Topic: Bitcoin just started to eat its portion of corporate debt bubble cake (Read 205 times)

The MSTR stock crash was actually because of fraud.  Saylor and other company executives were fraudulently reporting huge profits when the company was actually losing money.  It's a miracle they didn't go to prison for cooking the books, but this problematic past is also why I'm not a fan of Saylor now.  He's not some bitcoin savior here to show us the way, he's just a guy looking for the easiest way to make himself rich again.  He's identified a way to use his company to make easy money as the underlying business continues to get weaker and he leverages the business up to load up on bitcoin.

yesterday was the first day starting from 2017 when I turned bearish for btc and lost last hope for BTC in medium-short term. No continuation in such crucial bounce together with no strength of bulls under finex whale shorting pressure gave me certainty that we will soon see another leg down. Knowing the fact that FED is not going to raise interest rates till 2023 I assume that we should have 1.5 years more of "bubble of everything". It means that we may in fact go down with btc for next 6 months testing 20k levels and starting new wave in 2022 from 15-20k to 60-100k. Ending it in 2023. Starting next rally in 2025 when people will realize that rising interest did not help fight inflation due to high debt to GDP.

Looks like it was indeed a "bull trap".


https://www.coingecko.com/en/coins/bitcoin

This is how I see it, only way for me to believe in possibility to go up is when we break up the resistance line and of course i would love to see such price action for BTC but...

The red candle scenario is much more realistic for me right now and everything seems to be confirming this.

Whales start to short BTC, I am afraid we will see significant drop if this continue, like flash crash in this last moments of this correction how we think it is, this could be a big surprise, let's wait and see, we are not so far away from some major move.

I think that we are writing history here rather than repeating past events.


It was always internal things on small MC asset. BTC was never an "alternative investment asset" during The Real Interest Rate being negative 5%.


https://www.longtermtrends.net/real-interest-rate/

It means that if you have $1M  in your bank account you are paying $4166 MONTHLY in inflation (in devaluation of your savings). Fking 4k! Treasury bonds or term deposits gives nothing (0-0,2%). People are desperate to find good investment. Last time it was like that in 1980! But in 1980 Debt to GDP wasnt at 140%. It was never like that. Until 2023 FED does not plan to rise interest rates. Where will we go with "Real Interest Rate" chart till 2023? To -20% like during WW2? Will dollar survive that? I know that "new paradigm" AKA "It was never like that before" always accompanies the bubbles ... but its too soon. People should scream those numbers that I posted above. Now only few are talking about that. Most people are obsessed with shitcoins or Elon Musk. They miss big picture. They will scream those number at BTC @200k

I'm not saying that people will buy BTC trying to hide from inflation (only some will). But money will move from Treasury bonds that gives nothing to legit corporate bonds lowering interest rates on them. It will push money down to stocks and to junk corporate bonds (including microstrategy and others that will fallow). In fact future tense is wrong here because thats not the future. thats what we see right now. Thats how company can borrow more than it can handle (microstrategy earn less than its debt service cost). Market don't care. Market has money to alocate. Market APE in

For the first time in BTC history we will continue bull run after such strong and long correction. As you say it would be totally different bull run from all others (already is) and maybe we are still not over, of course, at the bottom of my heart i wish you are right, but from what I have seen in last 10 years of looking at BTC price chart daily, mostly for the hall day   , I am afraid that bear market is in full swing and first BTC needs to end this correction, as always somewhere around 80% from ATH and then we will continue.

Of course I see BTC price mark at 100K but not right now, not next week, month, maybe next year in the summer, more possible for me.

And I don't take the macroeconomic topic further, or don't say anything about BTC position or latest news like Taproot, because we had that all also in all previous bull runs and once they ended, nothing seems to be able to prevent it from drop, we had many different great news and still we have moved sideways or dropped lower, sometimes there where waves of super news and I was wondering why the price won't move?

I just think that history will repeat itself as it has already many times and nothing seems to be able to stop that, but this is also good, we will have another opportunity to buy cheap or at least heavily discounted BTC.

And now if you read this and haven't bought in 2011, 2013, 2015, 2017, 2020 then maybe soon will be your chance?

EDIT


Bull Trap?

But don't you think that $1Billion asset (2013 bubble) $10Billion asset (2014 bubble) is completely different than $1 trillion asset? That bitcoin is more and more exposed to global economy rather than internal influences? That we are now "alternative investment asset" not "nerds coins" or "scammers and criminals money". Bitcoin is even a legal tender in 6 mln people country now.

Microstrategy just finished $500 mln bitcoin purchase. You know what was its buying strategy? Michael bought all like dump monkey. Aped into BTC at $37k average. You know why? Because he knows that another 1 billion $ is around the corner, that he will issue another junk papers to collect next $1 billion in near future and than another. If not him ... someone else will do that because we have corporate debt bubble - bubble on 10 trillion $ market. As long as we will see big inflation and low interest rates (up to 2023) people will search for investment opportunities. Treasury bonds gives nothing, next big market is corporate debt... Amount of money that can be collected there is infinite compared to crypto market depth - thats what this topic is all about.

I think its a mistake to predict current bitcoin price movements based on its behaviour from past. When it was "nerds coins" and everyone with 1 mln $ was a whale. We should now look at bitcoin as "alternative investment asset". I do agree that almost all TA indicators yell "bear market" but BTC fundamentals were never stronger. We broken 200MA, we never had as big dump during bull markets (always 50%+ dump was a beginning of bear market, we broke trend lines). Yesterday was truly bloody day. We broke our last hope - 30k support that was holding for a month. Together with that we had dead cross but... no continuation. We bounce back +18% in 12h. In the moment when there was no hope for bitcoin from technical point of view. We are back in 30-40k range again. What i'm thinking is that this bull run was completely different from last one, bitcoin is completely different asset that it was before, global economy is in completely different situation. What if I tell you that all indicators yell "bear market" and we are in bear market for 2.5 month right now (from ATH) and we will be in bear market for another 2 month (inside 30-40k consolidation) and finish bear market after 4 months going back to moon? This bull market was completely different, ended with wyckoff (technical formation instead of short squeeze and mania burst). This bear market may be completly different too.


The difference is that Michael Sailor use his dead company as collateral. He borrowed 2.1 Billion dollars (going for another 1 billion)  as a company that was evaluated below 1 billion dolar before this deal. Its like you have 200k$ house that is loosing in value becuase of waterlogged foundations, so you borrow 600k $ to buy bitcoin using your old house as collateral. Its crazy.

I am still sceptic when it comes to BTC price, I think that bear market is already in full mode and BTC needs to correct as always even 90% before accumulation and another bull run.

We are repeating this over and over again, with small differences, like Wyckoff on the end of bubble right now, but still we ar going Up and Down from 11 years already.

Don't want to dive deep into big macro economical discussion because I am not expert in that topic, but I can clearly see that we have all signs of bear market.

In such circumstances I don't expect that BTC price will soon bounce back to 50K or maybe even we will see trend reversal and new ATH, first correction, and then we will see...

The last 10 years could be portrayed as an interesting contrast between inflationary, debt driven, models of economic growth. And our beloved cryptosphere which generated considerable economic growth through purely deflationary methods. Cryptos achievements and growth came without incurring high amounts of debt or inflation many economists and financial experts say are necessary evils for private and public sectors to function.

Bitcoin amassing approximately $1 trillion in market cap, without incurring debt. Is an amazing achievement by any standard or unit of measurement. I wonder what crypto could accomplish if it wasn't under constant attack by china and special interest groups. There could be an ongoing struggle between emerging technologies like crypto which grant end users greater options and opportunities in life. And special interests who wish to reduce the options and opportunities people have access to.

Of course, there are many side stories and spinoff narratives. The timing of CEO's selling off large portions of their stock holdings. Investment recommendations giving bad advice seemingly to make it easier for CEOs to unload their overpriced assets. The fed signaling its intent to raise rates.

It is not the first company or individual that borrows heavily to buy an asset that they expect to boom. In fact, this is done daily by an infinite number of amateur traders or even by that guy who sold his house and put everything into bitcoin. I am sure that everyone understand that this is just a simple bet.

There is something to be said about this. If you want to invest in bitcoin there is little incentive to do so through a company, as you have an immediate agency risk, so MS has to give an incentive to the shareholder. The ability to get debt beyond the reach of the usual hodler make the company more able to multiply the earning (and the loses, do not forget that if you are considering buying some stock).

Dang, forgot to add another '3' to the price 
Bitcoin moving -99.9% is highly unlikely but I'm afraid majority of the alts will dump so worse that most of the cryptocurrency investors will get rekt and some of the few will probably apply for bankruptcy as well. Bitcoin has attained the status of "Internet of Money" and I think it will continue to function just like the Internet of 1990s i.e it will function as a middle layer where others can build their companies on top of it. In the 1990s, we had the decentralized internet and tech entrepreneurs started building their company on top of the decentralized arena similarly in this decade, we are experiencing similar situation where the entrepreneurs are using the technology of bitcoin and modifying it to create their own cryptocurrencies. Similarly exchanges are also building and earning on top of bitcoin by having an exchange mechanism.

Elon triggered the event and the dump was further fueled by the China ban. But even after playing so much of manipulative games, his tweet tends to pump any crypto by 10-50%. I hope you do remember about the CumRocket tweet which pumped the shitcoin by 10-20% (hope my memory is serving me right). Meanwhile as usual, the current market is dominated by noob investors and hence we need a few more months to attain the maturation stage where the noobs would obviously get rekt thereby calling bticoin and crypto a scam and move away from the trading practices until the next halving bull run.

Taking a loan to buy an appreciating asset like Bitcoin is always considered good but we need lot more tighter regulations when institutions starts adopting bitcoin in larger numbers otherwise panic buys and panic sells would worsen the cryptocurrency industry altogether. The open market standard is allowing bad actors and manipulators to ruin the lives of many who depend on crypto trading. For instance, the pumping of dogecoin by Elon was a highly frowned upon practice as anyone who is here from 2017 indeed know that it's a shitcoin and there are zero use cases for the same.

Let us consider an example over here. Countries like China and India are completely against cryptocurrencies and we are very well aware of the same. Hence if any Chinese/Indian company buys bitcoin and all of a sudden if the country bans them, the company doesn't have any other way rather than moving outside of the country. This happened during the 2018 Indian ban of cryptocurrencies. This is why we need tighter regulations to prevent such adverse conditions.

Din't know about that but looking at a chart is was even worse. From 3330$ to 4$. As far as I know Oracle and Microsoft are companies that do something completely different nevertheless dotcom bubble was accompanied by the entry of a breakthrough technology, the impact of which was difficult to quantify. I am not surprised that someone might have overestimated their abilities. Same we see now during crypto bubble. Hope we will not see -99.9% on btc too


i'm not worried about Elon. I dont think that bitcoin dumped because of him. If an asset dumps by 50% after 1 tweet that didn't revealed new, groundbreaking information about which the market did not know before (everyone knew that bitcoin consue lots of power) means that it was super weak and overbought. It was doomed to go down. Tweet was just a "trigger event" that pushed the first domino brick after which market realized that we are at 60k without strong support back to 30k. That we did not have strong correction starting from covid panic sell and many more.

I'm asking if its good because the greater the bitcoin adoption become, the more tentacles of the current system begin to surround it. In 2023 we may find out that 60%-70% of supply is in hands of institution that bought btc for debt. Is it good? What consequences of this we may face in near future?

Most of them who are interested in cryptocurrencies in general are a fan of Microstrategy just because they are buying bitcoin by taking a loan again and again. While I wouldn't consider that as a huge risk, but extreme volatilities during the start of bear market can probably test the patience of Microstrategy in general. Bitcoin is protected by the users and impressive open source developers globally, but the lack of regulation and frequent manipulated pumps and dumps can influence the stock price of MSTR for sure. In the recent times, MSTR price has been solely riding based on the price of bitcoin and was unrelated to the company development. If bitcoin pumps, MSTR is looking for a recovery at a slower rate and when Saylor announces that he is buying additional bitcoin by taking a loan it dumps.

Saylor will always be remembered for his fake promises during the dot-com bubble period. He marketed MSTR as equivalent to Oracle and Microsoft and the fake promises came to light when the stock dumped from $330 ATH to $4  Saylor could probably be using the same practice to gain the investors attention this time and now the company has shifted to a bitcoin holding company rather than a software company.

While I wholeheartedly trust bitcoin, I wouldn't trust someone like Michael Saylor who is slowly trying to gain so much of power in a decentralized community. Well, for the newer generations or people who aren't aware of his past might support him but the introduction of something so much centralized like Mining Council is a dick move IMO. I'm not sure, how will he be handling his investors during the bear market but he is trying to exert some sort of control in the community by gaining the trust. He does sound like modern revamped version of Gavin (trying to centralize bitcoin) and many of the newbies are blindly following him and some strange newbs have gone to the extent of worshipping him 

Well obviously the answer would be Yes. But the point here to note is that, MSTR is moving from a software company model to an investment company with the insane investments in Bitcoin. While the failure of Bitcoin based on technical aspects is 100% unlikely there are still bad actors like Elon Musk and the people who support him can bring the price back to it's previous $10k range. The debt which were acquired by Saylor could have been used to develop the company, but he didn't do that and rather invested it into Bitcoin for much easier returns without working on anything.

Looks like microstrategy takes oposit strategy. Tries to borrow as much as market allows it to borrow an asset that is heavily inflated and buy as much deflationary asset as it is possible. With high inflation and low interest rates its like getting free money. With dead company used as collateral for this deal its like 0 risk high reward kind of deal. I cant believe that we dont see a rush for bitcoin from big companies (big but slowly dying like microstrategy - lower sales/revenue year after year, lower profit year after year) right now. Looks like debt bubble has infinite amount of money (compared to crypto market depth)

somehow i just smell something wrong about what happened lately , even max keiser seems really aggressive , yeah probably because elon started the shit thing, but just look , FOMO everywhere. now bitcoin creates the death cross, i just wonder, what will be.

I completely understand where you are coming from , recently I have also seen a rise in number of companies and even groups who encourage people to take loans in bitcoins also ! It's not just companies ! They are targeting individuals to trade in bitcoins. Then they calculate their debt and apparently this is a great idea for most people but when the whole thing is volatile, unfortunately many people are never able to get up from that depts.

If we were to analyze those individuals and not just big corporations regarding the loans , the number would be much more adverse.

But then again mining bitcoins and printing money they are a lot different. Bitcoins is not like paper money on fiat therefore in this instance I can see both benefits and negative effects.

But am strongly against the opinion that "loans will make you rich "

Companies are capable of getting these loans that regular people couldn't get. I am not talking about just numbers which should be available to whole humanity, maybe I can't get billions of dollars in debt but the whole world could get that and instead of them paying it back to banks with high interest, they could pay it back to government with low or to no interest at all, and whenever people fail the government will print money just like they do to banks.

Now I understand that most people would say "why would others be capable of getting a loan, then fail to pay it, and tax payers front that? It is unfair!" but you are already doing that, how about instead of one local bank getting 60 million dollars in loans around the corner, you do that for all the small business' around your town? That would make everyone richer instead of just bank owners wouldn't it? I mean that would actually help the nation instead of just banks.

The corporate debt bubble is the large increase in corporate bonds, excluding that of financial institutions, following the financial crisis of 2007–08. Global corporate debt rose from 84% of gross world product in 2009 to 92% in 2019, or about $72 trillion. In the world's eight largest economies—the United States, China, Japan, the United Kingdom, France, Spain, Italy, and Germany—total corporate debt was about $51 trillion in 2019, compared to $34 trillion in 2009. Excluding debt held by financial institutions—which trade debt as mortgages, student loans, and other instruments—the debt owed by non-financial companies in early March 2020 was $13 trillion worldwide, of which about $9.6 trillion was in the U.S.
https://en.wikipedia.org/wiki/Corporate_debt_bubble

Is it better now? In 2020 and 2021 we have  Infinite Quantitative Easing, Fed announced in March 2020 that it would begin buying corporate debt. We all know that money printing and ease of getting money with low interest cause not only inflation but also money ineffectiveness. But how bad is it? Well we don't need to search far from our crypto kindergarten for nice example:



Microstrategy sales/revenue goes down year after year. Cumulative Microstrategy profit from last 5 years is $158 million. During current Corporate debt bubble it is enough to borrow more than $2,1 billion ... with ease. Microstrategy does not stop here. Its now going for another $1 billion from Class A Common Stock Offering. This debt is obtained for high risk investment, not company development. To make it sound right... Microstrategy offers debt for high risk investment and in case of investment failure they will need to work for 100 years to pay the debt (without taking into account interest because with interest for investors its not 100yeas, its infinity - microstrategy earns less than cost of rolling debt).

How is it possible that company offers debt for high risk investments, debt that is unpayable in case of investment failure and market rush in with money. Who is investing in microstrategy debt?

1- Person who don't believe in future of BTC, in BTC price growth will not do that because of risk of miscrostrategy bankruptcy if BTC will dump significantly - as I said. microstrategy is not even able to roll the debt from its profit.
2- Person who believe in future of BTC, in BTC price growth should not do that either. If you are so sure that BTC price will grow ... why not buy it by himself? 6% annual profit is nothing compared to BTC expected growth.

It doesn't matter who. It shows how ineffective are constantly printed currency units. How easy it is to change investment considered by market as high risk (buying bitcoin) into investment considered by market as low risk (buing corporate bonds - company that will exist only if btc will continue to grow). Thanks to microstrategy bitcoin just started to eat its portion of corporate debt bubble cake. Just started because I think that its just the beginning. More and more companies will issue more and more debt for high risk investment. Who would not take this opportunity? 6% interest debt for potential 10x investment (bankruptcy in worst case scenario). Especially companies that hardly generates any profit (like microstrategy). Whats your thoughs on that? Is it good in long term that BTC will, in near future, grow thanks to corporate debt?


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