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Sell the News: MicroStrategy Plunge Deepens in Days Following Nasdaq-100 Inclusion

Published

2 месяца ago

30 декабря, 2024

In retrospect, it was inevitable.

Down more than 8% and holding just above $300 on Monday, MicroStrategy (MSTR) shares are now lower by about 30% since just after the announcement of their inclusion into the Nasdaq-100 index and nearly 50% from their late November record high.

The signs of at least a major short-term top in one-time barely known enterprise software company turned juggernaut Bitcoin Development Company MicroStrategy were everywhere.

First among those signals was the rocketing stock price — at its high of $543 in late November, MSTR was up nearly eight-fold in 2024 and more than a 50-bagger since the company began buying bitcoin (BTC) in August 2020.

There was also founder and Executive Chairman Michael Saylor — never shy about promoting his company’s prospects and evangelizing for Bitcoin — who late this year had somehow become even more ubiquitous on the financial news, podcast and social media carousels.

It wasn’t just the constant appearances, but subtle changes in Saylor’s attitude to what might charitably be described by U.S. sports fans as «spiking the football» following a touchdown. Among them was the constant promotion of the MicroStrategy-invented key performance indicator of «bitcoin yield,» which recalled late 1990s made-up internet bubble metrics like «page views.» His company flush with cash from share and convertible debt sales, Saylor — for reasons unknown — late in the year also got in the habit of teasing announcements of sizable new bitcoin purchases on the Sunday prior to the official regulatory filing on Monday morning.

And then there was the emergence of copycats. Despite years of the obvious success of Saylor’s bitcoin treasury strategy, there had been a decided lack of other publicly traded corporates adopting the same. Yes, a few — even large-caps like the Elon Musk-led Tesla and Jack Dorsey-led Square — had dipped their toes into bitcoin acquisition. No other company of note, though, was willing to not only adopt bitcoin as their main treasury asset but take advantage of willing markets to raise additional capital with which to accumulate tokens.

That changed in a sizable way this year however, with small cap medical device maker Semler Scientific, Japan hotel operator Metaplanet, and a number of bitcoin miners among those embracing the Saylor vision — each of them earning social media plaudits from Saylor with every capital raise and bitcoin purchase announcement.

If something cannot go on forever, it will stop

Not content with being maybe the greatest trader ever and accumulating many billions of dollars, George Soros wanted to be known as a great thinker. It’s no coincidence that his magnum opus on trading — the Theory of Reflexivity — sounds suspiciously similar to a famous theory from a fellow named Einstein.

Soros explained that investor perception and its effect on prices is a constant two-way street. In this way, perception (which is often wrong, as humans are fallible) can not just influence prices, but literally create its own reality, i.e. 1) investors believe a stock will go higher because earnings are about to get a big boost, 2) the stock price goes higher, 3) the high stock price allows management to raise capital at a cheaper cost than otherwise, 4) this improves earnings, 5) the stock price goes even higher, 6) the bulls pat themselves on the back for their brilliance and win over converts, … and so on.

Strip away much of Soros’ philosophy and this is also known as a virtuous circle, in which MicroStrategy had surely found itself in 2024. Part of Soros’ trading genius was recognizing these circles when they were happening and jumping on — in size. Another part of his genius was figuring out when the circles were about to break and getting out or even betting against them.

«If something cannot go on forever, it will stop,» said the late economist Herb Stein, who at the time was talking about government budget/trade deficits. Stein’s Law, it turns out, was equally applicable to MicroStrategy shares.

Scoreboard: still showing remarkable gains

Changing hands at about $430 just after the Dec. 14 announcement of its coming inclusion into the Nasdaq-100 Index, MicroStrategy is now selling at just above $300, a decline of roughly 30% in just two weeks.

Looking back, there appear to have been cracks in the MicroStrategy bubble three weeks earlier. The stock peaked at about $543 on Nov. 21. Despite bitcoin’s continued rise through late November and early December to an ultimate high above $108,000, MSTR lost ground — what technicians might call a troubling negative divergence. At the current $300, MicroStrategy for the moment is suffering a peak-to-trough drop of 45% in about five weeks.

MSTR shares have still put in a remarkable performance under anything except that very tiny time frame. They remain higher by more than 400% year-to-date and about 20-fold from the time Saylor initiated bitcoin purchases in August 2020.

While the bears might thus say the plunge has far to go, the bulls would surely point out that during MSTR’s run since August 2020, the stock has suffered a number of similar scary short-to-medium term declines and has always resolved higher.

What would Soros say? Just possibly, he would remind that his Theory of Reflexivity taught that prices can go further (both upward and downward) than most could possibly expect.

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U.S. Law Enforcement Seizes $31M in Crypto Tied to Uranium Finance Hack

Published

3 часа ago

24 февраля, 2025

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U.S. authorities have seized about $31 million in crypto tied to the 2021 hack of Uranium Finance, according to a Monday X post from the Southern District of New York (SDNY).

According to the post, the seizure was the result of a joint effort between SDNY and Homeland Security Investigations (HSI) in San Diego. A spokesperson for SDNY did not return CoinDesk’s request for comment before press time, and no further details about the seizure or any related investigation were immediately available.

Uranium Finance was essentially a clone of automated market maker (AMM) Uniswap deployed on Binance’s BNB chain (then called Binance Smart Chain). In April 2021, a hacker exploited a bug in Uranium’s pair contracts to steal $50 million in various tokens. At the time of the incident, the Uranium Finance hack was one of the largest monetary exploits in decentralized finance (DeFi) history.

After the exploit, the hacker attempted to launder a portion of the funds in a variety of ways, including using crypto mixer Tornado Cash, depositing small amounts of crypto into centralized exchanges, and, according to blockchain sleuth ZachXBT, perhaps through purchasing rare and highly valuable Magic: The Gathering trading cards.

Uranium Finance shuttered after the hack, leaving victims without answers or financial restitution. The partial recovery, which comes nearly four years after the initial attack, offers the first glimmer of hope for victims to see some of their money returned.

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Ethereum’s Pectra Upgrade Goes Live on ‘Holesky’ Testnet, But Fails to Finalize

Published

3 часа ago

24 февраля, 2025

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Ethereum’s Pectra upgrade went live on the Holesky testnet on Monday but failed to finalize in the expected time.

Pectra was activated on the Holesky testnet at 21:55 UTC (4:55 p.m. ET), but did not initially finalize according to blockchain data.

Finality is the state in which, once a transaction is confirmed and added to a block, it is immutable and cannot be reversed. A testnet is a network that copies a main blockchain (in this case Ethereum), and is used to test upgrades or new code before it goes to the main network.

It is not immediately clear why the Pectra upgrade did not finalize on Holesky. Ethereum developers were discussing Monday over the Eth R&D Discord channel what the issue could be.

This is not the first time an upgrade has not finalized on an Etheruem test network. In January 2024, when the developers were testing the Dencun upgrade, the hard fork did not initially finalize on the Goerli testnet.

What is Pectra?

The Pectra hard fork combines together 11 major upgrades, or «Ethereum improvement proposals» (EIPs), into one package. At the heart of this is EIP-7702, which is supposed to improve the user-experience of crypto wallets. The proposal, which was scribbled by Ethereum co-founder Vitalik Buterin in just 22 minutes, will allow wallets to have some smart contract capabilities, as part of a broader strategy to bring account abstraction to Ethereum — a concept that makes the usability of wallets a lot less clunky.

Another key proposal, EIP-7251, will allow validators to increase the maximum amount they can stake from 32 to 2,048 ETH. The proposal is supposed to ease some of the technicalities that validators who stake ETH face today: Those that stake more than their 32 ETH have to spread that across multiple validators, making the process a bit of a nuisance. By lifting the maximum stake limit and combining those validators, it could speed up the process of setting up new nodes.

Holesky is the first of two testnets to run through a simulation of Pectra. The next test is supposed to occur on the Sepolia testnet on Mar. 5. But according to Christine Kim, a Vice President of Research at Galaxy, developers could delay it depending on the scale of today’s issue.

After Pectra goes live on both testnets, developers will ink in a final date to activate the upgrade on mainnet.

Pectra was originally on track to be Ethereum’s biggest upgrade to date, and it’s the first big change to the blockchain in almost a year. Developers decided that Pectra was too ambitious, and they agreed to split the original package into two.

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Bitcoin Slips Under $94K as Stocks Try to Shake Last Week’s Jitters

Published

5 часов ago

24 февраля, 2025

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Bitcoin (BTC) continued to slide on Monday, hurt by not just by massive bearish price action in most of the rest of crypto, but also as U.S. stocks struggle to pull out of their recent downturn.

Falling to about $93,900 as stocks closed, bitcoin is down 1.9% in the last 24 hours. Ether (ETH) is lower by 5.9% over the same time frame. The broader CoinDesk 20 Index is down 5.1%.

Following last week’s major declines, an attempted rally by the major U.S. stock averages failed Monday afternoon, with the Nasdaq closing down another 1.2% and the S&P 500 0.5%.

The worst performer among the major cryptos was solana’s (SOL), down nearly 10% over the past 24 hours and a whopping 41% over the past month. In addition to its role in what appears to be a fading memecoin craze, SOL is also facing token unlocks in March and a 30% increase in SOL inflation due to the recent implementation of SIMD-96, which adjusted the network’s fee structure. At $151 at press time, SOL has now more than given up its post-election gains.

“Trying to communicate to folks who may be feeling complacency/denial that $95,000 is still not a bad exit price relative to where I think we could trade in 6-12 months,” Quinn Thompson, founder of Lekker Capital, a crypto hedge fund that specializes in using macroeconomic data for its trades, posted on social media.

Thompson estimated that there was an 80% chance that bitcoin won’t make new highs over the next three months and a 51% chance we won’t see new highs for even the next 12 months.

Turning to the U.S. economy, Neil Dutta, head of economic research at Renaissance Macro Research, said risks to the labor market are growing. Real incomes are slowing down, the housing market is getting worse, state and local governments are pulling back on spending. Worryingly, market consensus sees no economic slowdown in sight, with GDP median forecast at roughly 2.5%.

“If 2023 was about being surprised to the upside, there is more risk in 2025 of being surprised to the downside,” Dutta wrote.

“A passive tightening of monetary policy is the dominant risk and that has important implications for financial market investors,» Dutta continued. «I would anticipate a decline in longer-term interest rates and a selloff in equity prices as risk appetite wanes. For the economy, expect conditions to deteriorate in the jobs market.”