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Last week I wrote about MicroStrategy CEO Michael Saylor and his trend-setting move to convert his company’s treasury to bitcoin.
Here’s what happened next:
On Monday, Tesla announced it had converted ~10% of its cash reserves into bitcoin per its new treasury policy – thinly veiled behind the guise of accepting bitcoin as future payment for its cars (they need liquidity on hand to process payments). Though baked in to the SEC filing is this interesting nugget:
As an advocate of Bitcoin in the past, this is Elon Musk walking the tightrope of public markets. This decision and the language of the SEC filing is extremely strategic. He’s set his company up to own bitcoin as an inflationary hedge a la Michael Saylor while calming investor outrage (remember institutions see this as extremely questionable behavior) by hiding this behind a payments scheme. Win-win.
The result for Bitcoin was our first $10,000 daily candle:
From one rocket scientist to another
This might look like a rash decision by a CEO with history of doing bold things at the drop of a hat, but the seed for this move was planted back in December by none other than Michael Saylor himself…
Since January, Saylor has been very publicly sharing his playbook online through twitter, his company’s website, and a series of virtual webinars on buying Bitcoin as a public company.
If the wealthiest man in the world has directed his company to buy bitcoin, the only question that remains is simple: who’s next?
Wait, the Fed?
This week keeps on getting nuttier, in a weird turn of events the St. Louis Fed posted some very well done DeFi research via twitter:
While crypto-heads already agree DeFi will change the world, most people don’t even have a clue what DeFi even means. A well-written report like this coming from an institution of our nation’s monetary system is net-bullish and amazing validation for such a cool and nascent technology.
If you haven’t already I’d highly recommend reading the report.
It’s only Wednesday and already it’s been a wild week in crypto, don’t forget to check out the portfolio rundown for updates on market movements.
Forward and upward.
The Portfolio Rundown
The last week has been absolutely wild, alt season is in full swing. Notable movers this week are Cardano, Aave, and Ethereum.
Cardano has shot up as it works to reclaim it’s previous all-time high of $1.19 (a 54% move from current levels), one of the last remaining majors yet to do so and enter price discovery. I’m extremely excited about the huge growth after doubling down around $0.15 but this is a long term bet so I expect more of this to come, especially with Goguen set to launch in March.
Aave is leading the DeFi pack as a solid blue-chip project, at $6.29B in market cap it is certainly undervalued. At $61B in market cap, DeFi remains very small yet burns as one of the brightest use-cases in crypto currently and the only one generating meaningful revenue via fees. As alt season ramps I’ll be watching closely as that number grows.
Ethereum has broken out of its coil I talked about last week and is now discovering new levels in the $1,800 region:
The sky is the limit here as Ethereum works to make up ground lost to Bitcoin.
Shoutout to Bitcoin for entering price discovery after breaking through its all-time high and entering the high $40,000s
As Bitcoin sucks in more capital and climbs higher it’s important to remember the flow of funds that drives an alt season:
Fiat typically enters the crypto system as Bitcoin first. Gains in Bitcoin are harvested and dumped into large cap altcoins (mainly Ethereum). Gains here are pushed down through Mid Caps and then Low Caps. As these coins see huge volatility (net positive during an alt season) those gains are typically moved back to Bitcoin for stability. From there a portion is usually taken back to fiat as profits but the cycle will begin again.
The tl;dr here is that as long as Bitcoin is putting on weight in market cap alts will as well – there is never a shortage of traders hunting for 10-100x returns in thinly traded altcoins.
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Nothing in this email is intended to serve as financial advice. Do your own research.