Strategy and Coinbase lead the crypto-equity rally in pre-market trading, both up double digits.
The crypto market has experienced an unprecedented surge in volatility, with established coins like Bitcoin and Ethereum facing extreme price swings. Since January, the frequency of flash crashes has risen sharply, erasing billions from the market. A crypto analyst has suggested that these flash crashes have been driven by several factors, providing a detailed insight into what’s really going on in the market. Why Flash Crashes Are Occurring In The Crypto Market A crypto analyst known as ‘The Kobeissi Letter’ has shed light on the recent market crash and why top coins are falling drastically. The analyst revealed that the increasing number of flash crashes has resulted in over $300 billion being removed from the market in just 24 hours. Related Reading: Crypto Liquidations Cross $2.22 Billion, Here’s How Much Dogecoin Traders Lost He disclosed that on the previous day, the market began selling off, with Bitcoin dropping below the $95,000 mark. Between 1:45 AM ET and 2:15 AM ET, the cryptocurrency had one of the most shocking crashes, falling by $5,000 in mere minutes. Ethereum, the second largest cryptocurrency after Bitcoin, had it even worse. The altcoin experienced massive liquidations that contributed to a 37% price crash on February 2, fueled by trade war headlines. The Kobeissi Letter has revealed that the key factor behind these dramatic flash crashes is the growing divide between institutional and retail investors. Wall Street Hedge funds have increased their short positions on Ethereum by 500% since November 2024, marking a historic level of institutional bearishness toward Ethereum. Short positioning in Ethereum has also increased by over 40% in just one week. Moreover, Ethereum’s price is down by approximately 40% since December 2024, while Bitcoin has fallen by 15%. On the other hand, institutions have continued to accumulate Bitcoin, while retail investors have poured capital into smaller altcoins like Solana, creating extreme volatility in these assets. This “polarization,” as the analyst calls it, has led to the formation of “air pockets” in liquidity. As a result, when a sell-off starts, it triggers cascading liquidations, amplifying market instability and price crashes. The analyst has also pinpointed that this polarization phenomenon works in the opposite direction, as the market can experience rapid recovery, leading to billions added to its market cap within hours. Shifts In Sentiment And Political Influence Contribute To Market Crash The Kobeissi Letter revealed that the Fear and Greed Index has fallen from a bullish stance just weeks ago to 29% extreme Fear, underscoring the speed at which the market’s sentiment is changing to the negative. The analyst suggests that the extreme positioning in the crypto market is leading to these increasing flash crashes, making crypto significantly unpredictable. Related Reading: Crypto Fear And Greed Index Barrels Toward Extreme Greed Again As Bitcoin Price Clears $101,000, Is This Good News? Adding to the turbulence, the analyst revealed that political and corporate influences have been dictating the crypto market. He underscored that Eric Trump had publicly supported buying Bitcoin and Ethereum during dips, aligning with events like Ethereum’s February 3 recovery and Bitcoin’s rebound on February 25. While the market experiences flash crashes and instability, MicroStrategy continues to accumulate Bitcoin. The analyst revealed that the company had also contributed to the polarization of Bitcoin due to its unending accumulation trend. While the company buys more Bitcoin, MSTR stocks continue to fall, marking a 45% decline from their high on November 20. Featured image from Unsplash, chart from Tradingview.com
Bitcoin's stumble begs the question asked during the last bear market: Is there a point at which Michael Saylor would be forced to liquidate part of the company's near-500,000 BTC stack?
The premium given to the company’s massive bitcoin holdings will exist as long as investors believe it will continue to increase the amount of its bitcoin held per share.
Shares of Strategy (NASDAQ: MSTR) have dropped by over 55% from the November 24 high at $543 to around $250. With the software intelligence firm now holding approximately 499,096 Bitcoin—worth around $44 billion at current prices—market participants are wondering whether the company could ever face a forced liquidation of its massive Bitcoin treasury. On Tuesday, analysts from The Kobeissi Letter (@KobeissiLetter) took to X to provide a comprehensive thread analyzing this scenario. Here’s what they had to say: “The MicroStrategy liquidation: As MicroStrategy, MSTR, falls over -55%, many are asking about ‘forced liquidation.’ The company now holds $44 BILLION worth of Bitcoin, could they be forced to sell it? Is liquidation even possible?” Is A Forced Bitcoin Liquidation Possible? According to The Kobeissi Letter, MicroStrategy’s Bitcoin holdings total approximately 499,096 BTC, currently worth $43.7 billion. The firm’s average cost basis sits around $66,350 per Bitcoin. This naturally raises concerns about what happens if Bitcoin’s price were to drop significantly below MicroStrategy’s average entry point. “Let us begin by stating that this isn’t the first time liquidation is mentioned. MSTR has been buying Bitcoin for years and there have been MULTIPLE bear markets since then. This includes the 2022 bear market when Bitcoin fell from ~$70K to ~$15K. Is this time different?,” the analysts write. Related Reading: Market Signals Point To Caution: Bitcoin’s 3-Day Chart Shows Potential Sell Alert Critically, MicroStrategy’s operations rely on raising capital—often through convertible notes—to buy more Bitcoin. The Kobeissi Letter points out that MicroStrategy currently carries about $8.2 billion in total debt for its $43.4 billion Bitcoin holdings, representing a roughly 19% leverage ratio. Much of this debt is held in convertible notes maturing around 2028. “Just about the only way a ‘forced liquidation’ occurs if there is a ‘fundamental change’ at the company. This COULD require MSTR to liquidate Bitcoin holdings if an early redemption is called on the notes,” the experts from The Kobeissi Letter argue. A “fundamental change” could include corporate bankruptcy, or a vote by shareholders to dissolve the company—both scenarios that The Kobeissi Letter stresses are remote under the current structure. Michael Saylor, MicroStrategy’s Executive Chairman and prominent Bitcoin advocate, holds 46.8% of the company’s voting power, meaning he could effectively block decisions leading to liquidation. Related Reading: Bitcoin Crashes: Experts Warn Of 6-Month Slump To $73,000 Despite the steep share price decline, The Kobeissi Letter suggests that an outright forced liquidation is “highly unlikely.” The structure of the convertible notes and MicroStrategy’s ability to raise capital give the firm significant flexibility. Even so, if Bitcoin were to experience a protracted and severe price drop—well below its current levels—MicroStrategy might face challenges in servicing its debt and raising fresh capital: “However, what if these convertible bonds remain below the conversion price at maturity, beginning in 2027+? For this to happen, Bitcoin would need to fall well over 50% from current levels and remain there.” Michael Saylor has repeatedly brushed off the liquidation scenario. According to The Kobeissi Letter: “Michael Saylor was asked about liquidation recently. His answer was that even if Bitcoin fell to $1, they still would not get liquidated. They would ‘just buy all of the Bitcoin.’ While this sounds good in theory, the convertible note holders cannot be forgotten.” MicroStrategy’s business model—raising funds to buy Bitcoin, potentially driving the price higher, and then issuing new shares at a premium—depends on investor confidence. If shares continue to falter, or if Bitcoin dives well below MicroStrategy’s average entry price, the firm’s ability to attract capital could be severely tested: “We are now witnessing the first ‘bear market’ in MicroStrategy since it gained popularity in 2024. The question becomes: will investors continue to buy the dip here? Michael Saylor says ‘Bitcoin is on sale.’” However, with Saylor’s voting power and the long-dated convertible notes, a forced liquidation seems highly unlikely in the near term. At press time, BTC traded at $89,245. Featured image created with DALL.E, chart from TradingView.com
Strategy, previously known as MicroStrategy, is pushing ahead with its aggressive Bitcoin accumulation strategy. According to a Feb. 20 statement, the company plans to acquire an additional $2 billion worth of Bitcoin using proceeds from its latest convertible notes offering. At the same time, Japanese firm Metaplanet, a Strategy copycat, has reached a key milestone […]
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The last hurdle for MSTR to qualify for the S&P 500 is to achieve positive GAAP net income over the trailing 12 months.
The stock could be eligible for S&P 500 index inclusion once it adopts updated FASB accounting standards, the report said.
Strategy’s STRK is up 5% in pre-market trading, building on its 2% gain during its Nasdaq debut.
The following article is adapted from The Block’s newsletter, The Daily, which comes out on weekday afternoons.
Strategy (formerly known as MicroStrategy) has reported its largest quarterly Bitcoin acquisition to date, marking a significant expansion of its holdings in the fourth quarter of 2024. In the last quarter of 2024, the firm purchased 218,887 BTC, bringing its total holdings to 447,470 BTC as of Dec. 31. The company has made additional Bitcoin […]
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Strategy reported a net loss of $670.8 million for Q4 on Wednesday following a $1 billion impairment adjustment on its bitcoin holdings.
The company earlier on Wednesday changed its name to Strategy as its primary focus for some time has been bitcoin, not software.
The company fka MicroStrategy recorded total revenues of $120.7 million, down 3% from last year and missed estimates by about $3 million.
The following article is adapted from The Block’s newsletter, The Daily, which comes out on weekday afternoons.
"This brand simplification is a natural evolution of the company, reflecting its focus and broad appeal," the company said.
The company reports fourth-quarter earnings on Wednesday.
The following article is adapted from The Block’s newsletter, The Daily, which comes out on weekday afternoons.
S&P 500 futures slid 1.4%, Dow Jones future fell 1.2% and futures on the tech-heavy Nasdaq 100 lost 1.7%
MicroStrategy acquired around $20 billion worth of bitcoin over the past few months but did not sell any shares last week for more purchases.
Market capitalization seems to have been the dominant driver of stock price performance last year, particularly for companies with significant Bitcoin holdings. Companies such as MicroStrategy (MSTR) and Tesla (TSLA) saw their stock prices move in tandem with Bitcoin’s price appreciation. This trend has been amplified by the broader risk-on sentiment in equities, where speculative […]
The post New FASB rules make Bitcoin holdings a goldmine for corporate earnings appeared first on CryptoSlate.
The following article is adapted from The Block’s newsletter, The Daily, which comes out on weekday afternoons.
MSTR intends to use the proceeds to buy more bitcoin, of which is currently holds 471,107 BTC worth over $46 billion.
The following article is adapted from The Block’s newsletter, The Daily, which comes out on weekday afternoons.
Norway’s sovereign wealth fund saw a 153% year-over-year increase in indirect bitcoin exposure in 2024, according to K33 Research.
Mizuho Securities initiated coverage on shares of MSTR with an "outperform" rating and a $515 price target.
Norway’s indirect bitcoin exposure via its sovereign wealth fund has risen to 3,821 BTC, according to K33 Head of Research Vetle Lunde.
Several investor groups are trying to ramp up their crypto activity amid the political shift under President Trump, according to Bernstein.
MicroStrategy, the enterprise software company based in Tysons Corner, Virginia, has made headlines once again on Monday by purchasing Bitcoin (BTC) for the twelfth consecutive week. This latest acquisition saw the company spend approximately $1.1 billion on the market’s leading cryptocurrency from January 21 to January 26, as disclosed in a recent filing with the US Securities and Exchange Commission (SEC). With these purchases, MicroStrategy now holds around 471,107 BTC, valued at roughly $30.4 billion, representing over 2% of the total Bitcoin supply that will ever exist. MicroStrategy Aims To Boost Bitcoin Holdings Beyond 500,000 To further finance its Bitcoin acquisition strategy, MicroStrategy has announced plans to sell $250 million in perpetual preferred stock, offering an attractive 8% fixed coupon. This stock will have a conversion price of $1,000, although details remain limited as the information is not yet public. The venture aims to bolster the company’s already substantial Bitcoin holdings, which are nearing the 500,000 BTC milestone. Related Reading: Want To Get Rich? Here’s How To Create A Coin Like XRP From Scratch—Expert MicroStrategy has employed various fundraising strategies, including at-the-market stock sales and convertible debt offerings, with a goal of raising $42 billion in capital through 2027. The company’s stock has also shown remarkable growth, surging approximately 600% over the past year, although it experienced a slight decline of about 1.4% to $348.65 in early trading on Monday. Meanwhile, Bitcoin’s price fell around 2.5% to $101,500. Authorized Shares To Support Future Capital Raises MicroStrategy also announced recently that it would redeem over $1 billion of its 0% Convertible Senior Notes due in 2027 earlier than anticipated, with a planned redemption date of February 24. This move is intended to streamline the company’s financial obligations and provide greater flexibility for future capital raises. Benchmark analyst Mark Palmer noted that this strategy would allow investors to focus on the company’s operations rather than potential financial impediments. Redeeming these notes could also pave the way for MicroStrategy to issue new convertible debt with longer maturities, enhancing its capital-raising options. The company plans to offer approximately 2.5 million shares of Series A perpetual strike preferred stock, which will be senior to its Class A common stock and provide regular quarterly dividends starting March 31. Related Reading: Bollinger Bands Tighten On XRP Daily Chart – Major Price Move Ahead? Moreover, MicroStrategy has the green light from shareholders to significantly increase its authorized shares—from 330 million to 10.3 billion for Class A common stock—enabling it to pursue further equity offerings. This decision aligns with the company’s ongoing efforts to maintain liquidity and support its ambitious Bitcoin acquisition strategy without needing to liquidate its holdings. Saylor emphasized the company’s liquidity position, asserting, “We’ve had and expect to continue to have ample access to liquidity through our capital markets activities and cash flows from operations.” The firm’s co-founder further reassured investors that the company has no intention of selling its Bitcoin to meet interest obligations, reinforcing MicroStrategy’s commitment to its cryptocurrency strategy. Featured image from DALL-E, chart from TradingView.com
In January 2024, Cramer said that bitcoin was likely topping out and called for an exit. The asset has surged more than 100% since.