Good morning everyone, another ATH! $49,700.. amazing. I believe we are on the run for $100,000 a coin by April 1st. I know what you guys are thinking, that’s bold. This would happen for a couple various reasons.
1.) SEC Filings for this quarters purchases of Bitcoin are due by 2/16/2021 (Tuesday). This means that any company who has been purchasing Bitcoin this quarter has to report it to the SEC by Tuesday. I believe we will see a few major corporations go public with a play similar to Microstrategy, and Tesla. Over the past week purchases of up to a billion dollars has been bought and moved into cold storage since Tesla’s announcement.
2.) 1 Trillion dollar market cap. We are above the 900 billion dollar market cap for Bitcoin and we were told by the SEC once we breach 1 trillion an ETF would be approved for Bitcoin. This means Greyscale will have competition, mainstream adoption would be here. Prices would surge even higher.
3.) This goes back to Tesla’s purchase of 1.5B in Bitcoin. Looking into the purchase a little more I found a few fascinating contingencies. If Tesla’s Bitcoin price drops during the quarter they must report it on the quarterly earnings. Lets break this down, if they make 300million from car sales, but the 1.5B in Bitcoin goes down to 1.2B in bitcoin and lose 300million, they deduct that from their earnings putting them at 0. This may scare some people who do not understand what is going on causing a reduction in stock price to be eaten up by wall street. The flip side to this is a reversal of an impairment. You can reverse an impairment loss only when there is a change in the estimates used to determine the asset's recoverable amount. Breaking this down, say the price of Bitcoin rises to 1.8B from 1.5B they must report 300m in profit and pay taxes on it. The amazing thing is that if the 1.5B DOUBLES to 3.0B They no longer have to pay taxes on its gains or report it every earning.
Basically this move is genius because its a win win for Tesla, if this playbook goes through wall street more and more are likely to purchase Bitcoin. While Bitcoin is becoming more and more popular, there is less and less available. It is the most beautiful thing about Bitcoin is the scarcity. Demand increases, supply shrinks, supply can never be replenished.
Uber had its quarterly earnings 2 days ago and have been struggling to produce cash flow. They shot themselves in the foot when asked about adopting Bitcoin similar to Elon’s Tesla’s move and they said the idea was quickly dismissed “"We're going to keep our cash safe. We're not in the speculation business." Ubers stock has been declining since the comment 2 days ago dropping more than 6% from its highs. They don’t have any cash to keep safe. This is a prime opportunity for lyft to come into the bitcoin world and publicly announce that they will adopt Bitcoin. Lyft is lacking an additional source of revenue by not having an uber eats.
* Have a great Vday everyone, talk to you tomorrow.
