We did it once more!
Pete and I went stay once more final evening to deliver you vital particulars a few MAJOR transfer that’s about to occur within the crypto area this coming Monday.
There’s nonetheless time so that you can rewatch final evening’s pressing Zoom briefing right here 👇.
The final time we did this bitcoin (BTC) rocketed up practically 10% in just one week.
And I imagine an excellent greater transfer transfer might occur as quickly as subsequent week…
So I assumed I’d use at present’s situation to arrange you for what’s coming.
Let’s begin with MicroStrategy (Nasdaq: MSTR) a business-intelligence software program firm that’s been round for over three many years.
You might need seen MicroStrategy within the information not too long ago, but it surely’s not for something the corporate is doing within the software program sector.
That’s as a result of MicroStrategy is barely a software program firm anymore.
Keep in mind how huge a deal it was final week when Microsoft shareholders voted on whether or not the corporate can buy bitcoin as an asset class?
Effectively, MicroStrategy has been shopping for bitcoin for practically 5 years.
Again in 2020 MicroStrategy’s then-CEO Michael Saylor made the daring choice to start out buying bitcoin as a possible hedge in opposition to inflation.
And the corporate stored shopping for bitcoin — at the same time as its value fluctuated.
It was a dangerous transfer. However to date the choice has paid off in spades for MicroStrategy.
As chairman, Saylor has overseen a large surge within the firm’s inventory value over the previous 5 years.
This yr alone the corporate’s shares are up as excessive as 521%.
In fact, this unimaginable inventory story has nothing to do with the corporate’s software program enterprise.
By one estimate, MicroStrategy’s worth per share of its software program enterprise represents solely 0.3% of the inventory value.
However the firm’s bitcoin enterprise is booming!
It’s so vital to MicroStrategy’s enterprise that the corporate needed to provide you with a brand new efficiency indicator.
It’s referred to as “bitcoin yield.”
And it tracks the share change over time within the ratio of the corporate’s bitcoin holdings to its assumed diluted shares excellent.
However you don’t want to grasp how “bitcoin yield” works to grasp why I urged Pete to affix me for an additional stay briefing final evening.
All it is advisable know is that MicroStrategy now owns greater than 2% of bitcoin’s whole provide…
A provide that’s capped at 21 million cash.
And that brings me to Monday’s huge transfer…
What’s Occurring On Monday?
On December 23, MicroStrategy will enter the Nasdaq-100.
It’s a inventory market index reserved for the biggest 100 nonfinancial firms within the full Nasdaq Composite Index by market capitalization.
And it’s an enormous deal.
You see, MicroStrategy turned eligible to affix the Nasdaq-100 as a result of it’s technically a software program firm.
However as I simply confirmed you, it owes most of its market cap to the corporate’s bitcoin funding technique.
MicroStrategy’s market cap is up from round $1.4 billion on August 11, 2020 when the corporate first purchased bitcoin to round $93.9 billion as of Monday.
That’s a achieve of over 6,600%.
Clearly, one of many predominant components behind this enormous achieve is bitcoin’s current surge to over $107,000.
MicroStrategy’s impending Nasdaq-100 Index membership announcement additionally lifted the inventory.
But it surely’s HOW the corporate acquired bitcoin that we must always concentrate on.
As a result of MicroStrategy was in a position to make all these bitcoin purchases by leveraging debt.
It bought inventory and different convertible-debt choices to assist finance its bitcoin purchases.
In different phrases, the corporate has created a sort of infinite cash loop.
As its inventory value goes up… it’s in a position to purchase extra bitcoin.
As bitcoin’s value goes up… it’s in a position to purchase extra bitcoin.
And now that the corporate is becoming a member of the Nasdaq-100 quite a lot of establishments with ETFs that mirror the Nasdaq-100 will begin shopping for MicroStrategy…
And that can trigger its inventory value to go up.
As its inventory value goes up… it’s in a position to purchase extra bitcoin.
Do you see what’s occurring right here?
It’s like an infinite cash loop.
Right here’s My Take
MicroStrategy has the largest company portfolio of digital belongings on the earth.
Its explosive development exhibits how a cryptocurrency-driven company technique can work…
And its entry within the Nasdaq-100 proves that its high-risk bitcoin method can achieve market acceptance.
Like I instructed you final week about Microsoft’s vote…
It’s not a matter of if, it’s a matter of when shopping for bitcoin as an asset appeals to a serious company.
Possibly it’s Amazon or Apple. Possibly Microsoft’s shareholders finally relent.
However it’ll occur.
Within the quick time period, I see Microstrategy’s huge transfer to the Nasdaq-100 doing two issues.
One is that it might trigger an enormous spike in bitcoin like we noticed final week.
Second — and extra vital over the long run — is that it proves that bitcoin is a professional type of collateral.
We entered 2004 with a brand new bitcoin ETF that confirmed of us it’s OK to spend money on bitcoin now.
We’re ending the yr by exhibiting of us it’s not simply one thing you possibly can spend money on…
However one thing that you could borrow in opposition to.
Both approach, I see bitcoin going up and to the suitable.
And as we’ve seen earlier than…
When bitcoin goes up smaller cash are inclined to make even greater strikes.
My concern is that for those who wait till Monday you would possibly miss out on the 4 altcoins I’ve recognized that would make the largest strikes.
So for those who haven’t seen it… ensure that to click on on this hyperlink to look at final evening’s pressing Zoom briefing.
Regards,
Ian King
Chief Strategist, Banyan Hill Publishing
