MicroStrategy as a Leading Indicator
Considering MSTR as a Leading Indicator
Profiled as de facto leading Bitcoin institution, MicroStrategy (MSTR) recently announced plans to increase its bitcoin acquisition rate by selling up to $2 billion worth of its shares.
The recent arrangement was done during the current bearish sentiment, and further solidifies MSTR's counter-cyclical approach. The company's balance sheet reaches 226,500 bitcoins, making it one of the world's largest holders of the asset.
Sources: CryptoQuant, Maartunn
MicroStrategy employs a dollar-cost averaging (DCA) strategy in its purchases, but has a tendency to cyclically weight its purchase program. When spot prices sharply declined back in 2022, the company's yearly purchases were modest at 8109 bitcoins, while in 2023 acquisitions rose to 56,650 units.
On an annual basis, the growth of MSTR's buying program from 2022 to 2023 was an impressive 599 percent. This year's purchases have climbed to 37,350 units, and MicroStrategy is on track to reach or exceed last year's figures.
Sources: CryptoQuant, Maartunn, Timo Oinonen
While bitcoin's spot price is down -12.7 percent on a monthly basis, MicroStrategy decisively continues its purchase program. Aggregated with broader institutional demand, one could argue that bitcoin, at its current spot level, is undervalued. In the current market environment, MSTR's purchase program can be seen as a leading indicator to the underlying asset, bitcoin.
Q4 Looks Promising
From a purely technical vantage point, bitcoin has strengthened significantly within the past seven days, rising almost eight percent from 59,000 US dollars to 64,000. The current technical structure supports a Wyckoff accumulation pattern, in which institutional "smart money" investors quietly buy at favorable prices, absorbing selling pressure from weaker market participants.
As the accumulation progresses, spot price may break out above the trading range. This breakout is by default accompanied by increased trading volume.
Sources: Timo Oinonen, CryptoQuant
In a broader picture, bitcoin still stays inside its price discovery cycle that dates back to 2023. The sentiment seems to follow our long-term outlook, forecasted back in April: The post-halving market calmed down for the summer, but will likely recover by the last quarter (Q4). Trailing 2021, this year might also form a double top structure.
Bitcoin and digital assets might be further uplifted by Fed's shifting central bank policy. Jerome Powell spoke at the Jackson Hole Economic Symposium this week, and his speech was considered as dovish, signaling a shift in the Federal Reserve's monetary policy.
Powell indicated that "time has come for policy to adjust", suggesting an intent to begin cutting interest rates, with the timing and pace of these cuts to be determined by incoming economic data. This was interpreted as a response to diminishing risks of inflation and increasing concerns over employment, aiming to support the labor market and guide the economy towards a soft landing. The digital assets and broader market reacted positively to his comments, with expectations of rate cuts starting in September 2024.
Sources: Timo Oinonen, CryptoQuant
Bitcoin's realized price seems to be on a permanent growth angle, rising to $31,410.29. The realized price represents the average cost of all bitcoin purchases, indicating that the majority of bitcoin investors are significantly in profit. The confluence area between the realized price and Wyckoff accumulation structure remains as the main focal point.
Source: Material Indicators
Cumulative volume delta (CVD) mirrors growing demand among most investor segments. Especially the retail-sized $1K - $10K and institutional $100K - $1M orders are increasing rapidly. There is nearly $200M in ask liquidity laddered between $64K and $70K, and another $57M stacked on $70K level.
TON in Freefall After Pavel Durov's Arrest
Pavel Durov, the founder of Telegram and The Open Network (TON), was arrested in France on August 25th, 2024. The arrest took place at Bourget airport outside Paris and the reasons cited for his arrest include allegations related to the lack of content moderation on the Telegram platform.
TON investors reacted negatively to the arrest news, sending the token into a -20 percent decline. After correcting up a little, TON is now down -18.2% on a weekly basis. TON has been one of the retail's favourite tokens in 2024, and is still up 139,1% percent year-to-date, despite the incident.
Sources: CryptoQuant, Maartunn
The arrest has sparked a debate on free speech versus the need for content regulation, with figures like Elon Musk and others expressing support for Durov, viewing his arrest as an attack on free speech. Conversely, critics argue that platforms like Telegram need to be more accountable for content that facilitates criminal activities. The situation reflects broader tensions between digital rights, privacy, and security concerns in the modern digital ecosystems.
TRON up 30% Within 14 Days
Another retail-favourite token, TRON, has been able to retain its upward trajectory within the past 14 days, rising 30.9 percent. The TRON ecosystem has been uplifted by including revenue growth, network activity, and market dynamics.
TRON's protocol revenue has reportedly surpassed that of Ethereum by 50% in the last month, with projections indicating it could exceed $2 billion by the end of the year. This growth is largely attributed to TRON's dominance in the stablecoin market, particularly with Tether (USDT), which accounts for a substantial portion of transactions on the network.
Source: Artemis
The protocol has seen a surge in daily transactions, processing approximately 6.75 million transactions daily. This high level of activity has contributed to TRON's standing as a leading blockchain for payments, with USDT transactions making up about 70% of its total.
TRON has recently overtaken Cardano to become the 10th largest cryptocurrency by market capitalization, reflecting its growing influence in the crypto space. The current market cap of TRON is approximately $12.98 billion, with a trading price around $0.149. Additionally, the ecosystem has recorded around 2.5 million daily active users, indicating significant adoption and engagement within its ecosystem.
Justin Sun, the founder of the ecosystem, is facing action from the SEC for allegedly conducting unregistered offers and sales of crypto asset securities, including Tronix (TRX) and BitTorrent (BTT), alongside charges of market manipulation through wash trading and undisclosed celebrity endorsements.
Sun recently offered to support Telegram by creating a "FreePavel DAO", and pledged $1 million to back this initiative, which was aimed at legally aiding Durov following his arrest in France.
Trump Annouces a DeFi Platform
Profiled as the crypto-friendly presidential candidate, Donald John Trump recently announced a plan to created a new digital asset platform, called "The DeFiant Ones". The platform focuses on rivaling traditional banking systems by offering decentralized financial services, appealing to those who feel marginalized by conventional banking.
Previously, Trump pledged to establish a strategic bitcoin stockpile if elected, aiming to make the United States the "crypto capital of the planet and the bitcoin superpower of the world". This includes maintaining 100% of all bitcoin the US government currently holds or acquires.
Trump also promised to build a "bitcoin strategic reserve", consisting of 200,000 units. Designating bitcoin as a reserve asset would likely enhance its status as "digital gold," attracting institutional and retail investors alike. This paradigm shift could lead to a more stable and robust market, potentially driving the price higher over the long term as more investors view bitcoin as a coherent asset class.
