As fiat currencies compete in a race to the bottom, we stand on the precipice of a paradigm shift that will change the way we do business forever.
Even more than that, the very perception of money and intrinsic value is currently being explored and I could not think of a better time to be alive. Some might call this hyperbole and cynics might argue that nothing will ever truly change, but I beg to differ.
In this edition, we’ll take a look at MicroStrategy’s Michael Saylor doubling down on his massive bitcoin bet and the reasoning behind the firm’s move. On the technical front, bitcoin appears to have some juice in it as the number one crypto attempts to reestablish dominance above the $11,000 price-tag.
Let’s dig in.
MicroStrategy Doubles Down on Bitcoin bet
Business intelligence firm founder and CEO Michael Saylor announced on Twitter that the company was shooting for the starts with bitcoin, adding another purchase of $175 million worth of bitcoin at an average price of around $11,100.
On September 14, 2020, MicroStrategy completed its acquisition of 16,796 additional bitcoins at an aggregate purchase price of $175 million. To date, we have purchased a total of 38,250 bitcoins at an aggregate purchase price of $425 million, inclusive of fees and expenses.
– Michael Saylor (@michael_saylor) September 15, 2020
Speaking to CoinDesk, Saylor said: “I want something that I could put $425 million into for 100 years.”
In just two months, Saylor has transformed his company’s cash surplus into a near half a billion-dollar bet on bitcoin. After telling shareholders that cash was no longer a safe place for the company’s excess $500 million, Saylor went and bought an additional $175 million more bitcoin.
Forget about parking the balance sheet surplus in inflation-prone cash or low-yield bonds or overextended tech stocks, Saylor said. In a market like this — and in the future he said is certain to come — there are only two good places to put excess cash to work: stock buybacks and bitcoin.
Saylor also revealed that he “went down the rabbit hole” during COVID-19, and admitted that he “was wrong” to have doubted bitcoin back when it was priced at $600.
“I wish I knew then what I know now,” he continued.
At the time of writing, MicroStrategy has converted $425 million into bitcoin, and the stock has surged 30% since its first purchase on August 11th, up another 9% on Tuesday.
In truth, this is history in the making. While other publicly traded firms like Apple and Google stockpile excess capital in cash — leaving it there to dwindle for years due to inflation, Saylor had the “awful realization that we were sitting on top of a $500 million ice cube that’s melting.”
“This is not a speculation, nor is it a hedge,” said Saylor. “This was a deliberate corporate strategy to adopt a bitcoin standard.”
Daily HTF still in corrective territory
After 12 days embattled with the $10,000 region, bitcoin finally managed to push through $10,500 to rise above the 20-daily EMA in what appears to be a possible reversal or corrective move at the very least.
This came after the coin bounced cleanly off the 20-weekly EMA — which is often observed in a long-term bull run.
Since the move, bitcoin is now meandering just under $10,800 and is priming for continuation towards $11,000 pending some kind of catastrophic bitcoin-Esque pull-back.
A move towards $11,000-$11,200 would represent a .618 fib retracement from the original dump and would technically still represent a corrective move within a developing downtrend. However, should bitcoin conquer $11,000 and close several daily candles above it or on the level, then the probability for continued upside would increase significantly.
In such a scenario, it’s unlikely that $12,000 would offer any real resistance and price would likely cut through it like butter.
On the flipside, should momentum begin to wane below the pivot point, then a retest of $10,000 is highly likely. Until now, the CME-gap has been front-run but there’s a good chance that another test of the psychological level would cause a violent — albeit brief shake-out to fill the gap.
Since the daily time-frame informs the weekly though, a daily close below the 20-weekly-ema would force one to consider lower targets at the $9,150 level.
4-hour LTF flips bullish, suggesting $11,000 retest
Pending some kind of bipolar knee-jerk reaction to a headline or some externality, price is looking quite healthy on the 4-hour chart.
Here, we can see a clear support & resistance flip at the $10,600 level, which has notably turned into a cluster of supportive indicators that could act as a temporary floor. The BitMEX funding rate also remains slammed in negative territory, which could possibly act as rocket-fuel for another move towards the .618 fib level at the elusive $11,000 mark.
Briefly, these are levels to watch:
- $10,600 support / pivot point
- $11,000 resistance
- $10,000 support
If price breaches these levels and meaningfully closes above or below them, then that would inform a necessary change in bias on several time-frames.
May your gains be high and your losses low.
Catch you next time.