The Daily Dive #089 — MicroStrategy Earnings And Aggressive Liquidations
October Monthly Report Announcement
Dylan and I are excited to share the release of our October 2021 monthly report this upcoming Monday, November 1, to all of our paid and free subscribers.
The report will extensively cover the developing on-chain accumulation trends, evolving bitcoin derivatives market, latest state of Bitcoin mining and the global macroeconomic landscape.
We plan to host a Twitter Spaces through Bitcoin Magazine sometime next week to review the report. We will announce that date and time on Monday.
We look forward to sharing our work and hearing your feedback. Now, let’s dive into the daily.
MicroStrategy Report Q3 Earnings
MicroStrategy reported Q3 earnings yesterday, having acquired an additional 8,957 bitcoin in Q3 bringing their total holdings to 114,042 at an average purchase price of $27,713. That’s 198% in holdings growth from their 38,250 total bitcoin holdings just a year ago at the end of 2020 Q3. There is no change to their accumulation holdings announced back in September, which we covered in the The Daily Dive #058.
Phong Le, MicroStrategy President and CFO, highlighted their bitcoin strategy on the earnings call saying,
“Turning now to our bitcoin strategy. We had another active and successful quarter. We raised approximately $400 million in capital through the sale of Class A common shares as part of our aftermarket offering during the quarter. We used the proceeds of this offering and excess cash to purchase an additional approximately 8,957 bitcoin at an average price of $46,876 per bitcoin, net of fees and expenses.
“This is the fourth successful capital raise we've done in the past year, having raised $2.6 billion in new debt and equity capital that we deployed in support of our bitcoin acquisition strategy. We have approximately $600 million remaining in our existing ATM facility, and we'll continue to be opportunistic in executing against it.”
Whether it’s repurchasing their own stock, taking on low-cost debt or selling more shares, MicroStrategy is doing everything in their power to acquire more bitcoin, a new corporate playbook for bitcoin accumulation that we covered in The Daily Dive #005.
From their earnings transcript above, they have $600 million left in their $1 billion “At The Market” securities offering which allows them to offer, issue and sell stock at their discretion with plans to use the proceeds to buy more bitcoin. At a market price of $62,000 that’s potential for another 9,677 bitcoin purchase but growing more expensive by the day as Q4 goes on.
Since MicroStrategy’s first bitcoin purchase of $250 million on August 11, 2020, their stock performance has been on a tear, outperforming the likes of the S&P 500 Index, Tesla, Amazon, Google and many others. Performance relative to bitcoin has been outperforming for the majority of this year but now it’s flipped the other way with bitcoin slightly higher.
Many that criticized the MicroStrategy move now have to start waking up to the reality: Michael Saylor has pulled off one of the greatest CEO trades in history and we have only seen the beginning.
More Long Liquidations
Yesterday, we saw even more long liquidations totalling $65.6 million. This is the fifth-highest day for long liquidations over the last two weeks behind days of $164 million, $154 million, $73 million and $69 million. This amount of long liquidations is elevated relative to the last 30 days but nowhere close to the long liquidation blowups we saw in September.
The latest liquidation crash didn’t last long as it looks like some larger buyers came through on Coinbase this morning, driving up the spot price to near $63,000. This below chart shows the Coinbase price action along with the cumulative volume delta (CVD) which displays the cumulative volume changes based on the volume traded by sell aggressors versus buy aggregators. This metric is displayed on the bottom panel. In layman’s terms this shows that big buyers are aggressively pushing up the price.
