The Wolf Den #1064 - Limitless
Saylor.
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In This Issue:
Limitless
Bitcoin Thoughts And Analysis
Altcoin Charts
Legacy Markets
Blockstream Finds Fresh Capital For Innovation
SOL And ETH Continue To Lead
Litecoin ETF Filed
Larry Fink Speaks Highly Of Ethereum
Urgent: Bitcoin About To Break Its All-Time High
Limitless
The only significant story we've seen in the past week has been the Bitcoin bank announcement from MicroStrategy. I covered it extensively on Monday before it was made public, but now that the transcript is available, we can delve deeper into some key nuances to continue the discussion. One statement that stood out from the interview between Saylor and Bernstein was Saylor's claim that MicroStrategy is aiming to capture growth that is “infinitely scalable.” Here’s the full context of that statement.
Gautam Chhugani: You explained arbitraging the fiat markets with the Bitcoin markets. With $4bn raised from the market, scalability of the debt becomes an important aspect of the strategy. The first question on the MicroStrategy playbook—given the limited operating cashflows from the business, how scalable is the debt strategy? Also, from an investor’s point of view, what are the risks associated with this strategy that could lead to a breakdown of the arbitrage?
Michael Saylor: Good questions. For the first part, I think it's infinitely scalable. I don't have any problem seeing how we could raise $100bn more capital, and then $200bn after that. It's a trillion-dollar asset class going to $10tn, and then to $100tn. The risk is very simple—it's Bitcoin. You either believe Bitcoin is something, or you believe it's nothing. If you believe that Bitcoin is an asset class, not going to zero tomorrow, then you're taking the Bitcoin risk. If you hate Bitcoin, you shouldn't be involved in any of this. Because if you think it's tulip bulbs and it's going to zero, then everything is geared to Bitcoin.
Many of you might read that ambition and dismiss Saylor’s logic as fiction or nonsense—but call me crazy, I find the idea compelling. Michael Saylor has much more to say beyond what I’ve shared here, particularly about how MicroStrategy plans to evolve into a Bitcoin bank. While it’s too lengthy to include in full, this next part captures the essence of his vision.
Michael Saylor: If the Bitcoin network is $10tn, why couldn't there be a $500bn or $1tn finance company that strips the risk, volatility, and performance out of crude capital? What did John D. Rockefeller do? Rockefeller took crude oil and gave you kerosene, gasoline, and diesel. How big can the business get? Pretty big. I think there’s room for a $1tn company that securitizes every flavor of capital. I’m talking about the transformation of capital markets. These securities will be backed by digital capital, not physical, financial, or property-type capital. That’s our end game. We're not here to diversify. The whole value of the stock is that it’s 150% Bitcoin. That’s why people want the stock. My advice to anyone who wants to diversify: put 95% of your portfolio in something other than MicroStrategy. I promise you, we will stay 150% Bitcoin.
Saylor is pushing for something unprecedented. MicroStrategy, once just another tech company, has become a Bitcoin accelerant—a vessel designed to absorb cheap and trapped fiat capital from across the U.S. lending market and funnel it into Bitcoin. I’m unsure if they’ll pull it off, because even if Saylor is right about Bitcoin, he’s still operating within the confines of government, regulation, and politics.
While I can’t predict how the company will navigate these challenges, if MicroStrategy's market cap grows by 5x, 10x, or even 25x—reaching a trillion dollars as Saylor predicted—you can bet that every anti-Bitcoin regulator will be scrutinizing or trying to tear down the operation. However, I do agree with Saylor that raising debt is infinitely scalable, and Bitcoin will be the primary beneficiary. To illustrate this, there’s no better example than what we saw during COVID.
One of the most insightful writeups to emerge during the COVID crisis was Howard Marks' investor memo, “Knowledge of the Future.”
The title itself is an oxymoron, underscoring the memo’s key point: there’s no such thing as certainty when it comes to the future investment environment. Marks discussed “things people may think they know but don’t,” focusing on the unpredictability and absurdity surrounding COVID. This will all tie back to Bitcoin, just bear with me.
What you just read were excerpts from the April 2020 investor memo, where Marks shared various quotes from major media outlets on the Federal Reserve's actions to address the challenges posed by COVID-19.
Here’s where Marks puts his thoughts to paper:
'Limitless' is a critical word here, as it encapsulates Saylor's vision for MicroStrategy to be “infinitely scalable.” This idea of limitless fiat growth underpins his entire strategy.
For MicroStrategy to transform into a Bitcoin bank, it must bet on one constant: the U.S. government’s endless printing of money. No matter who wins the next election, both parties are poised to raise the budget by trillions through increased spending. The expansion of markets and the flood of fiat currency will naturally trickle into MicroStrategy’s funnel, fueling its Bitcoin accumulation. As fiat depreciates and Bitcoin adoption grows, Bitcoin will appreciate against the dollar, perpetuating this cycle.
Let’s return to Howard Marks on government intervention:
“Capitalism without bankruptcy is like Catholicism without hell.”
That’s a striking quote because it’s true.
Catholicism without hell would result in fewer believers motivated to live a moral life, as the idea of eternal punishment would no longer exist. Similarly, capitalism without bankruptcy leads to businesses operating without fear of failure, reducing accountability and stifling innovation. The absence of consequences for poor decisions creates an environment ripe for recklessness, a space where Bitcoin can thrive.
While Bitcoin doesn’t have the luxury of government backing in times of crisis, it benefits indirectly from the unlimited printing of fiat currency. As central banks flood the market with fiat, Bitcoin’s scarcity and fixed supply become even more attractive, allowing it to flourish amid monetary inflation. MicroStrategy is acting on this strategy at full throttle.
This is how Marks concludes:
I question whether MicroStrategy will succeed in its ambitions, but I am confident that all the necessary conditions are in place for Bitcoin to accelerate as the world heads in the wrong direction. The theory behind MicroStrategy’s decisions is sound. Howard Marks was making the case for Bitcoin and MicroStrategy back in 2020, without even realizing it.
As long as governments continue limitless printing, raising debt will remain infinitely scalable—and Bitcoin will benefit immensely. Furthermore, MicroStrategy isn’t rushing. “If we got too levered, we could just sell billions of dollars of equity to delever. We’re not doing everything overnight; instead, we’re moving in $500mn to $1bn tranches, progressively delevering and leveraging.”
Something tells me it will all work out.
We’re just one major news story away from Bitcoin printing a ferocious candle. However, election uncertainty will weigh heavily until we have a result. Something has to give soon… tick, tock.
Bitcoin Thoughts And Analysis
Bitcoin looks like it wants to go straight to $70,000. The question remains - can it break this key level and make a higher high?
The local $66,550 resistance is broken…
Altcoin Charts
For those who are new here, I share SETUPS and not SIGNALS. These are ideas that I am watching - if a certain thing happens, then the trade triggers. I am not telling you what to buy or when. I am showing you how I am watching certain charts and what has to happen for me to take a trade.
BITCOIN DOMINANCE
Wondering why I’m not sharing many altcoin charts lately?
It’s because Bitcoin Dominance continues to climb, reaching new highs for this entire cycle. While some altcoins may perform well against the USD and a few might even outpace Bitcoin, most are getting crushed by the honey badger.
Right now, it’s all about Bitcoin. Altcoins will have their moment, but for now, Bitcoin is in the spotlight.
Legacy Markets
US stock futures stabilized on Wednesday following a tech-driven selloff, with chip stocks showing some recovery after a profit warning from ASML Holding NV. Contracts for the S&P 500 and Nasdaq 100 remained steady, with Nvidia Corp. slightly up in premarket trading after a significant decline the day before.
Morgan Stanley’s earnings report is anticipated, as other major banks like JPMorgan and Citigroup exceeded expectations with strong trading results. The pound weakened by 0.6% after UK inflation dropped below the Bank of England’s target, prompting speculation about rate cuts. The FTSE 100 outperformed European stocks, while UK gilt yields fell.
ASML’s decline caused a broader selloff in chip stocks, erasing over $420 billion in market value. However, analysts noted that demand for artificial intelligence and supportive central bank policies could provide market resilience. Other stock movements included a 7% rise in JB Hunt shares after strong earnings and a drop in Qualcomm, which may delay its bid for Intel.
In Europe, the Stoxx 600 index fell, driven by losses in ASML and luxury stocks like LVMH. Meanwhile, Chinese property stocks surged in Asia as markets awaited a government briefing. Oil prices remained near $74 per barrel, and gold continued to rally as the US presidential election approached.
Key events this week:
Morgan Stanley earnings, Wednesday
ECB rate decision, Thursday
US retail sales, jobless claims, industrial production, Thursday
Fed’s Austan Goolsbee speaks, Thursday
China GDP, Friday
US housing starts, Friday
Fed’s Christopher Waller, Neel Kashkari speak, Friday
Some of the main moves in markets:
Stocks
S&P 500 futures were little changed as of 7:01 a.m. New York time
Nasdaq 100 futures rose 0.1%
Futures on the Dow Jones Industrial Average were little changed
The Stoxx Europe 600 fell 0.3%
The MSCI World Index fell 0.2%
Currencies
The Bloomberg Dollar Spot Index was little changed
The euro was little changed at $1.0890
The British pound fell 0.4% to $1.3016
The Japanese yen fell 0.1% to 149.38 per dollar
Cryptocurrencies
Bitcoin rose 1.9% to $67,759.12
Ether rose 1.7% to $2,616.01
Bonds
The yield on 10-year Treasuries declined two basis points to 4.01%
Germany’s 10-year yield declined two basis points to 2.20%
Britain’s 10-year yield declined eight basis points to 4.08%
Commodities
West Texas Intermediate crude fell 0.6% to $70.17 a barrel
Spot gold rose 0.4% to $2,673.92 an ounce
Blockstream Finds Fresh Capital For Innovation
Blockchain technology and infrastructure company Blockstream, led by Adam Back, has secured $210 million through a convertible note financing round, with Fulgur Ventures leading the investment. The goal of this funding is to accelerate the adoption of Blockstream's Bitcoin Layer 2 technologies, expand its mining operations ahead of the next Bitcoin market cycle, and bolster its Bitcoin treasury.
Blockstream’s Layer 2 solutions include the Liquid Network, which facilitates the tokenization of assets, and Core Lightning, which enables faster and cheaper Bitcoin transactions. The company aims to establish Liquid as the primary infrastructure for tokenizing real-world assets within the Bitcoin ecosystem. “This latest fundraise represents a defining moment for Blockstream as we embark on a critical new phase of growth to further bridge the gap between Bitcoin and the wider world of finance,” said Adam Back.
Blockstream reports that over $1.8 billion in assets, such as stablecoins, tokenized bonds, and securities, have been issued on the Liquid network to date, with more than 3,844 BTC locked on-chain. Notable products using the platform include Bitfinex’s tokenized securities offerings and STOKR’s issuance of the MicroStrategy Note (CMSTR), fully backed by MicroStrategy shares and tradeable peer-to-peer for Bitcoin on Liquid’s decentralized exchange platform, SideSwap.
SOL And ETH Continue To Lead
Solana’s total value locked (TVL) has surged past the $6 billion mark, and Australia launched its first Ethereum ETF yesterday—let’s break it down.
Starting with Solana—according to DefiLlama data, over 40 million SOL tokens are now locked in DeFi protocols, a substantial rebound from just 14 million SOL at the start of the year. The chart shows that if SOL continues this upward momentum, it may not be long before the June 2022 all-time high of 67.5 million locked SOL turns from resistance into support. A remarkable stat: “Since the start of October, Solana’s TVL has increased by $1 billion, with Raydium alone accounting for $600 million of that growth.”
Now for Ethereum—yesterday, Australia launched the Monochrome Ethereum ETF (IETH) on the Cboe Australia exchange, offering in-kind redemption and subscription. This feature allows investors to directly transfer ETH tokens between crypto exchanges, platforms, decentralized wallets, and cold storage into the ETF, and vice versa. Although it had a slow start, with just $183,000 in net assets on day one, the key takeaway is that the product is now available and poised for future growth.
While the in-kind redemption and subscription feature is a valuable tool for investors, I don’t see it being the main driver of growth. Many ETF buyers are older investors who likely prefer the simplicity of not managing the underlying assets themselves, which is why they opt for ETFs in the first place.
Litecoin ETF Filed
Canary Capital, the firm behind the recent XRP ETF filing, has officially submitted a Litecoin ETF application to the SEC. However, there’s nothing particularly unique to distinguish this filing from the many others that have already been submitted and approved. The same logic applies here as it does for other ETFs: as long as Gary Gensler remains at the helm of the SEC, the chances of these approvals happening anytime soon are slim to none.
Larry Fink Speaks Highly Of Ethereum
I was reviewing the Larry Fink transcript from the Q3 end-of-quarter conference call, and I noticed that Ethereum was indeed mentioned, though it wasn’t clearly highlighted in the version I shared yesterday. The transcription seems to have made it difficult to spot, so I want to highlight it clearly here.
Larry Fink said the following on the call:
"The role of Ethereum as a blockchain can grow dramatically. If we can create more acceptability, more transparency, and more analytics related to these assets, then it will be expanded. But I truly don't believe it's a function of more regulation or less regulation. I think it’s a function of liquidity and transparency. Through that process, years ago, when we started the mortgage markets and the high-yield markets, it started off very slow, but it built as we developed better analytics and data, along with acceptance and a broadening of the market. I truly believe we will see a broadening of the market in digital assets."
It’s clear that Fink sees a promising future for Ethereum, focusing on liquidity, transparency, and market acceptance rather than regulation as the primary drivers of growth.
Urgent: Bitcoin About To Break Its All-Time High!
The latest news and market updates suggest that Bitcoin may be on the cusp of a major breakout. I am joined by Andrew Parish from The Arch Public who will help me break down the recent developments in crypto and provide his bullish outlook!
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The views and opinions expressed here are solely my own and should in no way be interpreted as financial advice. Every investment and trading move involves risk. You should conduct your own research when making a decision. I am not a financial advisor. Nothing contained in this e-mail constitutes or shall be construed as an offering of financial instruments or as investment advice or recommendations of an investment strategy or whether or not to "Buy," "Sell," or "Hold" an investment.