Market uncertainty persists
There's uncertainty creeping into the market. Has this bull phase reached its peak already, or is this just a healthy correction en route to new highs? While analysts remain divided, Michael Saylor continues to push his Bitcoin strategy unflinchingly. Is he being brilliant or taking a risky gamble? Find out more in this edition of Bitvavo Market News.
Market update
Could the peak of this bull market already be behind us? More and more analysts are starting to see this as a plausible scenario. "Bitcoin bull cycle is over," stated Ki Young Ju, CEO of analytics firm CryptoQuant, last week on X.
If true, this would also mean breaking the remarkably consistent pattern ofĀ a peak every four years and a bottom every four years. "The traditional four-year cycle is over in crypto," says Bitwise CEO Matt Hougan. He believes the era of sharp peaks and deep troughs is now a thing of the past.
Every bear market begins with a correction, but not every correction is the beginning of a bear market. Currently, the price declines of the past few months still align with what's typical for a normal correction in a bull market. The price has not fallen below the 50-week average, which has historically been a key dividing line between bull and bear markets.
The phrase "This time is different" is considered risky in the financial world because history tends to repeat itself. For that reason, it's not unreasonable to assume that we are still in a bull market and could see record prices again later this year.
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Strategy raises more funds: risky or a smart move?
The US-listed company Strategy (formerly MicroStrategy) continues to buy Bitcoin. It now owns more than 500,000 BTC, worth more than $40 billion. Yet founder Michael Saylor still sees room for more. Last week, he announced a new funding round through a relatively unusual structure: preferred shares with a fixed interest rate of 10%.
These new shares, called STRF, come with no voting rights, no claim to share price gains, and no control over the company's Bitcoin reserves. They do, however, offer a fixed annual dividend. At stake are five million shares at $100 each. If all are sold, Strategy will raise $500 million to fund further Bitcoin purchases.
Preferred shares
Preferred shares occupy a unique position in a company's capital structure. They're similar to bonds: investors receive a fixed dividend, regardless of the company's profits or share price movements. In exchange, investors relinquish voting rights and the potential for additional returns.
An important feature is priority. In the event of dividend payments or bankruptcy, holders of preferred shares are paid before ordinary shareholders. This makes it appealing to investors who prioritize stability over price volatility.
Strategy previously released STRK, with an annual payout of 8%. STRF goes beyond that, featuring what's known as cumulative dividend. If the payout is temporarily suspended, the obligation remains, and the percentage can even increase, up to a maximum of 18%.
What does this mean for MSTR?
STRF and STRK are preferred shares from the same company as MSTR, but they do not move in line with the stock price of this common share. However, the effects cannot be entirely separated from MSTR. The combined dividend obligations now exceed $100 million a year. If the Bitcoin price falls and the company's cash position comes under pressure, these obligations could become a burden. For ordinary shareholders, this creates an additional layer of investors who get paid first.
Saylor's strategy
Michael Saylor uses this structure to buy additional Bitcoin without giving up voting rights or ownership. Interest is paid in cash, not shares, meaning existing shareholders are not diluted. In return, investors bear less risk, but also have less potential for big gains.
It's a bold strategy. By raising capital without giving away control or ownership, Saylor remains firmly at the helm. However, the fixed obligations do increase pressure on the balance sheet. Ultimately, the strategy's success is closely tied to Bitcoinās performance.
Risky move or a masterstroke? That's up to the market to decide.
In other news
Standard Chartered lowers ETH price target from $10,000 to $4,000. The reason? While Ethereum continues to grow,Ā its earnings are declining. With the rise of second-tier networks like Arbitrum and Optimism, more and more activity is shifting away from the main network - and with it, associated revenues. According to the bank, Ethereum is losing ground in areas such as DeFi, NFTs, and stablecoins. The monetary value of this displaced activity no longer automatically flows back into ETH. Growth is positive, but without associated cash flow, Ethereum becomes less attractive as an investment.
U.S. regulator drops case against Ripple. Ripple CEO Brad Garlinghouse announced the news on Wednesday. The regulator has now dropped more than six cases, signaling that the legal battle against crypto is losing momentum. The lawsuit against Ripple has not yet been officially dropped: according to the company, this could take weeks. The news caused the price of XRP to jump significantly, from $2.32 to $2.53, however, some of these gains were given back over the weekend.
Trump endorses crypto at Digital Asset Summit on March 21. In a video message, he stated that crypto can help strengthen the US dollar. As far as he is concerned, the "war on crypto" is over: the US should become the undisputed Bitcoin superpower and crypto capital of the world. Trump called for clear regulations around stablecoins and market structure, but remained vague on concrete plans. Still, the message was clear: under his leadership, crypto is not an enemy, but a strategic advantage.
Bitcoin developers moving towards new soft fork, the first since Taproot in 2021. The proposed upgrade, based on BIP-119 andĀ BIP-348, will make the network more efficient and secure, with new capabilitiesĀ for the lightning network and others. Remarkably, after years of stagnation, real consensus seems to be emerging. It's a rare moment of unanimity in an ecosystem influenced not only by developers but also by financial giants like Strategy and BlackRock.Ā
Satoshi Radio: InĀ the latest episode of Satoshi Radio, the hosts take you through the news that shaped the past week in crypto. For example, it covers the controversy surrounding financial advice of āfinfluencers,ā pension fund investments, strategic bitcoin reserves and the plans of bitcoin developers. Of course, you also get a comprehensive market update: when will bitcoin choose direction again?
This article is for informational purposes only and does not constitute a marketing communication or recommendation. None of the content herein should be considered as investment advice or a substitute for it.
Bitvavo makes no guarantees regarding the accuracy or completeness of the provided information.
Investments in crypto involve risks. There is a possibility of losing your entire invested capital.