Crypto Biz: Did Michael Saylor buy the Bitcoin bottom for once?

Business intelligence firm MicroStrategy is showing no signs of backing down on its Bitcoin gambit. Right around the time that Sam Bankman-Fried was being exposed as a fraud, MicroStrategy was scooping up more Bitcoin (BTC) — this time, the firm bought as close to the bottom as it’s ever gotten. While Bitcoin can always go lower, seeing a MicroStrategy buy around $17K is refreshing. Interestingly, MicroStrategy also sold some BTC earlier this month — but not for the reason you think (more on that below.)

The final Crypto Biz newsletter of 2022 discusses MicroStrategy’s Bitcoin buy, Fidelity Investments’ foray into the metaverse, Changpeng Zhao’s response to haters and the collective woes of Bitcoin miners.

MicroStrategy adds to Bitcoin stake despite steep loss

Business intelligence firm MicroStrategy scooped up 2,395 BTC at an average price of $17,181 between Nov. 1 and Dec. 21. (I know the bottom was sub-$16,000 but this is pretty close for MicroStrategy). It subsequently sold 704 BTC at a loss to offset previous capital gains. A few days later, the company bought an additional 810 BTC, bringing its total holdings to 132,500 BTC. MicroStrategy’s chief Bitcoin evangelist Michael Saylor has been adamant that his firm plans to convert its fiat holdings into BTC for the foreseeable future and will continue to hold the flagship digital asset indefinitely. The current value of MicroStrategy’s Bitcoin is $2.2 billion versus an overall cost basis of over $4 billion, according to Bitcoin Treasuries. That’s pretty brutal.

MicroStrategy has increased its #Bitcoin Holdings by ~2,500 #BTC. As of 12/27/22 @MicroStrategy holds ~132,500 bitcoin acquired for ~$4.03 billion at an average price of ~$30,397 per bitcoin. $MSTRhttps://t.co/lcMeULcGQk

— Michael Saylor⚡️ (@saylor) December 28, 2022

Public Bitcoin mining companies plagued with $4B of collective debt

Last week, we raised awareness about the impact of crypto contagion on Bitcoin miners. Mining companies are in a worse position than initially thought. Public miners have accumulated more than $4 billion in collective debt, which is hardly sustainable given the extent of the current bear market. Running debt to fuel business operations and expand capacity sounded like a good idea during the 2021 bull market. Now, these debt levels are a major risk. Case in point: Core Scientific, the biggest debtor among miners, recently filed for Chapter 11 bankruptcy. Check out how much money the other big mining firms owe.

CZ addresses reasons behind Binance’s recent FUD

Crypto exchange Binance has been in the news for all the wrong reasons. Its opaque management structure, shady proof-of-reserves report and allegations of “fraudulent concealment” in France have contributed to a coordinated FUD campaign against the company. (Or is the FUD in response to underlying issues at Binance?) Changpeng Zhao, also known as CZ, issued a series of tweets explaining why people are spreading fear, uncertainty and doubt about his exchange. In CZ’s view, the FUD was spread by external factors, including paid shills meant to make his exchange look bad. I’m not sure I buy it, but you can read his reasoning below.

3/ Some industry players view @Binance as competition. We have seen some go to extraordinary lengths to lobby against us, or loaning sums of money to small media that’s worth many times the media outlet's market value, including buying their CEOs houses, etc.

— CZ Binance (@cz_binance) December 23, 2022

Fidelity plans NFT marketplace and financial services in the metaverse

While crypto investment activity may be nonexistent among big institutions, one major player is expanding its exposure to the sector. Fidelity Investments, which has long been bullish on Bitcoin and digital assets, recently filed trademark applications for several Web3 and nonfungible token products in the metaverse. Fidelity said it’s exploring a range of investment services within virtual worlds, including retirement funds, mutual funds and financial planning services.

Before you go: What does 2023 have in store for crypto?

By most measures, 2022 was an awful year for crypto. 2023 can’t get any worse… or can it? On this week’s Market Report, I sat down with fellow analysts Marcel Pechman and Joe Hall to discuss the year ahead in Bitcoin and digital assets. While I remain optimistic about Bitcoin’s future, 2023 could see a return to basics following the parade of failures and bankruptcies of the past year. You can watch the full replay below.