 March 2, 2021  Everything you need to make sense of the crypto markets and beyond Sponsored By:  By the CoinDesk Markets Team Edited by Lawrence Lewitinn If you were forwarded this newsletter and would like to receive it, sign up here. Bitcoin (BTC) +5.9% $51,740 Ether (ETH) +3.1% $1,610 (Price data as of Mar. 2 @11:30 UTC) Good morning. Here's what we're writing about:
Check out the CoinDesk TV show "First Mover," hosted by Christine Lee, Lawrence Lewitinn and Emily Parker, at 9 a.m. U.S. Eastern time. Today the show will feature guests:
MARKET MOVES by OMKAR GODBOLE Bitcoin Retakes $50K, a Key Level for a Bull Revival Bitcoin has once more crossed above $50,000, possibly marking an end to the recent price pullback and a revival of the broader uptrend.
The top cryptocurrency by market value is trading near $50,950 at press time – up 3.86% in 24 hours – having dropped from record highs above $58,000 to $43,000 in late February, according to CoinDesk 20 data.
"The correction looks to have ended with a move above $50,000," John Ng Pangilinan, managing partner at Singapore-based Signum Capital, told CoinDesk. Securing a foothold above that level is key to the resumption of the broader uptrend and a move toward new record highs, he said.
Bitcoin's latest break above the psychological hurdle looks sustainable, as the futures market is in a far more healthy state than in mid-February when excess bullish leverage was seen. Further, institutional demand remains strong, as highlighted by the recent outflows from cryptocurrency exchange Coinbase Pro.  Bitcoin prices, Mar 2. to Mar. 3, 2021 (Source: CoinDesk) "This time it's at $50k with default funding, no overcrowded futures market, spot market parity with futures, and high Coinbase premium, coupled with large outflows and institutional interest," market analyst Joseph Young tweeted.
The comments were echoed by Matthew Dibb, COO and co-founder of Stack Funds, who said the overall trend remains bullish, adding that a UTC close above $52,100 would pave the way for a move toward new lifetime highs above $58,332.
However, a new record high could remain elusive if the U.S. bond yields resume their recent rally, pushing stock markets lower, he said.
"From a fundamental perspective, we are still at the mercy of macro markets. Knee jerk reactions in the bond market and volatile equities may continue to prove 'risk off' correlations with Bitcoin," Dibb told CoinDesk. "We remain extremely bullish but would not be surprised to see further volatility in the short term."
Bitcoin and stocks faced selling pressure last week, as the U.S. 10-year bond yield surged to 12-month highs above 1.6% and investors priced in prospects of an early unwinding of monetary stimulus by the Federal Reserve.
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LAWRENCE LEWITINN How to Buy $88,000 Bitcoin From Michael Saylor
Few people have captured the imagination of the crypto market quite like MicroStrategy CEO Michael Saylor, a guest on Wednesday morning’s First Mover on CoinDesk TV at 9:00 a.m. ET (14:00 UTC).
His company’s purchases of bitcoin, first announced in August, validated a key narrative driving the current bull market: the “institutions” were joining the fray (companies fitting crypto’s definition of an institution can be far more modest in size than Wall Street’s). It took a couple of months more of bitcoin prices languishing around the $10,000 level before really taking off in the final quarter of 2020 but after that, it hasn’t looked back. Well, at least not yet.
For MicroStrategy, its series of bitcoin purchases have been a triumph. As Saylor noted in a recent tweet, the company has thus far spent $2.186 billion to buy a total of 90,859 BTC. That puts its average cost at $24,063. At current prices, MicroStrategy’s bitcoin was worth $4.4 billion as of March 2.
A $2.2 billion gain in value for an asset on the balance sheet of a company that had been worth around $1 billion for the prior three years is usually considered a good thing. Usually.
Yet it should be noted that while MicroStrategy bought bitcoin at $24,063, it’s a different story for anyone buying their stock now.
The company’s market cap is now about $7.2 billion. As of March 2, $4.4 billion of its assets were in bitcoin. Around the time it first announced its bitcoin buys, MicroStrategy's market cap was just $1.3 billion. To buy all that bitcoin it now owns, the company at first used some cash, somewhere to the tune of around $425 million. In recent months, it has issued a total of $1.7 billion in convertible notes which, if turned to equity, could add a couple of million shares to the nearly 10 million already outstanding (that's another discussion).
Doing some paper napkin math – adding the value of the bitcoin and the underlying company while subtracting the debt and the cash spent (to avoid double counting) – the sum is $3.575 billion. Rounding that up to $3.6 billion and it's still just half the current market cap.
The remaining $3.6 billion needed to get to a $7.2 billion valuation can be explained as… magic. Well, at least to some buying the stock now. Otherwise, that $3.6 billion premium is a bet on value that has yet to be unlocked. It’s a bet that Michael Saylor and the rest of management is able to do incredible things with the company, like buy a lot of bitcoin before everyone else.
So far, it's been a profitable bet for those who were lucky to get in at the right time. MicroStrategy shares have significantly outperformed bitcoin's price since the start of September.
 Bitcoin versus MicroStrategy, Sep. 3, 2020 to Mar. 2, 2021. The MSTR premium was even higher a month ago (Source: TradingView) Indeed, the argument made for buying MicroStrategy’s stock right now is that it’s one of the few ways for institutional investors otherwise barred from getting into bitcoin because of regulatory issues (such as no bitcoin ETF) to gain exposure to cryptocurrencies. However, it’s a very, VERY expensive way to do so.
That's because paying a $3.6 billion premium for MicroStrategy’s leveraged bitcoin hoard of $4.4 billion works out to roughly $88,000 per bitcoin, more than triple the $24,063 the company paid to acquire it over the past few months. Remember, buying MicroStrategy shares now isn't the same as buying shares back in August.
Thus, if anyone is buying MicroStrategy’s stock solely for the bitcoin play, that person (or “institution”) would be paying nearly double for the bitcoin and getting a flat-lining stock.
Will that premium still be there should a Gary Gensler-led Securities and Exchange Commission decide to approve a bitcoin ETF? Who knows? Weirder things have happened.
The stock may very well continue to rally. In this environment, anything can happen. If a video game retailer on the decline could see its shares skyrocket, what’s to stop people from wanting to pay double for bitcoin?
-- Lawrence Lewitinn
BIGGEST MOVERS These are the biggest movers in the CoinDesk 20 over the past 24 hours:
Gainers: Losers:
The CoinDesk 20 filters from the larger universe of thousands of cryptocurrencies and digital assets to define a core group of 20. These assets constitute roughly 99% of the market by volume at eight of the largest and most trustworthy exchanges.
LATEST HEADLINES
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