Let The ‘Freak Out’ Begin

Today may be a very important day to the ‘All That Is Bitcoin’ faithful. The only reason why that line is important is for the mere fact that every – single – reasoning as to why Bitcoin™ is this, that or another thing, in regards to its value and more – is being laid to waste faster than a crypto-miner in China.

Which leads me precisely to my point, which is…

If Bitcoin is said to have value, because there is only so much of it that can be minted (e.g., “mined”). Then please explain to me why the crackdown in China that was once touted as reason for why Bitcoin would be worth even more (that was the reasoning, and relentlessly reported, when it was on the upswing towards $100K and higher) that with China’s latest crackdown of miners, it’s now being reported as the reason why its tumbling?

It’s OK…I’ll wait.

So, with the above, let me elaborate on why the headline is not just some lame chance of click-bait, but rather, it’s far more instructive and meaningful.

As I type this on Tuesday morning (approximately 9:00am ET) Bitcoin now sports what is known in the investment world as a “two handle.” For those not familiar with Wall Street jargon, that describes what number is needed to now profess the current price. (e.g., 30K is a “three handle. 20K is a “two” and so forth.) Hint: a “two handle” is not what you want to hear when you were getting used to a “six” and calculating how many ‘Lambo’s’ (and in what colors) you were going to acquire as it was “guaranteed!” to hit ever the higher heights.

Over the ensuing weeks of late, it has been touted everywhere (and by that, I mean just that – everywhere!) that the “bottom was in.” And, when it went back up and over $40K just last week, it was all but declared: “The worst is over so, buy, buy, buy, then buy some more!”

Hint: It doesn’t seem to be working out that way. To wit:

(Chart Source)

“Now, why is this important to the headline?” you ask. Great question, and it’s this…

The moment (if it does, of course) Bitcoin goes negative for the year, you are going to see a lot of “investment and/or portfolio managers” sudenly need to question whether or not they can still hold onto this “investment.” They’ll also be wondering if they should cancel the most recent ‘Lambo’ on order or not, but I digress.

As always, we shall see. However, what we have seen – and now do have something to watch – comes from none other than the eminent “faithful” that has been at the center of all the reasons why “BTFD” (buying the f’n dip) was a no-brainer. Once again, to wit:

MicroStrategy And The Big Bitcoin Bet

The American intelligence firm added 13,000 BTC to its treasury from $489 million (after expenses) raised from a corporate bonds sale to accredited investors. The average purchase price was $37,617.

The company’s most recent purchase is down 13.2% in value due to fear of a crypto trading ban in China.

MicroStrategy is the world’s largest Bitcoin holder among publicly traded companies. It holds $105,000 BTC worth $3.4 billion at current prices. The total aggregate of MSTR’s purchase is $26,080.

“MicroStrategy Buys The Dip With $489 Million Bitcoin Purchase” Investing.com

I’m not a math genius, but I do still use the old tried and true method that 2 is less than 3. And, from my back-of-the-napkin-math: They’re a lot closer to ALL of their investment being in the red, rather than just the last $500Million which is now down +20%, currently.

Just one last note: Let it not be lost, to buy those latest ‘coins’ – they had to borrow in what is called “cold hard cash” known as “Bonds,” which will also demand the same for repayment.

© 2021 Mark St.Cyr

Note: This is not trading or investing advice of any sort. This commentary is for “big picture” discussion purposes only. Please read, or re-read the “About This Site” page for any questions or clarifications.