Author: Faith Yakubu

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Investment firm Kerrisdale Capital has released a report suggesting that MicroStrategy’s shares are overvalued, arguing that they trade at a premium compared to the underlying value of Bitcoin. Kerrisdale Capital, which holds a short position on MicroStrategy shares and is long on bitcoin through BlackRock and Fidelity’s spot bitcoin ETFs, highlighted the significant surge in MicroStrategy’s stock price amidst the recent rise in bitcoin’s price.

Kerrisdale Capital emphasized that while MicroStrategy’s shares have experienced remarkable growth, they believe the valuation is disproportionate to the actual value of the company’s Bitcoin holdings. The investment firm disclosed its short positions in MicroStrategy stock and expressed the potential for gains if the stock price declines. Despite achieving a new all-time high earlier in the week, MicroStrategy did not respond to requests for comment.

The landscape of investment options related to Bitcoin has evolved significantly, according to Kerrisdale Capital. The availability of various financial instruments, including spot bitcoin ETFs offered by major institutions like BlackRock and Fidelity, has provided investors with alternative ways to gain exposure to bitcoin. Kerrisdale Capital noted that this accessibility has diminished the uniqueness of MicroStrategy shares as a vehicle for Bitcoin investment.

In contrast, MicroStrategy has persistently pursued its strategy of amassing Bitcoin, currently owning roughly 214,250 bitcoins, equivalent to approximately 1% of the total supply of the cryptocurrency. Despite this significant bitcoin reserve, Kerrisdale Capital pointed out that MicroStrategy’s market capitalization has ballooned to nearly $32 billion, far exceeding the value of its bitcoin holdings.

Kerrisdale Capital disclosed its long positions in both BlackRock and Fidelity’s spot bitcoin ETFs, indicating its confidence in these alternative investment vehicles compared to MicroStrategy stock.

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Bitcoin (BTC) and the wider cryptocurrency market are witnessing a downturn in early trading on Wednesday following a legal victory for the Securities and Exchange Commission (SEC) over Coinbase and its staking program.

Coinbase attempted to have charges regarding its staking service dismissed, yet the presiding Judge declined their motion. The Judge asserted that the SEC adequately argued that Coinbase functions as an exchange, a broker, and a clearing agency under federal securities laws. Additionally, the Judge noted that through its Staking Program, Coinbase is involved in the unregistered offer and sale of securities.

As a result of this decision, the case will progress to discovery. This marks the second consecutive day that significant developments related to cryptocurrency exchanges have influenced market sentiment, following yesterday’s unsealed indictments against KuCoin and two of its executives.

These developments have led to increased volatility for Bitcoin. On Wednesday, BTC price initially spiked to a high near $71,800 before dropping to $68,385 after the ruling was announced.

Despite the decline, Bitcoin has rebounded above $69,260, registering a 1.5% loss on the 24-hour chart. This rapid recovery underscores a recurring trend in Bitcoin’s price action: shorter downward movements accompanied by more prolonged and faster uptrends.

Analysts from The Kobeissi Letter highlighted this trend as a potential indication of shorts being squeezed, suggesting that Bitcoin may be gearing up for a short squeeze.

They observed that the disparity between institutional long positions and hedge fund short positions is currently at an all-time high. Additionally, they remarked that long positions are persisting, with each new record high in Bitcoin being driven by widespread short covering.

Analysis from CryptoQuant supports this view, indicating that Bitcoin demand has surged while sell-side liquidity continues to decline. The total ‘visible’ amount of Bitcoin at key entities stands at 2.7 million Bitcoin, down from an all-time high of 3.5 million Bitcoin in March 2020.

This dwindling sell-side liquidity, coupled with record Bitcoin demand, suggests that Bitcoin may be approaching a liquidity crisis, potentially supporting higher prices.

Excluding exchanges outside the U.S. from the calculation further reduces liquidity, with the Bitcoin liquid inventory dropping to six months of demand.

According to CryptoQuant founder and CEO Ki Young Ju, sell-side liquidity is now “much lower” relative to demand compared to historical levels.

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Coinbase’s Chief Legal Officer, Paul Grewal, affirmed the exchange’s readiness for the ongoing legal battle with the US Securities and Exchange Commission (SEC) after a court ruling allowed the case to move forward.

In a post on the social media platform X, Grewal stated that Coinbase had anticipated the court’s decision, following Judge Katherine Polk Failla’s ruling that the SEC had “sufficiently pleaded” its case against the leading US-based crypto trading platform.

Following this development, Coinbase shares experienced a decline of over 3% to $260, as reported by Yahoo Finance data.

Grewal emphasized Coinbase’s preparedness for the legal proceedings, noting the court’s decision to allow most of the SEC’s claims to proceed while dismissing claims against Coinbase Wallet. He conveyed the company’s eagerness to gain further insight into the SEC’s internal viewpoints and dialogues concerning cryptocurrency regulation.

Last year, the SEC filed a lawsuit against Coinbase, accusing the company of breaching federal securities laws in connection with the trading of at least 13 cryptocurrency securities tokens.

Despite the ruling, some within the crypto community have downplayed its significance, with one member describing it as a “nothing-burger.” Fox Business journalist Eleanor Terret echoed this sentiment, stating that the SEC had a low bar to secure a favorable ruling and that it was expected for Coinbase to have the opportunity to defend its case in court, similar to the ongoing legal battle involving Ripple.

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BlackRock’s inaugural tokenized investment fund, the BlackRock USD Institutional Digital Liquidity Fund (BUIDL), has seen a surge of approximately $160 million in inflows within its first week of operation. The fund’s growth trajectory continues with recent injections from Ondo Finance, a tokenized real-world asset (RWA) platform.

The world’s largest asset manager, BlackRock, introduced BUIDL last week, marking a significant entry into the realm of tokenized investment vehicles. According to a Bloomberg report, the fund amassed $160 million in deposits during its initial week. Additionally, Ondo Finance announced plans to allocate a significant portion of its tokenized short-term U.S. Treasury bills ETF, OUSG, into BUIDL. Ondo Finance disclosed to CoinDesk that it intends to transfer $95 million onto the BUIDL platform, although it remains unclear whether this amount is included in BlackRock’s reported $160 million total.

The BlackRock USD Institutional Digital Liquidity Fund (BUIDL) functions as a tokenized money market fund primarily investing in U.S. Treasury bills, repurchase agreements, and cash. Leveraging the Ethereum blockchain infrastructure facilitated by Miami-based Securitize, BUIDL tokens are issued to investors. These tokens are designed to maintain a stable value of $1 per token and distribute dividends in the form of tokens representing U.S. dollar yield to eligible investors.

BlackRock’s foray into digital assets is gaining momentum, following its recent achievements in the cryptocurrency space. Earlier in January, BlackRock, along with nearly a dozen other funds, secured SEC approval for a spot bitcoin exchange-traded fund (ETF). The iShares Bitcoin Trust (IBIT), BlackRock’s ETF offering, has attracted over $15 billion in investments, positioning it as the second-largest spot bitcoin ETF, trailing only Grayscale’s GBTC, according to data from The Block’s spot bitcoin ETF tracker.

BlackRock’s successful debut of BUIDL underscores its commitment to embracing digital assets and underscores its growing influence in the evolving landscape of tokenized investment products.

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GSR, a crypto market maker, has revised its estimate of the likelihood of a spot Ether ETF approval in May to 20%. This represents a significant decrease from its earlier estimate in January, where it had placed the chances at 75%.

According to Brian Rudick, an analyst at GSR, the change in estimation is influenced by several factors. Rudick highlighted the lack of engagement from the SEC, potential political pressure against approving digital asset ETFs, and an ongoing investigation into whether Ether qualifies as a security. These factors collectively diminish the odds of approval.

Rudick also speculated that the approval process for spot Ether ETFs might extend well into 2025 or 2026, potentially involving litigation due to the complexities surrounding the regulatory environment.

In a notable shift, Rudick mentioned that some ETF applications have been amended to include Ether staking. While this could enhance the attractiveness of such ETFs, it also introduces additional complexities to the approval process. Rudick suggested that this move might either provoke a response from the SEC or indicate a concession to a delayed approval, potentially lowering the odds for May.

Similarly, Bloomberg ETF analysts have also adjusted their estimates, now placing the likelihood of a spot Ether ETF approval in May at 30%. This contrasts with their earlier projections, which were more optimistic, indicating a challenging regulatory landscape for Ether ETFs.

James Seyffart, a Bloomberg analyst, expressed growing pessimism, noting a lack of progress in the approval process as the deadline approaches. With little movement observed, optimism surrounding the approval of Ether ETFs seems to be waning.

Overall, both GSR and Bloomberg analysts paint a cautious picture regarding the prospects of a spot Ether ETF approval in May, highlighting regulatory uncertainties and the potential for prolonged approval processes.

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The US Department of the Treasury’s Office of Foreign Assets Control (OFAC) has announced sanctions on 13 entities and two individuals involved in the financial services and technology sectors of the Russian economy. These entities, including those dealing with virtual assets, are accused of aiding Russian entities in evading US sanctions.

According to the Treasury Department, these designations come after reports of entities facilitating transactions or offering services that helped sanctioned Russian entities evade sanctions. The move follows previous actions by OFAC targeting companies servicing Russia’s financial infrastructure and restricting its access to the global financial system amid the conflict with Ukraine.

Under Secretary of the Treasury for Terrorism and Financial Intelligence, Brian E. Nelson stated that Treasury will continue to expose and disrupt companies aiding sanctioned Russian financial institutions in reconnecting to the global financial system.

Among the sanctioned firms are Moscow-based fintech companies like B-Crypto, Masterchain, Laitkhaus, and Atomaiz, which allegedly collaborated with OFAC-designated Russian banks to facilitate cross-border settlements and issue digital financial assets. Cyprus-based Tokentrust Holdings Ltd., the majority shareholder of Atomaiz, was also designated.

Other entities targeted include technology companies like Veb3 Tekhnologii and Veb3 Integrator, providing blockchain solutions to clients such as Sberbank and Alfa-Bank. Bitpapa, a peer-to-peer virtual currency exchange, and Crypto Explorer, a virtual currency exchange operating in Russia and UAE, were also sanctioned.

In addition to crypto-related sanctions, OFAC-designated companies associated with the OFAC-designated Echelon Union for Science and Technology, a Moscow-based entity licensed by Russian authorities.

As a result of these sanctions, all property and interests in property of the designated persons within US jurisdiction are blocked and must be reported to OFAC. Foreign financial institutions dealing with Russia’s military-industrial base risk facing sanctions as well.

These sanctions aim to disrupt Russia’s ability to use alternative payment mechanisms and financial technology entities to evade US sanctions and continue funding its conflict with Ukraine. The Treasury vows to monitor and respond to Russia’s evolving sanctions evasion tactics while upholding the integrity of the international financial system.

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South American gold and precious metals producer Nilam Resources (NILA) is venturing into the world of cryptocurrency by announcing its intention to acquire 100% of the common stock of a special purpose entity holding 24,800 Bitcoin (BTC). This move comes as the exploration-stage mining company signed a letter of intent with Xyberdata Ltd.

The special purpose entity, to be named MindWave, will be established for this purpose. Nilam Resources plans to issue a newly authorized Preferred Class of Series C Stock in exchange for the Bitcoins, which will be offered at a discounted rate compared to current market prices.

With full control over MindWave’s capital stock, Nilam Resources aims to use the 24,800 Bitcoins, along with other assets, as collateral to raise capital for investment in high-yield generating projects.

Under the agreement, shareholders of MindWave will exchange their equity interest for the newly issued Preferred Shares of Class C stock authorized and issued by NILA.

The newly created Class C Preferred Stock is expected to offer conversion rights upon listing on NASDAQ, another national exchange, or other defined liquidity events. These shares will be issued pro rata to the shareholders and will be considered ‘restricted securities’ as per Rule 144 under the Securities Act of 1933.

Pranjali More, CEO of Nilam Resources, affirmed that the company and its team have been diligently working over the past few months to complete all agreements and due diligence required to advance towards a legally binding Letter of Intent.

Following this acquisition, Nilam Resources’ assets will surpass one billion dollars.

In a press release, the company emphasized that this move aligns with its vision, mission, and core values, aiming for an inclusive and sustainable financial future while driving positive change in the digital economy.

Pranjali More, COO of Nilam Resources, highlighted the company’s commitment to transparency, innovation, and sustainability, prioritizing clear communication and investing in projects with enduring social and environmental impact.

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The Technology Working Group of the UK Treasury, the economic and finance ministry of the government, has recently released a comprehensive report delving into the potential use cases of fund tokenization.

The report primarily investigates the utilization of tokens as collateral for money market funds and examines the role of tokenized funds within the on-chain investment market. It outlines how the UK funds industry can leverage the potential of tokenization to enhance asset management operations and proposes a foundational tokenization model for firms operating within the UK.

Moreover, the report elucidates various use cases demonstrating how this model could improve business operations, including optimizing money market fund collateral management. This marks the second report from the Technology Working Group, established in April 2023 under the Asset Management Taskforce. The forthcoming third report is slated to focus on the impact of artificial intelligence on the industry.

This recent publication builds upon the findings of the Technology Working Group’s inaugural report released in November 2023. The latest report expands on the potential use cases of fund tokenization identified in the initial publication.

Tokenization, as defined in the report, involves issuing units recorded on a distributed ledger, contrasting with units recorded on traditional record-keeping systems. The transition of existing operational infrastructure supporting investment funds onto a distributed ledger is posited to drive efficiency and transparency within the sector while enhancing its competitive edge.

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MicroStrategy’s (NASDAQ:MSTR) stock reached an all-time high on Tuesday, surging past $1,860 and peaking at $1,909, as reported by Yahoo Finance.

This milestone was achieved following MicroStrategy’s recent acquisition of an additional 9,245 bitcoins on March 19, which brought its total holdings to approximately 214,250 BTC. With this acquisition, the company now controls 1% of Bitcoin’s total supply.

The business intelligence company, now recognized for its substantial bitcoin holdings, saw its stock price soar to $1,909 before settling at $1,863 as of 12:35 p.m. ET, reflecting a 0.49% increase over the past 24 hours. MicroStrategy’s intraday market capitalization stands at $31.67 billion.

The surge in MicroStrategy’s stock price is closely linked to its significant investment in Bitcoin, which has been attracting attention from investors. The company’s decision to increase its bitcoin holdings further solidifies its position as a major player in the cryptocurrency market.

Bitcoin’s price, on the other hand, experienced fluctuations, reaching $69,522.56 at 12:47 p.m. ET on March 26, with a slight decrease of 0.82% over the past 24 hours. Earlier in the day, bitcoin’s price surpassed $71,000, leading to $193 million in liquidations within the same period.

MicroStrategy’s record-breaking stock performance underscores the growing influence of cryptocurrency investments on traditional financial markets, as companies like MicroStrategy continue to allocate significant resources to digital assets like Bitcoin.

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An examination of the interplay between Bitcoin cohort accumulation and monthly issuance sheds light on the current market dynamics. Presently, the ongoing epoch witnesses a daily mining output of approximately 900 BTC, totaling nearly 27,000 BTC per month, depicted by the blue line in our analysis graph.

Cohorts within the Bitcoin ecosystem range from smallholders (with less than one Bitcoin) to large entities holding 10,000 or more BTC, including miners and exchanges. Notably, the analysis becomes intriguing when the orange bar chart, representing the aggregate accumulation of cohorts, surpasses the blue line denoting monthly issuance.

When the orange bar chart exceeds the monthly issuance line, it signifies that all cohorts combined are accumulating more Bitcoin than the total monthly issuance. Conversely, a scenario where the orange bar chart falls below the monthly issuance line indicates that cohorts are not accumulating the entire monthly issuance on an aggregate basis.

Breaking down the recent data as of March 25, the monthly issuance stands at 27,000 BTC, while the aggregate cohort accumulation has reached 43,114 BTC. This data indicates that over the past 30 days, all cohorts collectively absorbed the newly mined Bitcoin and acquired additional quantities from exchanges. This upward trend in buying activity aligns with the recent surge in Bitcoin prices, surpassing the $70,000 mark.

Conversely, a contrasting period was observed between March 3 and March 22, during which cohorts accumulated less Bitcoin than the monthly issuance. This trend contributed to the dip in Bitcoin prices from its all-time high of $60,000.

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