Bitcoin fever hits Wall Street: Companies from fitness to pharmaceuticals are jumping into bitcoin in hopes of replicating the explosive success of MicroStrategy. We talk about it in the Cryptic Analysis, after the essential news to remember this week.
Block 1: Essential news
Brazil: Towards a sovereign bitcoin reserve?
A bill tabled by Brazilian MP Eros Biondini proposes to create a sovereign strategic reserve in bitcoins (RESBit), representing up to 5% of Brazil’s international reserves, or approximately $370 million. This initiative aims, according to the MP, to diversify Treasury assets, protect against geopolitical risks and support the issuance of a central bank digital currency (MNBC). The text provides for asset management by the Ministry of Finance with strict controls, semi-annual reports, and training in blockchain and cryptoeconomics. Inspired by the example of El Salvador, and although unlikely at this stage, this project reflects the interest of certain senior officials in bitcoin.
United States: The CFTC soon to be responsible for crypto regulation?
President-elect Donald Trump is reportedly considering transferring regulation of cryptocurrencies from the SEC (Securities and Exchange Commission) to the CFTC (Commodity Futures Trading Commission), selon Fox Business. This agency, seen as more flexible, could reclassify certain cryptocurrencies as commodities rather than securities, which would mark a turning point in the American regulatory framework. The SEC, criticized for its severity under Gary Gensler, would retain its role in securities. If this change comes to fruition, it would usher in a new era of crypto regulation in the United States, aligned with Trump’s pro-crypto vision during his campaign.
Gary Gensler will leave his post on January 20
Gary Gensler, Chairman of the Securities and Exchange Commission (SEC), announced his resignation effective January 20the day of Donald Trump’s inauguration. This decision, expected since Trump’s victory, puts an end to his controversial mandate marked by tensions over the regulation of cryptocurrencies. In a statement, Gensler thanked President Biden and his colleagues, while emphasizing the SEC’s commitment to enforcing the law “without fear or favor.”
Charles Schwab will offer cryptocurrency trading
Charles Schwab, one of the world’s largest asset managers with nearly $10 trillion under management, announced its reinforced entry into the cryptocurrency market. During the Schwab IMPACT Conferenceits future CEO, Rick Wurster, revealed that the company wanted to offer its clients the possibility of trading cryptocurrencies directly, in addition to products already available such as ETFs or Bitcoin Futures. Charles Schwab also acquired a stake in EDX Markets, suggesting a broader integration strategy into the crypto market, potentially with the creation of an exchange.
Block 2: Cryptic Analysis of the week
The bitcoin playbook: A new wave of speculation for businesses?
The meteoric rise of bitcoin in recent weeks has sparked a new trend among publicly traded companies. From fitness equipment makers to biopharmaceutical companies to battery producers, more than ten companies have announced plans to allocate a portion of their cash reserves to bitcoin in the month of November alone. For these companies, bitcoin is not just a digital asset on which to make profits: it has become the last ticket to the stock market boom.
This corporate gold rush has its origins in a strategy implemented by Michael Saylor, executive chairman of MicroStrategy. Since 2020, Mr. Saylor has transformed his company from a modest software company into an investment vehicle in fact in bitcoin. The results? A surge in MicroStrategy’s stock price, which has increased 30-fold since it began buying bitcoins, and whose reserve value is currently estimated at $38 billion (386,700 BTC). The company’s shares have doubled since Donald Trump’s electoral victory, driven by his pro-crypto stance.
MicroStrategy stock price
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Pursuing the MicroStrategy dream
Companies like Anixa Biosciences (ANIX) are eager to replicate the success of MicroStrategy and its strategy with bitcoin. Last Friday, Anixa announced that its board approved the purchase of bitcoin, sending its stock up 19% before closing with a 5% gain. Similarly, fitness equipment company Interactive Strength (TRNR) revealed plans to invest $5 million in bitcoin. Its stock rose 80% during the day, before closing with a jump of 11%.
The trend continued with Hoth Therapeutics (HOTH), which announced the purchase of $1 million in bitcoin, which briefly sent its stock up 25%. Other companies, including Rumble, LQR House, Cosmos Health, Nano Labs and Solidion Technology, saw similar temporary surges after revealing their bitcoin cash flow strategies.
However, not all the stories have been positive. Acurx Pharma (ACXP) saw its shares fall after announcing its plans, a reminder that riding the bitcoin wave is no guarantee of success.
Speculation or strategy?
The rush to MicroStrategy underscores bitcoin’s growing appeal as a treasury asset for businesses. For some industry experts, if a few years ago buying bitcoin seemed too risky, today not buying it can be considered risky. For many companies, aligning with the crypto trend is not only about diversification, it is also a way to access new capital markets by raising funds, like the strategy of MicroStrategy which financed the purchase of bitcoins through the issuance of convertible debt securities.
Skeptics also warn against parallels with past fashions. In the late 2010s, companies added the term “Blockchain” to their name to capitalize on crypto mania, with infamous cases like that of Long Island Iced Tea, which renamed itself Long Blockchain and tripled the price of its shares, before being delisted from Nasdaq and being accused of insider trading.
If the enthusiasm is real for companies that store bitcoins in their treasury, the risks are just as significant. Companies diving headlong into BTC face potential volatility, unsustainable valuations, and the possibility of falling into the same trap as past speculative bubbles. In the case of MicroStrategy, a violent and lasting reversal of bitcoin could even jeopardize the company’s solvency. I spoke to you in more detail about this case in the last episode of Crypt On It: MicroStrategy, the company that outperforms Nvidia
Now, it remains to be seen whether this wave of corporate adoption marks a transformative moment for bitcoin and the ecosystem that revolves around it, or if it is a fleeting trend. Response in the coming months.
Block 3 : Tops & Flops
Cryptocurrency rankings
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Block 4: Readings of the week
Crypto Industry Helps Donald Trump Pick SEC Predicts(Wired, in English)
The three pillars of the Bro-Economy (The Atlantic, in English)
Dogecoin is a joke – so what’s behind its rally? (The Conversation, in English)
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