MicroStrategy is bad at timing the market

Less than 30% of MicroStrategy's bitcoin investments, in terms of dollars spent, have happened at below $40,000 per coin.

Jack Raines

9/24/24 9:32AM

In case you missed it: MicroStrategy just bought another 7,420 bitcoin for $458 million, bringing the company's total holdings to 252,200 bitcoin worth approximately $9.9 billion, with an average cost of $39,266 per coin.

While bitcoin has smoked the stock market since MicroStrategy made its first bitcoin investment in August 2020, gaining 430% vs. an 82% gain for the Nasdaq 100 index (a 5.25x outperformance), the performance of MicroStrategy's holdings has been less impressive, only gaining a cumulative ~62%.

The reason for MicroStrategy's relative underperformance: inopportune investment timing. Real-time bitcoin dashboard Bitbo has tracked all of MicroStrategy's bitcoin purchases, showing the cash spent and number of coins purchased in each investment, and we can use those values to calculate the company's average price paid per coin each time.

Since MicroStrategy made its first bitcoin investment, there have been three multi-month periods in which bitcoin traded below $40,000: August 2020 through early February 2021, May 2021 through July 2021, and May 2022 through November 2023.

MicroStrategy only bought $2.7 billion of its $9.9 billion in bitcoin during these windows, which are highlighted below in red:

The other ~$7 billion, or more than 70%, of its bitcoin purchases occurred near market highs. This is despite bitcoin trading below $40,000 in 59% of days since MSTR made its first bitcoin investment.

MicroStrategy didn't respond to a request for comment.

While MicroStrategy founder Michael Saylor has long been one of bitcoin's biggest proponents, saying it was "absolutely" a buying opportunity when the cryptocurrency's price fell below $20,000 in 2022, even he was gun-shy when prices were hovering at multi-year lows.

Even for the biggest bulls, investing during bear markets is easier said than done.

$11.4B

Sage D. Young17h

The FBI revealed in a Monday press release that Americans submitted 181,565 complaints of schemes involving cryptocurrency and reported losses totaling around $11.4 billion last year, a 22% increase from 2024.

The age range most affected were people older than 60. Those in this category had the highest crypto complaint count at 44,555 with losses at $4.4 billion, per the annual report from the Internet Crime Complaint Center, a division of the FBI tasked with gathering intelligence on cybercrime.

One cybercrime the report pointed to was cryptocurrency investment fraud, which are sophisticated long-term scams using psychological manipulation, an appearance of legitimacy, and exploitation of cryptocurrencies to deceive victims into investing large sums of money.

“These scams are largely perpetrated by organized criminal enterprises based in Southeast Asia using victims of human trafficking as forced labor to run the scam operations,” per the report.

The FBI report comes as the crypto ecosystem is still reeling from a recent $270 million exploit that was planned six months in the making, a change from the initial estimate of multiple weeks.

Sage D. Young20h

Aave sinks as another service provider leaves

The native token of the largest lending protocol in DeFi has shed roughly $163 million in market capitalization, dropping nearly 11% over the past 24 hours, after news that another service provider is leaving.

Chaos Labs on Monday announced it was stepping down as a risk manager for the Aave DAO, citing concerns over V4 of the protocol and the recent exit of other core contributors.

The risk management firm, which has been contributing to Aave since November 2022, decided to end its engagement with the protocol in part because of a “fundamental misalignment on how risk should be managed at Aave,” Chaos Labs CEO and founder Omer Goldberg said on X.

The V4 protocol introduced a new smart contract code base. “When that architecture is rewritten from scratch, the risk infrastructure must follow. As a result, while the scope changed materially, the resourcing did not. Aave Labs may be comfortable with those trade-offs. We are not,” Goldberg stated.

Chaos Labs’ termination comes after service providers Aave Chan Initiative and Bored Ghosts Developing Labs announced leaving due to centralization concerns with Aave Labs, which is headed by the protocol’s founder, Stani Kulechov.

In response to Chaos Labs’ recent decision, Kulechov said, “There is no disruption to the Aave Protocol, its smart contracts, asset listings, or network deployments.” Kulechov added that Aave was not supportive of several elements of Chaos Labs’ initial proposal, such as a higher-risk management payment of $8 million.

Aave has a total value locked of over $24 billion. V4 went live at the end of March and has seen around $10 million in deposits in the first week.

Yaël Bizouati-Kennedy

Bitcoin bear

22h

Bloomberg analyst outlines all the reasons he’s sticking with his call that bitcoin will crater to $10,000

His one caveat: if it can hold the $75,000 level, bitcoin bulls may “prove him wrong.” Other experts called his prediction an “attention-grabbing extreme” and “almost unimaginable.”