avatars amid crypto winter Zeynep Geylan · 11 mins ago · 2 min read

Many celebrities who displayed their NFTs as avatars are removing them from their social media due to the depressing sentiment of the market.

2 min read

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Updated: June 24, 2022 at 9:51 pm

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Most celebrities who bought and displayed NFTs as social media avatars are now removing them amid the harsh crypto winter, which has led to a downturn in NFTs as well.

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The fast-paced nature of the crypto market attracted celebrities who want to invest their fortunes. Some of the biggest names in Hollywood including Justin Bieber, Ashton Kutcher, and Bruce Willis participated in various projects. Many also purchased NFTs, especially from the Bored Ape Yacht Club (BAYC) collection during 2021.

Is the  NFT hype dead?

Most celebrities who proudly displayed their BAYCs as a Twitter avatar have recently changed them, including Serena Williams, Reese Witherspoon, Lil Durk, Travis Barker, and Shonda Rhimes.

Jimmy Fallon

Jimmy Fallon was especially proud of his ape. He showed a copy of it during his show featuring Paris Hilton and said they were “a part of the same community.”

Jimmy & @ParisHilton compare #BoredApeYC NFTs. #FallonTonight pic.twitter.com/RoOlhteLnN

— The Tonight Show (@FallonTonight) January 25, 2022

Despite his then excitement, Fallon changed his avatar to a selfie on June 8, 2022. However, he kept the .eth extension near his name, indicating that he’s still a part of the community.

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Why did they buy in the first place?

Not many of the stars came forward to explain why they purchased NFTs. In the case of Jimmy Fallon, he purchased an Ape because he felt like it was a good idea after talking to Hilton about it. Buying one because everyone else is doing could be a reason for billionaire celebs to purchase NFTs.

Studies show that the real reason behind the NFT hype is the high return on investments. While 64% of the participants said they purchased NFTs to make money, only 14.7% of them said they bought them because they wanted to be included in a community. Even though the study is not specifically about Hollywood stars, it wouldn’t be surprising for the A-list celebrities to pursue high returns on investment.

Paris Hilton was the only one who publicly explained why she was excited about NFTs. She wrote a blog post to stress that NFTs bring great benefits to small artists and creators. She wrote:

“I see NFTs, or non-fungible tokens, as the future of the creator economy. They use blockchain technology to help creators increase the value of their work and share it with fans in real-time,”

It seems like Hilton was genuine in her post, given that she is still keeping her NFT avatar and the .NFT extension in her Twitter account.

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Proposed Gillibrand-Lummis crypto Bill uploaded to GitHub for recommendations

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Proposed Gillibrand-Lummis crypto Bill uploaded to GitHub for recommendations

Proposed Gillibrand-Lummis crypto Bill uploaded to GitHub for recommendations Oluwapelumi Adejumo · 6 hours ago · 2 min read

Senator Lummis has opined that the bill is seeking comments from industry stakeholders so that it can properly reflect the innovations in the crypto space.

2 min read

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Updated: June 24, 2022 at 6:53 am

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The proposed Responsible Financial Innovation Act (RFIA) bill has been uploaded to GitHub for the crypto community to give their recommendations about the bill.

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In a Twitter post by Senator Cynthia Lummis, one of the two bipartisan senators responsible for the bill, the decision to update it on GitHub is to get the grassroots opinion about the bill.

Plebs! As promised, you can now contribute comments on my bill establishing a framework for digital assets with @SenGillibrand via GitHub. Civil comments and criticisms welcome. Please share widely. We want to get this right. Help us iterate publicly on policy. https://t.co/1eOb6jfKaA

— Cynthia Lummis 🦬 (@CynthiaMLummis) June 22, 2022

According to a press statement from the Senator’s office, the bill seeks comments from industry stakeholders to reflect the space’s innovations properly.

The bipartisan had suggested that Bitcoin and Ethereum be classified as commodities while other altcoins should be labeled as securities. The bill also proposed that the Commodity Futures Trading Commission should be tasked with regulating the industry.

However, the bill has faced criticism from the community over its blanket classification of other crypto assets as securities. Some argue that Bitcoin should be considered separately from other digital assets.

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Crypto community makes recommendations

As of press time, there have been only nine comments on the bill, with most of them being constructive recommendations.

One of the comments called for a separate Bitcoin Bill that is different from the crypto Bill. Stduey explained that Bitcoin is different from other risky assets even though the current market downturn might make it feel like both are the same.

In his words,

If you buy 5,000 satoshis for $1, you will have 5,000/2.1 quadrillion satoshis forever, and no one can change that. People cannot understand the magnitude of this yet, but this subtle difference is what separates bitcoin from every other crypto, fiat, precious metal, and commodity. Absolute scarcity. Nothing else has this feature.

Another recommendation for the bill was made by Asherhopp, who said that the legislation should include language that will limit the Federal Reserve from creating unlimited CBDC, the same way fiat currencies are minted.

He added that the bill should compel the Fed to add crypto to its balance sheet, apply tariffs to the digital yuan, and ban any CBDC.

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One of the recommendations touched on the subject of airdrops and unrealized gains.

According to the recommendation,

Airdrop receivers should only have to pay short or long-term taxes on the coins they cash out assuming the initial value is $0 because they do not realize the gains until they trade or sell.

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Saylor goes full maxi, slamming everything that isn’t Bitcoin

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Saylor goes full maxi, slamming everything that isn’t Bitcoin

Saylor goes full maxi, slamming everything that isn’t Bitcoin Samuel Wan · 9 hours ago · 2 min read

Saylor listed three things that weigh down on Bitcoin, one of which is the cross-collateralization of altcoins, which he deems unregistered securities.

2 min read

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Updated: June 22, 2022 at 2:00 pm

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MicroStrategy CEO Michael Saylor has thrown altcoins under the bus by calling on regulators to do their part in tackling risky crypto industry practices.

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Speaking to the founder of technical analysis platform Northman Trader, Saylor told Sven Henrich that a “parade of horribles” is weighing down on Bitcoin and regulators must act accordingly.

A “parade of horribles is dragging down Bitcoin”

In explaining the “parade of horribles,” Saylor listed three factors that negatively impact the price of Bitcoin.

First is the prevalence of wash trading in the crypto space. Unlike stocks, there are no specific regulations that address the wash trading of digital assets.

Wash trading is a form of market manipulation involving simultaneously buying and selling an asset. This practice can create a false picture of what is happening in the market, such as artificially high volume.

This leads to the next factor, which Saylor said was the effect of unregulated exchanges and the market volatility they bring. Expanding further, the MicroStrategy boss talked about a conflict of interest in exchanges acting as both market makers and token holders, in conjunction with wash trading and trading with high leverage.

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“If you had 20x leverage trading on Apple stock with no wash trading rules, Apple would be a lot more volatile asset and so would the Nasdaq.”

Finally, Saylor turned to altcoins and said only Bitcoin is a commodity because it has no issuer. He added that the 19,000 other cryptos are unregistered securities. The result is a multi-hundred-billion “cloud” trading without fair disclosure that is “cross-collateralized” with Bitcoin.

“What you have is a $400 billion cloud of opaque, unregistered securities trading without full and fair disclosure, and they are all cross-collateralized with Bitcoin.”

Split in the regulatory treatment of crypto on the cards

On May 18, Securities and Exchange Commission (SEC) Chair Gary Gensler told the House Appropriations Committee that Bitcoin is a commodity “maybe.”

Currently, in the U.S., crypto-assets are governed under the jurisdiction of the SEC and treated under applicable securities laws.

Speaking to CNBC on May 16, the Commodity Futures Trading Commission (CFTC) Chairman Rostin Behnam said it makes sense to go through all the cryptocurrencies, classifying each as a commodity or security, and designating the appropriate agency authority accordingly.

“Within this space, in my view, it makes sense for commodities to be regulated by the Commodity Futures Trading Commission and securities to be regulated by the SEC.”

Behnam said that Bitcoin and Ether fit the definition of a commodity in his opinion. But there are also “plenty” of other tokens that fall within that category.

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