Microstrategy - The Bubble

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This is the all-time chart of the Microstrategy stock, in case you haven't noticed already: https://finance.yahoo.com/ .

Taken from Yahoo Finance

The best screenshot I could get from all my charting software was from Yahoo, as with the rest I wasn't able to find a good image that gives a better picture of this chart.

Everyone knows about the dot-com bubble. Most of us were young in the beginning of the millennium, and some weren't even born. We are trying to find pieces of this puzzle as this kind of bubble was deemed to be the starting point of the economic meltdown that happened in 2008. Money was pouring in tech companies and any website that was running under the .com top-level domain was getting listed in Nasdaq and making millions overnight.

Microstrategy was part of this bubble with Saylor being the CEO. I did some research on the company during that era, and everything looks to be shady and corrupt for Saylor.

The S.E.C. contended that Mr. Saylor and two other MicroStrategy officials, had committed fraud in reporting profits when the company was actually losing money.

Source: New York Times

The company went public in 1998 and just two years later it reached a price of more than $3000 that was 80 times higher than the listing price. Of course, the tech bubble imploded and the price of Microstrategy went back to the ground as this medium-sized software company wasn't Microsoft or Oracle.

MicroStrategy did agree to a cease-and-desist order and promised to make "significant" internal changes in order to ensure that it complies with securities laws in the future. In addition, the company's corporate controller and accounting manager agreed to individual cease-and-desist orders for reporting and recordkeeping violations.

Source: Computerworld

The price crashed as the dot-com bubble officially reached its peak in March 2000 and started a long bear market.

How Saylor turned what was once a $313-a-share stock and the biggest fortune in Washington into a $4.09 stock and a merely moderate number of millions is an amazing tale of hubris, hyperbole and high-tech hallucinations.

Source: Washingtonpost

Fast forward to 2013

The next time we read news from Michael Saylor was during the 2013 Bitcoin bubble. Obviously, Saylor had sold his Bitcoin very early and as any speculator would have done, he was creating fud tweets like this one:

Taken from Twitter

Online gambling was illegal in the USA since 2006, but it was enforced in April 2011 on what is called the "Black Friday", when online poker room Full Tilt Poker was charged with illegal gambling and defrauding its players, and the website was seized by the federal agencies.

In fact, FTP (Full Tilt Poker) was accused of running a Ponzi Scheme and having a model that wasn't sustainable. A similar accusation is often given to Bitcoin, as Bitcoin opponents saying it has no intrinsic value and no use case but investors expect the price to rise as long as new money is entering.

Saylor didn't make this comment without having inside knowledge. The situation in MtGox was similar during these days, new money was entering Bitcoin, but the withdrawals from the MtGox exchange were problematic. In the end, MtGox collapsed, and Bitcoin entered a two-year bear market.

Seven years later.

The price of Microstrategy is once again in a bubble. This time the stock price started rising after Saylor became one of the top Bitcoin proponents, and reportedly invested almost all the cash/profits of his company into Bitcoin.

This was a good investment in my opinion, as right after the halvening the charts were looking very bullish, and the good news kept coming. However, Saylor embarked on a twitter journey, trying to promote his image and give some thoughts on Bitcoin that went very far, and contradicted most of the reasons Bitcoin was created. Saylor often told that Bitcoin was not a currency and it only could be used for investment purposes. The price of Microstrategy pumped as the whole market was extremely bullish because of the trillions printed as quantitative easing. He said more about required regulations, misrepresented decentralization, and insisted on abiding by any requests the governments make to keep Bitcoin's price rising. Missing the point that Bitcoin doesn't require anything and is not susceptible to any regulations and restrictions.

The stock market is in a big bubble right now, and perhaps the cryptocurrencies are somewhere in the middle. Saylor is playing his game and convinced lately Musk to buy a billion dollars in Bitcoin. Microstrategy stock price has risen together with the price of Bitcoin, but it is now pegged to volatility and would be very sensitive to the Bitcoin trend, as long as Saylor will keep holding.

I am sure that he will sell if he hasn't already started. We haven't seen the public address and don't know where he bought Bitcoin. Some say it was in Coinbase, and it could be part of the news coming from that exchange about an influx of institutional money entering, back when Microstrategy was buying.

Some dots if connected make perfect sense. Now, will Coinbase inform us about any withdrawals in bank accounts, in terms of billions of USD if they are to happen? I doubt it will, as they want to hype the market as well. When the downfall begins, we will notice in the charts, but we won't have a good alert before it begins.

Lead image from: https://coingape.com/microstrategy-ceo-bitcoin-not-bubble/

I reposted this article on Publish0x: https://www.publish0x.com/the-future-of-finance/microstrategy-the-bubble-xqkddyg

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Comments

perfect

$ 0.00
3 years ago

Very nice read

$ 0.00
3 years ago

I do think cryptocurrency prices are being inflated somewhat with the increasing hype on crypto, but I also think there's some intrinsic value to the idea of cryptocurrency considering how it is decentralized. Even if the price is a bit inflated, I think many cryptocurrencies remain undervalued simply because most of the public do not know or care about it. Once fiat currencies start inflating, though, I think many people will look to preserve their wealth. One way to do that is cryptocurrency.

$ 0.00
3 years ago

Its really true that we can not trust such wallets like in few days ago faucet wallet hacked but they can not pay all that money which has stolen..

$ 0.00
3 years ago

Many thanks to @Ellie for the generous tip!

$ 0.00
3 years ago