Hello, my friends! Welcome back to my latest analysis report.
In this report, I'll be discussing whether Bitcoin is in a perfect storm right now.
Bitcoin is now trading at around $60,000, dropping about 52% to 53% from its all time high, i.e. $126,000. We all noticed that we are in a bear market but what will trigger its final blow before finding its way back in a bull market? I shall discuss about the following three major headaches facing by Bitcoin:
1. The Debt Problem of MicroStrategy
MicroStrategy (now known as Strategy) is the undisputed Bitcoin whale and also one of the primary institutional buyers of Bitcoin. Unfortunately, they bought a lot of Bitcoin at an average price of $75,000 and hence their Bitcoin holding is currently underwater. Worse still, the company recently sold 32 Bitcoins to fund distributions on its preferred stock. The company's mNAV (multiple to net asset value) fell to 0.99, that means the company's valuation is now below the value of its Bitcoin holdings. This discount is sparking severe anxiety among investors, who fear MicroStrategy may eventually be forced to sell its Bitcoin holding to pay off its debt in the coming days. As long as such liquidation fear looms over the market, it will continue to act like a wet blanket on Bitcoin's price.
2. U.S Regulatory Crackdown
It is reported that the U.S. government discovered the Islamic Revolutionary Guard Corps (IRGC) had been using Bitcoin to bypass Western sanctions and fund war efforts. In return, the U.S government leveled heavy sanctions on Iran's biggest crypto exchanges, including Nobitex. So Bitcoin is now subject to close scrutiny for being utilized as an evasion tactics during global conflicts. Such level of U.S government scrutiny would entirely change the risk profile of Bitcoin for institutional investors since tighter rules and regulations may be imposed across both traditional banking and other crypto exchanges.
3. The Departure of South Korean
Finally, we all know that South Korean retail investors are famous for their extreme speculative energy and we had ridden the boat with them last year. However, they have completely jumped ship as they are all obsessed with the global AI boom. The Korean investors have been dumping their crypto holdings to pile their money into semiconductor stocks like Micron, Samsung and SK Hynix. So we lost their money to hold onto their Bitcoin holding and their raw energy to bump the price of Bitcoin.
What are your thoughts? Let me know where you find any flaws in the comments below!
