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We did it once more!
Pete and I went dwell once more final night time to carry you essential particulars a few MAJOR transfer that’s about to occur within the crypto house this coming Monday.
There’s nonetheless time so that you can rewatch final night time’s pressing Zoom briefing right here 👇.
The final time we did this bitcoin (BTC) rocketed up practically 10% in just one week.
And I consider a good greater transfer transfer may occur as quickly as subsequent week…
So I assumed I’d use right this moment’s challenge to organize 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 lately, however it’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.
Bear 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?
Nicely, 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 worth fluctuated.
It was a dangerous transfer. However up to now the choice has paid off in spades for MicroStrategy.
As chairman, Saylor has overseen a huge surge within the firm’s inventory worth 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 worth.
However the firm’s bitcoin enterprise is booming!
It’s so essential 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 know how “bitcoin yield” works to know why I urged Pete to hitch me for an additional dwell briefing final night time.
All that you must 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 most important 100 nonfinancial corporations within the full Nasdaq Composite Index by market capitalization.
And it’s a giant deal.
You see, MicroStrategy grew to become eligible to hitch 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 foremost 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.
However it’s HOW the corporate acquired bitcoin that we should always concentrate on.
As a result of MicroStrategy was capable of make all these bitcoin purchases by leveraging debt.
It offered inventory and different convertible-debt choices to assist finance its bitcoin purchases.
In different phrases, the corporate has created a form of infinite cash loop.
As its inventory worth goes up… it’s capable of purchase extra bitcoin.
As bitcoin’s worth goes up… it’s capable of purchase extra bitcoin.
And now that the corporate is becoming a member of the Nasdaq-100 numerous establishments with ETFs that mirror the Nasdaq-100 will begin shopping for MicroStrategy…
And that can trigger its inventory worth to go up.
As its inventory worth goes up… it’s capable of 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 planet.
Its explosive progress exhibits how a cryptocurrency-driven company technique can work…
And its entry within the Nasdaq-100 proves that its high-risk bitcoin strategy can achieve market acceptance.
Like I informed 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 significant company.
Perhaps it’s Amazon or Apple. Perhaps Microsoft’s shareholders ultimately relent.
However it would occur.
Within the quick time period, I see Microstrategy’s huge transfer to the Nasdaq-100 doing two issues.
One is that it may trigger a large spike in bitcoin like we noticed final week.
Second — and extra essential over the long run — is that it proves that bitcoin is a authentic type of collateral.
We entered 2004 with a brand new bitcoin ETF that confirmed people it’s OK to spend money on bitcoin now.
We’re ending the yr by exhibiting people it’s not simply one thing you may spend money on…
However one thing that you may 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 likely to make even greater strikes.
My concern is that if you happen to wait till Monday you may miss out on the 4 altcoins I’ve recognized that might make the largest strikes.
So if you happen to haven’t seen it… be sure to click on on this hyperlink to observe final night time’s pressing Zoom briefing.
Regards,
Ian KingChief Strategist, Banyan Hill Publishing
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