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MicroStrategy, the largest corporate Bitcoin holder, reported its Q3 financials, showcasing a 5.1% increase in “BTC Yield” and unveiling its ambitious "21/21 Plan," which aims to raise $42 billion over three years to further expand its Bitcoin holdings. This capital will be split between $21 billion in equity and $21 billion in fixed-income securities. By the end of Q3, MicroStrategy held 252,220 Bitcoin valued at $16 billion, with a year-to-date BTC Yield of 17.8%. Despite a 10.3% drop in revenue year-over-year to $116.1 million and a net loss of $340.2 million due to significant digital asset impairment, the company remains committed to its Bitcoin-centric treasury strategy.
U.S. Treasury Report Analyzes Stablecoins' Modest Impact on Treasury Demand
In a recent report, the U.S. Treasury highlighted the influence of digital assets, particularly stablecoins, on financial markets, noting that stablecoin growth has slightly increased demand for short-term U.S. Treasuries. The Treasury’s 132-page document, intended for the Treasury Borrowing Advisory Committee, discusses how stablecoins and cryptocurrencies like Bitcoin and Ethereum have expanded rapidly, though they remain relatively small in comparison to other asset classes. The report estimates that about $120 billion of stablecoin reserves are invested in Treasuries, with Tether alone holding $81 billion in T-bills. Stablecoins facilitate over 80% of crypto transactions, playing a critical role in the digital asset ecosystem. While the Treasury sees further stablecoin growth as likely, it cautioned that regulatory challenges could impact their development. It also noted that rising demand for Treasuries might accompany the growing digital asset market, positioning them as potential “on-chain” safe assets amidst volatility.
Securitize Surpasses $1 Billion in Tokenized Assets with New Fund Services Venture
Securitize, a prominent tokenization firm, has surpassed $1 billion in tokenized assets onchain, driven significantly by the success of BlackRock's BUIDL fund, which alone crossed the half-billion-dollar mark in July. To further streamline fund operations, Securitize has launched "Securitize Fund Services," a new venture designed to simplify and centralize the administration of tokenized funds. This service will support companies like BlackRock and Hamilton Lane in handling compliance, tax, financial reporting, and record-keeping functions essential to fund management. Securitize CEO Carlos Domingo highlighted that traditional fund administrators lack the capacity to handle tokenized securities at "blockchain speed," making in-house consolidation essential for better service and broader opportunities, including potential fund launches on additional blockchains.
Trading Desk Insights
Bitcoin has recently exhibited signs of volatility, retreating slightly after a robust week that saw the preeminent cryptocurrency advance nearly 10%. The minor correction is attributed to profit-taking but remains overshadowed by anticipations of regulatory changes post the forthcoming U.S. elections—a potential pivot point for the market that could surpass current expectations.
Amidst a generally bearish trend in the equity markets, Bitcoin's price abruptly surged, fueled by MicroStrategy's announcement of a substantial $42 billion funding initiative aimed at increasing its Bitcoin holdings over the next three years. This news not only bolstered Bitcoin but also helped MicroStrategy's stock mitigate losses, closing down just 2.5% compared to broader market declines.
The performance of stocks linked to digital assets was less favorable. Notably, Coinbase saw a 7% drop in its share price following earnings that fell short of projections, while Robinhood experienced a sharp 13% decline. Bitcoin mining entities such as MARA Digital, Riot Platforms, and Cleanspark also faced significant sell-offs, with stock prices dropping between 5% and 10%.
Turning to the cryptocurrency funds market, Bitcoin-focused ETFs continued to attract significant capital, with Blackrock leading a day of hefty inflows totaling $893.3 million, albeit on a trading volume that halved from the previous Tuesday to $2 billion. The sustained influx into Bitcoin ETFs highlights enduring institutional interest and signals a shifting preference away from altcoins towards Bitcoin.
In the broader financial markets, stocks took a hit on Thursday as investors processed a slew of underwhelming earnings from major technology firms, with a keen eye on upcoming reports from industry leaders like Apple and Amazon. The market is also poised for key economic indicators set to release this week—Thursday’s PCE index and Friday’s employment data—which will play a crucial role in shaping the Federal Reserve’s interest rate decision scheduled for November 7th.
Crypto Charts
Disclaimer
This research is for informational use only. This is not investment advice. Other than disclosures relating to Secure Digital Markets this research is based on current public information that we consider reliable, but we do not represent it is accurate or complete, and it should not be relied on as such. The information, opinions, estimates, and forecasts contained herein are as of the date hereof and are subject to change without prior notification. We seek to update our research as appropriate.
Any forecasts contained herein are for illustrative purposes only and are not to be relied upon as advice or interpreted as a recommendation. The price of crypto assets may rise or fall because of changes in the broad market or changes in a company's financial condition, sometimes rapidly or unpredictably. Past performance is not a guide to future performance, future returns are not guaranteed, and a loss of original capital may occur. Fluctuations in exchange rates could have adverse effects on the value or price of, or income derived from, certain investments. We and our affiliates, officers, directors, and employees, excluding equity and credit analysts, will from time to time have long or short positions in, act as principal in, and buy or sell, the securities or derivatives, if any, referred to in this research.
The information on which the analysis is based has been obtained from sources believed to be reliable such as, for example, the company’s financial statements filed with a regulator, company website, company white paper, pitchbook and any other sources. While Secure Digital Markets has obtained data, statistics, and information from sources it believes to be reliable, it does not perform an audit or seek independent verification of any of the data, statistics, and information it receives.
Unless otherwise provided in a separate agreement, Secure Digital Markets does not represent that the report contents meet all of the presentation and/or disclosure standards applicable in the jurisdiction the recipient is located. Secure Digital Markets and their officers, directors and employees shall not be responsible or liable for any trading decisions, damages or other losses resulting from, or related to, the information, data, analyses, or opinions within the report.
Crypto and/or digital currencies involve substantial risk, are speculative in nature and may not perform as expected. Many digital currency platforms are not subject to regulatory supervision, unlike regulated exchanges. Some platforms may commingle customer assets in shared accounts and provide inadequate custody, which may affect whether or how investors can withdraw their currency and/or subject them to money laundering. Digital currencies may be vulnerable to hacks and cyber fraud as well as significant volatility and price swings.
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