Since their all-time highs in November 2021, we’ve seen bitcoin and the broader crypto market drop 65% and 70%, respectively.
It’s been so bad that some analysts are calling it a new Crypto Winter… a reminder of the 2018 plunge that saw bitcoin fall from $19,000 to $3,100.
Here at PBRG, we disagree with this take (you can read some reasons why here and here)…
Because while some investors are selling into fear, one group of buyers is taking advantage of today’s low prices… and buying up billions of dollars’ worth of discounted bitcoin.
Today, I’ll tell you who they are… and why today’s falling bitcoin prices have created the perfect opportunity to join them.
We’ve Been Here Before…
First and foremost, it’s never easy to watch your portfolio burn to embers in a brutal sell-off.
But we’ve been here before. And when the dust finally settles, history shows that prices will rebound to new highs.
For example, we saw were in a similar situation at this same time last year…
By June 2021, bitcoin was sitting at just under $32,000 per bitcoin. That’s a 50% fall from just two months prior, when it hit an all-time high of $63,410.
At the time, we saw headlines like “Bitcoin and Ethereum Are Dead” and “Bitcoin Is Headed for Zero.”
When those articles appeared, bitcoin was sitting at $40,782 and $30,817, respectively… but for many, the writing was on the wall. Bitcoin was finished…
Except it wasn’t.
As you probably know, bitcoin hit a new all-time high of over $68,000 five months later… all while so-called experts continued to write articles calling bitcoin a worthless scam.
But last June, investors were scared… many were unloading their bitcoin positions like they are now…
And publicly traded companies were happy to help them unload. Just like today.
A Bet Against Inflation
Here’s a list of 10 public companies that have added large amounts of bitcoin to their balance sheets:
| Company | Market Cap | BTC Held | Bitcoin % of Mkt Cap |
| MicroStrategy | $1,745,582,843 | 129,218 | 170% |
| Tesla | $673,985,316,947 | 43,200 | 0.1% |
| Core Scientific | $678,468,603 | 8,497 | 29% |
| Marathon Digital | $720,240,775 | 8,133 | 26% |
| Square | $37,616,654,491 | 8,027 | 0.5% |
| Bitfarms | $362,598,917 | 6,075 | 39% |
| Hut 8 Mining | $370,020,540 | 6,460 | 40% |
| Coinbase | $11,203,424,089 | 4,487 | 2% |
| Riot Blockchain | $590,704,392 | 4,464 | 17% |
| Hive Blockchain | $313,783,950 | 4,032 | 30% |
Source: bitcointreasuries.net
Even in the middle of a massive broader crypto sell-off, publicly traded companies like MicroStrategy and Tesla continue to hold billions of dollars in bitcoin. And several others hold hundreds of millions of dollars of bitcoin, too.
And when you compare these numbers to last year, every single company holds either the same amount of bitcoin… or significantly more.
So why are these companies holding bitcoin on their balance sheets during a major sell-off? It all comes down to the dollar…
Since the pandemic outbreak in March 2020, it’s estimated the Federal Reserve and Congress have spent nearly $9 trillion to rescue the U.S. economy.
As the Fed prints more money, they make the rest of the dollars we hold worth less and less… and helps fuel the 40-year record-high inflation we’re seeing today.
But bitcoin is different…
It’s programmed to reduce the supply coming to market. Its scarcity means it will hold or rise in value over time as the U.S. monetary supply expands.
So to protect the value of their money, these companies have been turning to bitcoin.
One example is MicroStrategy. The company was the first to convert fiat holdings on its balance sheet to bitcoin back in August 2020. And it’s followed it up with several more buys since.
MicroStrategy CEO Michael Saylor and his team chose bitcoin over bonds, gold, real estate, and equities.
Right now, it may appear Saylor made a bad bet on bitcoin. After all, his company’s bitcoin holdings are down $900 million.
But like us, Saylor is looking at the long term.
Over the coming years, he predicts bitcoin will be worth $1 million. That’s an 4,067% gain from today – more than enough to outpace even the most vicious cycle of inflation.
I wouldn’t be surprised if Saylor adds more discounted bitcoin in the coming months. At $1 million per coin, this pullback will just look like a blip on the radar.
Now, I understand if you’re still skeptical… After watching bitcoin fall 65%, it can be hard to see past the short-term price charts.
But that’s a mistake.
For years, Daily editor Teeka Tiwari has predicted that institutions would flood into this space… even when the crypto market was at its most volatile. But unloading your portfolio into a sell-off is one of the worst things you can do.
Here’s Teeka:
Right now, the biggest mistake crypto investors are making is confusing short-term weakness in the markets with a long-term downward spiral.
Rather than understanding this is a temporary ailment that will repair itself… they’re just dumping their bitcoin.
It’s the equivalent of amputating an entire limb because of a tiny scratch.
I’ve seen that type of fear-based selling again, and again, and again throughout my career.
Please understand this: Selling great assets into weakness never ends well. You’ll regret it when bitcoin rallies like it has in the past.
As Teeka always says… Volatility is the price of admission for life-changing gains in crypto.
How to Position Yourself During This Sell-off
Despite the significance of these publicly traded companies adding bitcoin to their balance sheets, we don’t suggest buying them for bitcoin exposure.
Some on the list are just holding bitcoin and don’t work in crypto. And by buying stocks, you’re setting yourself up for volatility related to things like company specific news, earnings reports, etc.
Instead, the better option is to own bitcoin yourself. With prices down around $23,800, it’s an ideal time to add bitcoin to your balance sheet if you haven’t already.
And if you hold bitcoin and aren’t comfortable buying more… do not sell it.
When the dust settles and more companies buy bitcoin as a hedge against inflation, the long-term bullish trend will reassert itself – and prices will rise.
Remember, keep a long-term mindset, and as Teeka says, “let time do the heavy lifting.”
Regards,
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Grant Wasylik
Analyst, Palm Beach Daily