Big bets on a hot financial market can be rewarding, but you know the flip side.
These sizzling markets can just as quickly severely punish because they have a way of cooling off just when nearly everyone is convinced that the market will get even hotter.
Consider MicroStrategy, a software firm that borrowed money to invest in Bitcoin.
So far, things haven’t worked out so well. Here’s an August 3 Marketwatch headline:
MicroStrategy racks up $1 billion loss, says CEO will leave that post
That loss was due almost entirely to its investment in Bitcoin and occurred in Q2 — cumulatively, MicroStrategy has racked up around $2 billion in Bitcoin losses.
These losses are mentioned as an update to our January Global Market Perspective coverage:
The chart shows the long-term trend in the largest corporate holder of bitcoin, MicroStrategy Inc. At this point, MicroStrategy is down 62% from a countertrend rally top in February 2021… The Global Market Perspective issued [a] reversal warning in April 2021 based on the latest change of trend in MicroStrategy’s share price: “The huge looming thing is how common these reversals of fortune are going to become.”
At the time of that Global Market Perspective coverage more than six months ago, MicroStrategy had already raised its Bitcoin holdings to $5.9 billion (as of Dec. 30, 2021).
Despite the loss, MicroStrategy is not backing off its bullish view of Bitcoin, with the CEO saying in an early August interview that this is an ideal entry point to buy Bitcoin.
Of course, only time will tell if the CEO turns out to be right or wrong. All the while, Bitcoin’s Elliott wave pattern is revealing its own message.
Our just-published August Global Market Perspective provides a clearly labeled Elliott wave chart of Bitcoin, along with video commentary, in the “Cryptocurrency” section. In that section, you’ll find Elliott wave analysis of Ethereum, XRP and other cryptocurrencies.
Tap into our latest coverage of cryptocurrencies, global stock markets, bonds, precious metals, crude oil, forex and much more by following the link below.