There is no denying that Bitcoin has underperformed this cycle. It appeared that all the cards were lining up perfectly for it to finally break through and have a potential “super cycle.”
Trump became the first U.S. president to strongly advocate for Bitcoin and even vowed to create a nation bitcoin strategic reserve. There was real momentum that the US government would finally give us clarity about the crypto industry. But it was the introduction of Spot Bitcoin ETFs and the creation of several Bitcoin treasury companies that had the market dreaming about just where prices may be going. Once nation-state game theory and constant accumulation by these treasury companies were taking place, there was a real belief that a sudden supply shock of Bitcoin would happen soon.
Experts in the cryptocurrency market had been declaring that one of the largest transfers of wealth that the world had ever seen would soon be occurring. Those who had been consistently investing in this market throughout the years would be reaping the rewards.
Yet as we now know, Bitcoin topped out at $124k, doing just a 2x from the previous all-time high, leaving many investors disappointed.
“You either die a hero or live long enough to become the villain.”
I have had the belief for quite a while that there are no gods in Bitcoin. Each time the market builds someone up to be their savior, a person who will pump the price of their BTC bags up so that they can finally make life-changing wealth. That is the exact moment they quickly become the “main character” and one of the biggest threats to Bitcoin.
The most recent person to take on this role has been Michael Saylor.
If you aren’t aware, Saylor was the Founder/CEO of MicroStrategy, now called Strategy. His company was one of the first to publicly announce that it had begun putting Bitcoin on its balance sheet. He took it a step further by essentially shifting the focus of Strategy to becoming the first Bitcoin treasury company.
At first, everyone was incredibly bullish. This was only the beginning. Surely Michael Saylor was setting the trend, and several other companies would follow suit. Every few weeks, Strategy would announce that they had bought even more Bitcoin. Bitcoin holders cheered them on; we viewed this as a catalyst that would ignite the bull market.
The problem is that Strategy kept on buying and buying and buying even more. Recently, they had accumulated nearly 900,000 BTC, and this began to sound the alarm bells for many.
One single company had accumulated over 4% of the total supply of Bitcoin, and it didn’t appear to be slowing down anytime soon. Instantly making them one of the clear potential FUD scenarios if they were to become sellers.
Accumulating a significant amount of Bitcoin in and of itself isn’t the real problem in this situation. It’s the extra leverage that they took on to be able to do this.
To gain access to even more capital to buy Bitcoin, Strategy launched a preferred stock called Stretch. (STRC). This preferred stock featured a variable dividend rate that was adjusted monthly with the goal of keeping the share price near $100. The further the price dips, the higher the dividend that Strategy must pay to its holders.
What can go wrong often will. Perhaps it was due to the current Bitcoin bear market, or maybe to traders gaming the monthly dividend payments, and some even argue that some powerful financial players had been hunting Saylor in an attempt to liquidate him.
No matter what the real answer is, the truth is that the price of STRC recently dipped all the way down to $72. Putting extreme financial pressure on Strategy to be able to pay its monthly dividends.
When a single company owns nearly 900,000 BTC, the entire world begins watching to see what it will do. There was a real fear that if Strategy began selling significant amounts of Bitcoin, it could cause a price panic that would send the price of BTC into a downward spiral. Everything was beginning to reach a boiling point.
Then finally, the announcement came that everyone had been waiting for. Strategy sold 3,588 Bitcoin for about $216 million between June 29 and July.
Initially, the price of BTC did drop, but the bullish factor is that it has recovered and even began increasing.
Sometimes the fear of something horrible happening can actually be worse than it actually occurring.
The market was concerned that there was a high chance that Saylor may continue to act irrationally. That he would essentially bet everything on hoping Bitcoin’s price would go up quickly, rather than making the responsible decision to sell some Bitcoin to fund the company's dividends. The price of STRC, while still not out of the woods, has already recovered to $85.
The first time you pull off the band-aid is always the worst.
The market’s biggest fear of Michael Saylor actually selling Bitcoin had taken place, and now each subsequent time should have less of an effect on the market.
The reality is this development alone won’t be enough to pump the price of Bitcoin, but you should never discount the impact when one of the largest FUD or fear cases surrounding an asset is eliminated. I truly believe the continued fear around Strategy and STRC was holding the BTC market back.
Now that this situation is in the rear-view window, Bitcoin can finally begin to move on. I believe that we have reached the end of the crypto bear market. Bitcoin’s price has bottomed, and bullish days will soon be ahead. Currently I’m doing everything I can to accumulate as much as I can before the bull cycle begins again. Your chance to accumulate Bitcoin cheaply is running out.
How about you? Do you think the fear surrounding Michael Saylor and Strategy was holding back the price of Bitcoin?
As always, thank you for reading!
