If you see the bitcoin charts, price has gone up a lot in the last few years but volume has tanked. Do I read this right that now crypto is basically a smaller market where a bunch of whales scam a ever dwindling but never completely disappearing flow of fools and marks?
I think a lot of the volume on spot BTC has gone to ETFs, DATs, perps, WBTC, and other derivatives, when a few years ago spot was really the only option. Hard to track total volumes now.
I suspect that most of the trades are off-chain now, due to blockchain being being complete and utter crap for fast transactions by design. So people are entrusting their tokens to the centralized entity and receive some IOUs from it, with which they trade and that centralized platform. Basically unlicensed banks recreated with all negatives of the bank and no benefits.
For those that don’t know, the point of the bitcoin holding strategy of MSTR is that they sell convertible notes to buy bitcoin, which is essentially a put against the US dollar (they’re making a profit from the US dollar losing value over time due to inflation, assuming bitcoin rises against it). The convertible notes can be purchased by institutional investors that aren’t allowed to buy bitcoin directly as indirect bitcoin exposure because the notes can be converted into MSTR shares
I'm seeing a 2% decline in Bitcoin prices over a year, and up 410% over 5 years. Tumbles if you're day-trading. It gets old hearing this regularly over the past 10 years.
If a company’s crypto holdings are worth more than its market cap wouldn’t that mean I should buy the stock as its enterprise value is higher than its current market cap? Unless of course it’s saddled with debt which this article alludes to but doesn’t explain since most of the purchases seem to be for share buy backs?
> If a company’s crypto holdings are worth more than its market cap wouldn’t that mean I should buy the stock as its enterprise value is higher than its current market cap?
Well, one question to ask is if the company can actually cash out their crypto holdings at the current market price? If they have substantial holdings of thinly-traded crypto, the answer is usually "lol".
Faith in the company matters too. You can't compel them to sell, and if you think the company is going to slowly drive itself into the ground, you probably don't want to give them your $$$. There are quite a few companies that traded below their book value for that reason. IIRC, Kodak is a current example. Want to bet on that?
You would need a mechanism to extract that value- i.e. the ability to strip the company apart for parts. Buying a non-controlling portion of shares doesn't give you that ability.
Indeed. The decision-making apparatus is sometimes so starkly separated from the stakeholders that there's no reason to believe that the balance sheet and the stock price are likely to be correlated at all in the future. If the company doesn't pay dividends, and can't be sold off for its assets, then what is the function of equity?
I find Wall St. baffling for all the usual reasons, but this one is too rarely discussed.
If you see them returning value to shareholders in the short term, perhaps. But some of these DATs are giving their leadership massive pay packages (up to $400M[1]) so IMO they will sit on their treasuries as long as possible paying themselves huge salaries to... hold Crypto.
It can be a good strategy but take a while to play out. I planned to buy GBTC when it was $8 in 2022 for that reason but managed to not do so, darn it. It's now $70.
More info on "Strategy", the company, which is supposedly the world's largest public Bitcoin holder.[1] "According to its most recent X post, the firm has raised $11.9 billion through common equity, $6.9 billion in preferred equity, and $2 billion in convertible debt."
The equity part includes listed stocks: STRF, STRC, STRE, STRK, and STRD. Those are on the NASDAQ, not crypto exchanges. Here's a long discussion of Strategy's strategy.[2]
They're leveraged, but the financing for the leverage is not from crypto markets, and has more strength behind it. The whole thing will come unglued if there's a prolonged drop in the price of Bitcoin, but they can ride through medium-length down periods.
Strategy's various stocks have dropped more than the price of Bitcoin.
I just want out. I don't know how to put this but at the deepest level what's happening right now is making me sick. So many people below the poverty line barely making it by and then you have this stuff and Wallstreet Bets. Michael Saylor tops them all. Decadent and depraved. S&P at all time records and SNAP benefits not being renewed. I hate it here.
> So many people below the poverty line barely making it by and then you have this stuff and Wallstreet Bets.
I agree the juxtaposition demonstrates how callous our society is - but would you agree that these are two entirely independent things, though? (i.e. we could have eliminated poverty while still having irrationally overpriced BTC; or maybe in the future when BTC's value eventually reverts back to 2 pizzas we will still have poverty and destitution.
I don't think it's independent. I think part of the reason for the rise of gambling in all its forms of late is a certain nihilism/despair among the younger generation (one that's not really unjustified; the median under-30 citizen now has no reasonable hope of ever owning a home anywhere where they could earn enough to support themselves, much less a family, for example).
In theory that would be great, but that isn't what is happening, it's getting progressively more debauched year after year. I'm not saying Stalinism or nothing, but I don't see the people with power doing anything beyond helping out the already wealthy. It's grotesque.
There's a subreddit called exactly that, r/iwantout. Turns out the grass is not actually greener on the other side, because, for many people, wherever you go, there you are, as the saying goes.
I don't expect it to be better, it's just soul crushing to see this happen in the place I grew up. Soul destroying. It's such a let down on a whole society scale. Maybe I would be less emotionally attached to what is going on somewhere else. This all just makes me feel like vomiting.
I mean this less about crypto directly and more about the current state of the economy and society. The K economy with the top living in over the top decadence while below it's living day to day, barely getting by for a huge number of people. Bitcoin hoarders are just the most glaring symbol of that.
This is unsurprising. Maxis won't care, because in theory they don't care about the price. The only people complaining about this are those who bought at the top and made unsound financial decisions.
If you couldn't tell the majority of crypto influencers were foreigners before Twitter/X disclosed their location, I don't know what to tell you.
Readit News
If that’s not what it’s doing, then it will eventually have no value.
Well, one question to ask is if the company can actually cash out their crypto holdings at the current market price? If they have substantial holdings of thinly-traded crypto, the answer is usually "lol".
Faith in the company matters too. You can't compel them to sell, and if you think the company is going to slowly drive itself into the ground, you probably don't want to give them your $$$. There are quite a few companies that traded below their book value for that reason. IIRC, Kodak is a current example. Want to bet on that?
I find Wall St. baffling for all the usual reasons, but this one is too rarely discussed.
1. https://unchainedcrypto.com/a-musk-style-reward-anthony-pomp...
Businesses (or parts of) can have negative value - still worked out pretty well for the execs there.
The equity part includes listed stocks: STRF, STRC, STRE, STRK, and STRD. Those are on the NASDAQ, not crypto exchanges. Here's a long discussion of Strategy's strategy.[2] They're leveraged, but the financing for the leverage is not from crypto markets, and has more strength behind it. The whole thing will come unglued if there's a prolonged drop in the price of Bitcoin, but they can ride through medium-length down periods. Strategy's various stocks have dropped more than the price of Bitcoin.
[1] https://cryptonews.com/news/strategy-reports-21b-raised-in-2...
[2] https://www.vaneck.com/us/en/blogs/digital-assets/matthew-si...
I agree the juxtaposition demonstrates how callous our society is - but would you agree that these are two entirely independent things, though? (i.e. we could have eliminated poverty while still having irrationally overpriced BTC; or maybe in the future when BTC's value eventually reverts back to 2 pizzas we will still have poverty and destitution.
Dead Comment
If you couldn't tell the majority of crypto influencers were foreigners before Twitter/X disclosed their location, I don't know what to tell you.