Pete | DFDV, APYX @Pete_Humiston - Twitter Profile

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about 1 month ago

Who remembers when $MSTR sold 704 $BTC in December 2022? NO ONE. So naturally, one should ask, "Why?" Two reasons. 1) The sale benefited shareholders. Strategy sold 704 BTC to realize tax losses, strengthening the balance sheet and creating potential tax benefits before purchasing even more $BTC just two days later. Nobody took it seriously as a change to the long-term Bitcoin thesis. 2) The market wasn’t looking for someone to blame. December 2022 already had its villains. FTX had just imploded, following Luna, 3AC, Celsius, Voyager, BlockFi, Genesis… the market had all the explanation it needed for why $BTC was down. Fast forward to today. $BTC has been correcting since peaking around $83K a few weeks ago, sentiment has deteriorated, and suddenly everyone is desperate for a new narrative. That’s because markets don’t just trade on fundamentals. They trade on stories.... Bull markets search for reasons prices must go higher. Bear markets search for reasons prices must go lower. Most participants subconsciously seek validation that their positioning is correct; they anchor themselves in narratives that reinforce their existing views. That’s simply human nature. We all want to validate our own biases. Side note... that’s also why the best investors are willing to change their minds when new information emerges instead of becoming emotionally attached to a thesis. Personally, I don’t think the loudest critics of $STRC and $MSTR are fundamentally bearish on either, or at least they don't possess the knowledge for their views to have material weight. Mostly what I see are speculators hoping for sub-$40K or sub-$50K Bitcoin, or KOLs trying to desperately engagement farm themselves back to relevancy. Ironically, many of these same people spent the bull market explaining why $BTC had to reach +$200K. As for @Strategy itself? The company remains well-capitalized and has numerous tools available to meet its obligations and get the flywheel going again. Even if Strategy were to be as extreme as to sell additional $BTC, there is more than enough liquidity depth to absorb it. Anyone who has taken the time to understand the $MSTR story and its products knows things don’t really begin to break unless BTC remains deeply depressed, something like sub-$20K, for several years. This is a dynamic that has existed since Strategy's inception, and we're just back to another moment in time where people (who don't understand the story) are emotionally calling for the demise of the largest holder of $BTC. And let's not forget, it doesn't take much for sentiment to flip after the right announcement and/or green candle. The crypto market is notorious for sentiment flipping at the drop of a hat and for being highly emotionally driven. As it should, we are all speculators. The idea that selling 32 BTC somehow “broke the narrative” carries little weight. We’ve literally seen Strategy sell Bitcoin before. The difference is that in 2022, the market understood the context and wasn't hungry to find a sacrificial lamb to justify getting the prices they wanted. To me, this looks less like a fundamental breakdown and more like a technical correction, deteriorating sentiment, and sharks smelling blood in the water. In case you forgot, $BTC's market cap is still only about one-quarter of $NVDA. It doesn’t take much to move the price in the short term, especially when sentiment is already fragile, and consensus has yet to be that "the bottom is in." Short-term price action and long-term fundamentals aren’t always telling the same story. Also, don’t forget: in investing, subscribing to the “wisdom of the crowd” is one of the surest ways to underperform.

pete_humiston's tweet photo. Who remembers when $MSTR sold 704 $BTC in December 2022? NO ONE.

So naturally, one should ask, "Why?" Two reasons.

1) The sale benefited shareholders.

Strategy sold 704 BTC to realize tax losses, strengthening the balance sheet and creating potential tax benefits before purchasing even more $BTC just two days later. Nobody took it seriously as a change to the long-term Bitcoin thesis.

2) The market wasn’t looking for someone to blame. December 2022 already had its villains.

FTX had just imploded, following Luna, 3AC, Celsius, Voyager, BlockFi, Genesis… the market had all the explanation it needed for why $BTC was down. Fast forward to today. $BTC has been correcting since peaking around $83K a few weeks ago, sentiment has deteriorated, and suddenly everyone is desperate for a new narrative.

That’s because markets don’t just trade on fundamentals. They trade on stories.... Bull markets search for reasons prices must go higher. Bear markets search for reasons prices must go lower.

Most participants subconsciously seek validation that their positioning is correct; they anchor themselves in narratives that reinforce their existing views. That’s simply human nature. We all want to validate our own biases.

Side note... that’s also why the best investors are willing to change their minds when new information emerges instead of becoming emotionally attached to a thesis.

Personally, I don’t think the loudest critics of $STRC and $MSTR are fundamentally bearish on either, or at least they don't possess the knowledge for their views to have material weight. Mostly what I see are speculators hoping for sub-$40K or sub-$50K Bitcoin, or KOLs trying to desperately engagement farm themselves back to relevancy. Ironically, many of these same people spent the bull market explaining why $BTC had to reach +$200K.

As for @Strategy itself? The company remains well-capitalized and has numerous tools available to meet its obligations and get the flywheel going again. Even if Strategy were to be as extreme as to sell additional $BTC, there is more than enough liquidity depth to absorb it. Anyone who has taken the time to understand the $MSTR story and its products knows things don’t really begin to break unless BTC remains deeply depressed, something like sub-$20K, for several years. This is a dynamic that has existed since Strategy's inception, and we're just back to another moment in time where people (who don't understand the story) are emotionally calling for the demise of the largest holder of $BTC.

And let's not forget, it doesn't take much for sentiment to flip after the right announcement and/or green candle. The crypto market is notorious for sentiment flipping at the drop of a hat and for being highly emotionally driven. As it should, we are all speculators.

The idea that selling 32 BTC somehow “broke the narrative” carries little weight. We’ve literally seen Strategy sell Bitcoin before. The difference is that in 2022, the market understood the context and wasn't hungry to find a sacrificial lamb to justify getting the prices they wanted.

To me, this looks less like a fundamental breakdown and more like a technical correction, deteriorating sentiment, and sharks smelling blood in the water. In case you forgot, $BTC's market cap is still only about one-quarter of $NVDA. It doesn’t take much to move the price in the short term, especially when sentiment is already fragile, and consensus has yet to be that "the bottom is in."

Short-term price action and long-term fundamentals aren’t always telling the same story.

Also, don’t forget: in investing, subscribing to the “wisdom of the crowd” is one of the surest ways to underperform.

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Pete | DFDV, APYX

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