Last night, Microstrategy founder Michael Saylor tweeted again that Microstrategy purchased approximately 3,000 bitcoins for approximately US$155.4 million between February 15 and February 25, with an average price of approximately US$51,813 per bitcoin.
At the same time, Bitcoin broke through 53,000 USDT, 54,000 USDT, 55,000 USDT, and even exceeded 56,000 USDT, setting a new high since December 2021, and the market atmosphere seemed to gradually return to a bull market.
Behind this, facing the end of a new round of halving cycle, what new catalysts are there in terms of market, technology and other dimensions for Bitcoin in 2024? Will they push Bitcoin to a higher level?
01 New “Pixiu” in the crypto world
As an old investor in Bitcoin, MicroStrategy's purchase of Bitcoin has long been an open strategy. The news of its public purchase of Bitcoin can be traced back to August 11, 2020.
As of now, Microstrategy has purchased 193,000 bitcoins for approximately US$6.09 billion, with an average price of US$31,544 per bitcoin.
Putting aside the trading platforms that serve as custodians, the company entities that currently hold more than 100,000 bitcoins, apart from Block.one and the long-defunct Mt.Gox, is MicroStrategy, which ranks third.
To some extent, MicroStrategy has taken over the baton from Grayscale since 2020 and become the new "Pixiu" of cryptocurrency: MicroStrategy's 190,000 BTC currently ranks first among listed companies' BTC holdings, with a total value of more than US$10 billion.
Among listed companies, in addition to MicroStrategy, the second is the leading listed mining company Marathon, which holds 13,286 BTC, accounting for 0.063% of the Bitcoin issuance, and is currently worth about US$700 million; while Tesla still holds 9,720 Bitcoins, worth about US$275 million, and has not changed its Bitcoin holdings for the sixth consecutive quarter.
Interestingly, MicroStrategy’s total market value is currently $13.5 billion, so the fair value of the BTC it holds accounts for about 80% of its market value, which means that 80% of its net assets can be understood as the value of Bitcoin. This has led many investors to configure MicroStrategy as a “quasi-Bitcoin ETF.”
Even half a month ago, before this round of stock price surge, MicroStrategy's total market value was only 7 billion US dollars. At one point, the value of BTC it held was higher than its total market value, making it a "high-quality asset" with a "price-to-book ratio" of less than 1.
Of course, since the approval of the spot Bitcoin ETF on January 10, a new and more powerful cryptocurrency "Pixiu" has gradually surfaced - in just one month, the BTC holdings of 9 new spot Bitcoin ETFs (excluding GBTC) have completed the reversal of MicroStrategy.
Bitcoin holdings ranking
Currently, the total net asset value of the Bitcoin spot ETF is US$37.67 billion, the ETF net asset ratio (market value as a percentage of the total market value of Bitcoin) is 3.76%, and the historical cumulative net inflow has reached US$5.63 billion.
In general, each round of market has its own crypto "Pi Xiu". Looking back now, in the cycle from 2020 to 2022, Grayscale's purchases and Tether's additional issuance were regarded as the "bull market engine" to drive incremental OTC funds. Since 2024, the spot Bitcoin ETF and MicroStrategy have successfully filled the gap and taken over the historical task of driving the market.
02 Bitcoin L2 trend is in the ascendant
Since the emergence of Ethereum and the public chain ecosystem, whether it was the ICO craze in 2017, the DeFi summer in 2020, or the subsequent NFT craze, almost every industry carnival over the years was no longer dominated by Bitcoin, and there was even a gradual trend of leaving Bitcoin behind to dance alone. It was not until the Ordinals craze since 2023 that BTC was finally no longer absent.
With the explosive growth of the Bitcoin ecosystem, the development of Bitcoin Layer2 in 2024 has almost become a mainstream narrative that is set in stone.
After all, as the most valuable asset in the circle, BTC is a new asset form created with the help of inscriptions, and it is destined to give rise to new demands. Although there are still underlying defects in directly implementing smart contract scenarios such as DeFi, a series of pan-BTC L2s such as Stacks and RSK may be an opportunity for a breakthrough, and even coupling with Ethereum is one of the options (just like the renBTC and WBTC bridging the Ethereum ecosystem).
Therefore, many people predict that in the next bull market, there will be at least 10-15 BTC L2-related targets among the top 100 projects by market value, and there will be projects that enter the top 10.
From this perspective, Bitcoin, which has now reached a market value of one trillion US dollars, is already the largest "sleeping pool of funds" to be mined in the crypto world. This also makes Bitcoin's programmability, especially L2 that carries larger funds and richer use cases - such as creating a series of applications such as Swap, lending, liquidity mining, etc., gradually becoming less out of reach, and is gradually becoming a rigid demand.
Pantera partner Franklin Bi clearly pointed out: If DeFi reaches the same proportion on Bitcoin as on Ethereum, the total value of DeFi applications on Bitcoin is expected to reach US$225 billion (25% of Bitcoin's market value), and over time, its scale may fluctuate between US$72 billion and US$450 billion (8% to 50% of Bitcoin's market value).
03 Potential variables in the evolution of Bitcoin technology
Colored coins in 2012 and SegWit in 2017 have both given Bitcoin expansion and new possibilities to varying degrees, and have promoted a wave of ecological prosperity by gradually becoming a reality.
However, since the Tarpoot upgrade in 2021 brought new combinations and possibilities to Bitcoin in terms of performance, privacy and even smart contracts, there has been little wave of technological innovation in Bitcoin that has attracted widespread attention in the past three years.
It was not until 2023 that the Ordinals protocol gave rise to a new wave of new asset issuance on Bitcoin, which attracted the market's attention to Bitcoin's expansion track, and especially the discussion volume on the Bitcoin technical level began to increase again.
Since the beginning of 2024, if there is any new trend worth paying attention to in the recent Bitcoin technology level, it is undoubtedly the development and innovation of RGB and the underlying lightning network dimension.
As an exploration plan with the initial concept proposed in 2018, the officially available version of RGB is expected to be officially launched in April this year. It is essentially a scalable and private smart contract system suitable for Bitcoin and Lightning Network. It aims to integrate the security of the Bitcoin network, the efficiency of the Lightning Network and its own scalability, giving them maximum expansion.
To put it simply, it is to carry forward the original intention of Bitcoin as "electronic currency" and allow two people to realize purely P2P encrypted and private transfers just like paper currency transactions.
Of course, its experience is average, and only two people with transaction intentions can transfer money (to ensure anonymity) - that is to say, if you want to transfer money to other people, you even need to get the other party's consent and confirmation first, and both parties must be online at the same time; secondly, because the contract status cannot be globally visible, RGB cannot support use case scenarios involving multiple people.
Not long ago, Nervos launched the RGB++ solution based on the original RGB protocol. It attempts to entrust RGB's asset status, contract release and transaction verification to the CKB public chain. CKB acts as a third-party data hosting and computing platform, and users no longer need to run the RGB client themselves.
In general, the ecosystem of the Lightning Network has gradually developed. OmniBOLT, Taproot and RGB have all flourished or are about to be launched. Whether in the dimension of new asset issuance or capacity expansion, there are many new variables worthy of attention, and most of them have been accumulated for a long time. Therefore, 2024 is likely to be another "year of technological evolution" for Bitcoin.
04 Summary
There are less than two months left until the fourth Bitcoin halving, which is expected to take place on April 21, 2024, when the block reward will drop from 6.25 BTC to 3.125 BTC.
Source: https://history.btc123.fans/half/
From this perspective, with the current continuous inflow of funds into ETFs, MicroStrategy's buying spree, the continuous evolution of the technology ecosystem such as RGB, and the halving event, Bitcoin is likely to have multiple layers of "safety cushions" under multiple positive factors for at least the next two months. Even if there is a possibility of a sharp correction before and after the halving, it can also play a certain hedging role.
However, although the footsteps of this halving are getting closer, the expansion of Bitcoin in all dimensions has obviously ushered in almost all new variables, and even overwhelmed the attention of the halving. As for where these new variables will eventually lead Bitcoin, it is worth looking forward to.
