Tag: Bitcoin News

The famous bitcoin-loving company has continued to acquire more BTC amidst unstable market conditions.

MicroStrategy has maintained its position as the most significant corporate bitcoin holder. Despite uncertainty among other bitcoin and crypto investors, the company has remained optimistic about the crypto market. As announced today, it has spent $786 million buying 11,931 bitcoins.

MicroStrategy Adds 11,931 to its Bitcoin Holdings

MicroStrategy’s executive chairman, Michael Saylor, announced on his X (formerly Twitter) account that the company has bought 11,931 BTC for $786 million at approximately $65,883 per coin.

Before the purchase, Saylor revealed that the company would sell $500 million worth of convertible notes to raise more funds for bitcoin acquisition. After a few days, the company revealed a raise to $700 million. Consequently, through a press release earlier today, MicroStrategy announced the completion of $800 million worth of convertible notes due 2032. 

However, after deducting the initial purchasers’ discounts and commissions and estimated offering expenses payable by MicroStrategy, the notes were worth approximately $786 million, the exact price the company spent for acquiring bitcoins. 

The notes bear an interest of 2.25% each year. According to the agreement, interest is payable upfront on June 15 or December 15 of every year until 2032 if not repurchased. On the other hand, starting June 20, 2029, MicroStrategy can buy back the notes at a redemption price directly proportional to the principal amount of the notes. 

MicroStrategy Holds Almost 1.1% of Total Bitcoin Supply.

Following today’s purchase, Saylor’s company holds 226,331 bitcoins acquired at an average price of $36.798 per BTC. MicroStrategy’s bitcoin, purchased with approximately $8.33 billion, has gained over 80% and is currently worth $15 billion. 

MicroStrategy now possesses over 1.07% of the total bitcoin supply of 21 million BTCs and 1.14% of the circulating bitcoin supply of 19.7 million.

MicroStrategy started buying bitcoin in 2020 and has adopted the cryptocurrency as its primary reserve asset. Notwithstanding volatility in the crypto market, Saylor remains bullish about bitcoin and is helping the company acquire more. Following MicroStrategy’s footsteps, other companies like Semler Scientific have adopted bitcoin as a store of value. 

Bitcoin has not been on the green side for a few weeks now, as many factors, such as miner capitulation, U.S. interest rate data, and massive discharge by whales, affect its price. At press time, the cryptocurrency has struggled to stand above the $64k mark, trading at $64,800 per BTC. 

The price of bitcoin has dumped significantly within the past two weeks as Whales sold bitcoins worth more than $1.2 billion. 

Bitcoin’s recent rollercoaster ride, marked by high volatility and price instability, has left investors in disarray. With its value plummeting to $64,000, the situation has become a cause for concern, emphasizing the need to assess its short-term movement carefully. 

Seasoned Bitcoin holders, often called ‘whales,’ have wielded their influence in the market by offloading a significant portion of their holdings. Their moves have not only impacted the price of bitcoin but also had a ripple effect on bitcoin miners and ETFs, which have experienced negative days as holders divest their positions with no signs of replenishing amidst the bearish trend. 

Bitcoin Whales Sold Over $1.2 Billion BTC

Onchain data from analysis firm CryptoQuant reveals that bitcoin whales have cashed out more than $1.2 billion within the past two weeks, contributing to the bitcoin price plummet. 

In a post on X (Formerly Twitter), Ki Young Ju, CEO and founder of CryptoQuant, revealed that the sale was likely conducted through brokers, not on the open crypto market. He further cautioned that the sale has yet to impact the market entirely. If the substantial amount sold isn’t purchased over the counter, “brokers may deposit BTC to exchanges, impacting the market.” This stark warning serves as a reminder to bitcoin investors of the potential future effects of the sale, underlining the need for caution in these uncertain times.   

Furthermore, On-chain analyst Will Clemente has warned that bitcoin is approaching the $63,800 support, marking short-term holders’ cost basis. If the market trades below the range for a few consecutive days, this will indicate a significant downward trend.  

Bitcoin Miners and ETFs Join Bearish Trend

Following the just-concluded Bitcoin halving, miners have amplified the downward trend. Many weak and early ones recently sold about $550 million in an attempt to cover losses and mining expenses. This move has affected the miners and sent shockwaves through the market, underscoring the broader implications of the price drop.

Moreover, Bitcoin Exchange-Traded Funds (ETFs) have outflowed more than $700 million within the last four market days, with FBTC and GBTC leading the sale, further dumping the market. 

Bitcoin reserves held by miners have dropped 1.90 million bitcoin after starting the year with 1.95 million BTC.  

Bitcoin miner reserves have dropped to their lowest level since 2010 (14 years ago), which could cause a potential shift in the crypto market.  

As of June 2024, Bitcoin reserves held by miners have dropped 1.90 million bitcoin after starting the year with 1.95 million BTC.   

Lucas Outumuro, head of research at IntoTheBlock, noted that miners will continue to reduce their BTC holdings over time. He attributes the development to the halving events, which pressure miners’ profit margins and force them to sell more reserves.    

BTC and Miners 

Several factors contribute to this phenomenon. Notably, in Bitcoin’s proof-of-work consensus mechanism, miners earn newly minted bitcoin as rewards for validating transactions and securing the network. Miner reserves are the unsold bitcoins accumulated by these miners. Approximately every four years, the mining rewards undergo a halving that reduces the subsidy by half.   

The most recent quadrennial halving, which took place on April 20, 2024, cut mining rewards from 6.25 BTC to 3.125 BTC.   

Historically, when miners reduce their selling, it has often led to bullish trends in BTC’s price. Also, with fewer bitcoins sold on the market, the shift in supply demand can lead to price appreciation.   

Despite the reduction in mining rewards, the value of mining reserves in U.S. dollars has remained near its all-time high of approximately $135 billion, indicating that although miners hold fewer BTC, the dollar value of their reserves has increased, reflecting higher BTC prices.    

Reserve Drop Presents Opportunity and Challenges 

An April report by Coinshares predicts a surge in Bitcoin’s hash rate in 2025 following a dip after the recent halving. As bitcoin rewards decrease and competition increases, the amount of BTC produced per unit of hash power diminishes over time, leading to higher production costs. 

The development presents opportunities and challenges for investors. On the other hand, the potential for a price surge makes the digital asset an appealing investment, but the volatile nature of the market needs caution and prudent decision-making

United States Spot Bitcoin ETFs have outflowed $562 million within three market days. 

After a 19-day streak of inflows for Bitcoin Exchange-Traded Funds (ETFs), the market has taken an unexpected turn, with a massive sell-off of over half a million within just three market days. This sudden and unexpected shift has led to a more than 7% decrease in Bitcoin’s price over the last seven days, falling below $65,000. The uncertainty among U.S. investors following last week’s Federal Open Market Committee (FOMC) meeting has further contributed to this market volatility. 

Spot Bitcoin ETFs Outflows $562 Million

As Farside shows, Bitcoin ETFs suddenly switched to red days starting last week, recording outflows of more than $580 million. Its outflow streak has extended to this week, recording a $145.9 million outpour on Monday. 

Fidelity’s FBTC has led the outflow, selling $278.5 million of its ETF within the last three market days. It is closely followed by Ark 21Shares ARKB, which has seen an outflow of $151.7 million during the same period. In contrast, Grayscale’s ETF, known for its outflows, has only sold $116.8 million of its GBTC. 

BlackRock’s IBIT has undoubtedly remained on the green side, recording $19.7 million in inflows within the period. In contrast, Franklin Bitcoin ETF, EZBC, Valkyrie’s BRRR, and WisdomTree Bitcoin Fund, BTCW, have remained stagnant—only Bitwise’s BITB inflowed funds worth $2.9 million yesterday. 

FOMC Meeting Affects Inflows Into Bitcoin ETFs

Significantly, large outflows from Bitcoin ETFs last week were directly influenced by the FOMC meeting on Wednesday. The FOMC’s decision to retain the U.S. interest rate within the 5.25% to 5.50% range, contrary to investors’ expectations, triggered significant market movements. 

James Butterfill, Coinshares’ head of research, described the meeting as a “more hawkish-than-expected FOMC meeting, prompting investors to scale back their exposure to fixed-supply assets.”

Following the announcement, Bitcoin has significantly dropped in price, dragging other altcoins as the crypto market remains bearish. At press time, Bitcoin trades at $65,300, with other bearish candles being formed as investors continue to sell, leaving many market predictors and Bitcoin enthusiasts in perplexity. 

Stocks and bonds had outperformed bitcoin, which marks a reversal from the previous three months ending in March when digital assets surpassed traditional market returns.

Bitcoin reached a one-month low due to outflows from digital-asset investment products and concerns over prolonged high US borrowing costs, which weakened the crypto market.

The largest digital asset fell by 2.7% on Tuesday, June 18, hitting a level last seen in mid-May. It later cut some losses, trading at $65,740 as of 1:20 pm in Singapore. Smaller tokens, including Ether, Solana, and Dogecoin, also experienced declines. 

Over $600M Outflow Recorded 

According to data from CoinShares International, approximately $600 million was withdrawn from digital asset products last week, the largest outflow since March. Persistent inflation has prompted traders to reduce their expectations for Federal Reserve interest rate cuts this year, creating a challenging environment for speculative investments like crypto.   

Trading volumes for the week amounted to $11 billion, falling short of this year’s weekly average of $22 billion but marking a substantial increase from the $2 billion per week recorded last year.  

The outflows focused entirely on bitcoin, with withdrawals totaling $621 million. The bearish sentiment also prompted inflows of $1.8 million.  

During this quarter, stocks and bonds have outperformed bitcoin, which marks a reversal from the previous three months ending in March, when digital assets significantly surpassed traditional market returns.

Caroline Bowler, CEO of BTC Markets, commented, “Crypto is becoming increasingly exposed to macro triggers.” She also expressed optimism about its long-term outlook and prospects.   

New Listing Decline  

There has been a noticeable decrease in interest or demand in the crypto market, which has affected new coins like the ZK token. After its Monday listing, the token dropped by a third, joining other highly anticipated launches in sharp sell-offs.   

A recent local report in South Korea indicated that upcoming regulations, expected next month, might compel exchanges to reduce the variety of tokens accessible to investors. As a significant hub for smaller digital assets, known as altcoins, the nation’s potential regulatory changes have unsettled some traders. 

Since the beginning of 2023, bitcoin’s price has quadrupled, reaching a peak of $73,798 in March, driven by the growing demand for specialized US exchange-traded funds (ETFs). However, the recent cooling of the rally coincides with a slowdown in ETF inflows.  

MicroStrategy plans a $500M stock sale to acquire more BTC, underscoring its dedication to BTC as a treasury reserve asset. 

MicroStrategy, led by CEO Michael Saylor, has announced its plan to offer a $500 million private offering in convertible senior notes.    

According to the announcement, these notes, set to mature in 2032, are targeted at institutional investors. The firm intends to use the proceeds to acquire more bitcoin.  

MicroStrategy and Interest of the Notes 

The announcement states that interest on these notes will be paid semi-annually, with the first installment due in December 2024. The notes are set to mature in June 2032 unless they are converted, redeemed, or repurchased earlier. Starting in June 2029, MicroStrategy can redeem any portion of the notes as long as at least $75 million in aggregate principal remains outstanding.    

“The notes will be unsecured, senior obligations of MicroStrategy, and will bear interest payable semi-annually in arrears on June 15 and December 15 of each year, beginning on December 15, 2024. The notes will mature on June 15, 2032, unless earlier repurchased, redeemed, or converted in accordance with their terms,” the press release notes.  

However, conversion remains restricted until December 2031, when the notes become fully convertible before the maturity date. The development offers potential gains tied to MicroStrategy’s stock performance while protecting against downside risks due to the notes’ senior unsecured status.  

The press release states that the notes will be offered and sold to qualified purchasers in accordance with Rule 144A of the Securities Act of 1933, which implies that the convertible senior notes and any convertible shares of MicroStrategy’s class A common stock will not be officially registered with the Securities and Exchange Commission (SEC).  

Since they are not registered with the SEC, these securities cannot be bought or sold in public markets unless specific legal conditions are met.   

MicroStrategy’s choice to issue convertible notes rather than traditional debt instruments demonstrates its confidence in Bitcoin’s long-term potential. Additionally, the company offers investors incentives through the option of potential equity conversion. For instance, if MicroStrategy’s (MSTR) stock price rises due to its growing focus on the digital asset, investors could benefit from the rewards.    

MicroStrategy’s Previous Acquisitions

Meanwhile, on April 9, 2024, MicroStrategy added 112 BTC to its portfolio. On March 19, 2024, the firm acquired 9,245 BTC, worth $623 million.  

On March 11, 2024, the firm also purchased 12,000 bitcoins, valued at $821.7 million at an average price of $68,477 per BTC.

The lower inflation numbers have created optimism about the economic outlook and the potential for a more relaxed stance on interest rates from the Federal Reserve.

The highly anticipated U.S. Consumer Price Index (CPI) data released on Wednesday showed that U.S. inflation stayed at 0.3% in May, higher than the market expected. Investors and analysts were keenly awaiting this inflation data to understand the current state of the economy and predict the possible actions of the U.S. Federal Reserve regarding interest rates.

According to the U.S. Bureau of Labor Statistics, the CPI for May remained at 0.3%, while the market had predicted it would drop to 0.1%. Although there was a slight increase, the overall CPI inflation decreased to 3.3% in May from 3.4% in April. Additionally, the Core CPI, which excludes food and energy prices, dropped to 0.2% in May from 0.3% the previous month. Core CPI inflation also decreased to 3.4% for the year from 3.6% in April. These signs of cooling inflation have led to market optimism.

May CPI Spark Optimism in the Crypto Market

The lower CPI inflation numbers have boosted investor sentiment, leading to a rally in the cryptocurrency market, including Bitcoin. The positive data has led the market to expect a more lenient approach from the Federal Reserve on interest rates. Following the CPI release, Bitcoin’s price increased by over 4% to $69,980 after a slow week, with a low of $66,123.60 in the past 24 hours. Bitcoin Futures Open Interest also grew by 2.29% to 523.38K BTC, worth $36.37 billion, according to CoinGlass.

The altcoin market also saw gains. The price of Ethereum rose nearly 3% today to $3,637.36, while Solana’s price increased by about 4% to $158.43. These gains in the cryptocurrency market reflect the overall positive sentiment among investors due to the cooling inflation figures. The lower inflation numbers have created optimism about the economic outlook and the potential for a more relaxed stance on interest rates from the Federal Reserve. This has, in turn, fueled a rise in the prices of cryptocurrencies as investors seek higher returns.

As the largest bank in Latin America, the adoption of bitcoin trading could influence other banks around the world to consider a similar strategy  

Brazil’s largest bank, Itaú Unibanco, has launched bitcoin (BTC) trading for its 60 million customers. This means users can now buy, sell, and hold the crypto asset directly through the bank’s online platform and mobile app.   

The bank’s decision to offer bitcoin trading services reflects a significant trend of the growth, acceptance, and integration of crypto into the traditional financial landscape.   

An X user noted that the recent development could significantly impact the entire crypto market, particularly Latin America. Another mentioned that the launch could legitimize Bitcoin and other crypto assets in the sights of traditional investors who might have hesitated.   

Introducing Bitcoin to Customers

The launch of bitcoin trading seeks to offer the bank’s customers a smooth and secure access the world’s leading cryptocurrency. Customers will enjoy the convenience of handling and managing their Bitcoin transactions through their existing bank accounts alongside traditional financial services.    

As the largest bank in Latin America, adopting bitcoin trading could influence other banks worldwide to consider a similar strategy. The bank further noted that it has ensured that the trading process is user-friendly, transparent, and secure.     

Experts Bullish on Bitcoin

The development comes after Robert Kiyosaki, the famous American author of “Rich Dad Poor Dad”opined that BTC will reach an unprecedented high of $350,000 in the next two months.   

The famous author noted that his prediction about the digital asset is based on his extensive knowledge and experience, which has prompted him to advise investors to consider acquiring more bitcoin.  

Showing the growth and acceptance of bitcoin, an analyst in Standard Chartered Bank, Geoffrey Kendrick, also predicted that the digital asset will reach $100,000 to $150,000 by the end of the year.  

Furthermore, the healthcare company Semler Scientific acquired 581 BTC, valued at approximately $40 million. The firm also adopted bitcoin as its primary treasury reserve asset. The firm now holds 828 BTC worth $17 million and plans to invest $150 million more.    

At the time of writing, the crypto asset is trading below $70,000, with a market cap of $1,366.76 billion. Investors are hopeful about the digital asset’s rise. 

Since the weekend, bitcoin and the cryptocurrency market have been on a downtrend as investors sell off their holdings, awaiting an excellent opportunity to buy back. 

Before the end of Friday, bitcoin’s market structure underwent a sudden and drastic change, sending shockwaves. The cryptocurrency plummeted by nearly 5%, shifting from $72,000, a mere 2.5% away from its previous all-time high, to $68,500 within seven hours. Despite the hopes for a recovery before the new week, it has declined to $66,750 per BTC, forming a significant number of bearish candles.

Here are three (3) why bitcoin and other cryptocurrencies have declined recently.

Three Reasons Why Bitcoin is Dumping

Traders await the Consumer Price Index (CPI) report. Bitcoin dropped below $68,000 this morning as traders expressed anxiety over what to expect from the CPI report and Fed decision, which will be released on Wednesday. 

Considering the recent forecast on May CPI, traders fear that interest rates will remain elevated for a long time, making it difficult for cryptocurrency investments to thrive, as traditional investments may seem more promising and attractive to investors, reducing demand for cryptocurrencies. 

Spot Bitcoin ETFs record first outflow in 20 days. After a long inflow streak that lasted for 19 days, U.S. spot bitcoin ETFs have witnessed an outflow of $64.9 million.  Data from Farside shows that four U.S.-approved spot bitcoin ETFs recorded outflows worth $78.8 million on Monday, with Grayscale leading the sell and discharging about $39.5 million worth of bitcoins. 

However, BlackRock’s IBIT and Bitwise’s BITB recorded inflows of $6.3 and $7.6 million, respectively, leaving other ETFs dormant.

Miner Capitulation. Following the last Bitcoin halving, mining rewards have been divided into two, reducing to 3.125 BTC per block. This poses a challenge for weak miners, who struggle to remain in profit after running on high operational costs. These miners are moved to sell off Bitcoin reserves to mitigate losses or cover expenses. The selling pressure has contributed to the recent dump in Bitcoin’s price. 

However, historical data reveals that miner capitulation is always short-lived, and the price of bitcoin recovers. Weak miners will exit the industry, while stronger ones will gain more profits as they will have fewer competitors. 

Investors Remain Optimistic Despite Bitcoin Dump

Notwithstanding the recent downtrend in the cryptocurrency market, investors and analysts await a bounce back or change in market structure resulting from higher inflows into digital assets. 

Renowned financial giant Robert Kiyosaki, known for his bitcoin optimism, has predicted that BTC will surge to $350,000 within the coming two months. Similarly, Jack Dorsey, former CEO of Twitter, envisions bitcoin at $1 million in a few years.     

The increase in bitcoins being sold has caused a temporary dip in prices, which is seen as a necessary step to remove less efficient miners from the market.

The Bitcoin market is facing a downturn, partly due to a rare event known as miner capitulation, as highlighted in a recent X post. This event occurs approximately every four years during the halving event and significantly impacts the cryptocurrency landscape by cutting mining rewards in half.

#Bitcoin undergoing a rare miner capitulation. This one is from the halvening event, culling weak miners. As they die, they dump BTC, price rebounds afterwards.

But first we need to purge the degen open interest in futures bets. Liquidations need to happen before a pump. pic.twitter.com/xsSdg5QMsP

— Willy Woo (@woonomic) June 10, 2024

The latest halving reduced rewards from 6.25 to 3.125 bitcoins per block. This drastic reduction makes it increasingly difficult for less efficient miners to cover their operational costs. Consequently, many of these miners are forced to cease their mining activities and sell off their Bitcoin holdings, leading to an increased supply in the market and exerting downward pressure on prices.

This increase in bitcoins being sold has caused a temporary dip in prices, which is seen as a necessary step to remove less efficient miners from the market. This “dumping” phase is crucial for maintaining a healthy market equilibrium. At the same time, the futures market is experiencing a surge in liquidations. Futures contracts allow traders to speculate on Bitcoin’s future price and have seen high open interest. This means many traders have active positions, which increases volatility. Recent price movements have triggered these liquidations, forcing traders to close their positions due to insufficient margins and causing abrupt price drops.

The Fed’s Decision Anxiety

The upcoming inflation data and the Federal Reserve’s outlook could further increase worries about high interest rates, negatively affecting speculative assets like cryptocurrencies. The Federal Reserve’s stance on interest rates is particularly influential. Despite recent rate cuts by the European Central Bank and the Bank of Canada, strong U.S. labor data suggests that the Fed might adopt a more hawkish approach, potentially prolonging the period of high interest rates.

Despite these challenges, many industry experts remain optimistic about Bitcoin’s long-term prospects. Historical trends suggest that Bitcoin often experiences robust recoveries following periods of miner capitulation and market liquidations. As the market stabilizes post-capitulation, the reduced selling pressure and improved market conditions are expected to drive a price rebound. This resilience highlights Bitcoin’s potential to recover and thrive after significant market disruptions.