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The Daily: MicroStrategy eyes trillion-dollar valuation in bitcoin bank endgame, Paradigm invests $20 million in Layer 2 project and more

The Daily: MicroStrategy eyes trillion-dollar valuation in bitcoin bank endgame, Paradigm invests $20 million in Layer 2 project and more

The BlockThe Block2024/10/11 17:51
By:James Hunt

Michael Saylor said MicroStrategy’s endgame was to become the world’s leading bitcoin bank with the potential to reach a trillion-dollar valuation.Paradigm has invested $20 million in Ithaca, a spinoff from the venture capital firm that is building a Layer 2 blockchain called Odyssey.Blockchain analytics platform Arkham plans to launch a crypto derivatives exchange in November, targeting retail investors in an attempt to compete with giants like Binance.The following article is adapted from The Block’s new

The Daily: MicroStrategy eyes trillion-dollar valuation in bitcoin bank endgame, Paradigm invests $20 million in Layer 2 project and more image 0

It's Friday! In today's newsletter, Michael Saylor's MicroStrategy eyes a trillion-dollar valuation in its bitcoin bank endgame, Paradigm invests $20 million in the firm behind the Layer 2 blockchain Odyssey, blockchain analytics platform Arkham ARKM +19.62% plans to launch a crypto derivatives exchange and more.

Meanwhile, Mt. Gox pushes its repayment deadline to 2025.

Let's get started.

MicroStrategy eyes trillion-dollar valuation in bitcoin bank endgame

Michael Saylor said MicroStrategy's endgame was to become the world's leading bitcoin bank with the potential to reach a trillion-dollar valuation.

  • "[Bitcoin BTC +5.19% ] is the most valuable asset in the world. The endgame is to be the leading bitcoin bank, or merchant bank, or you could call it a bitcoin finance company," Saylor told analysts at research and brokerage firm Bernstein.
  • The firm's strategy is based on its long-term belief in bitcoin as the best deflationary money. Currently, bitcoin makes up 0.1% of global financial capital, and Michael Saylor predicts this will rise to 7%, implying a $13 million price per bitcoin by 2045, Bernstein digital asset lead Gautam Chhugani explained in a note to clients.
  • If U.S. capital markets allow MicroStrategy to raise funds through debt, equity and other instruments, it will happily scale and arbitrage between them and bitcoin, which Saylor expects to grow by an average of 29% annually in his "base case" scenario, the analyst said.
  • Chhugani also noted Saylor's view that bitcoin's underlying growth yield was attractive enough to continue making money on capital markets arbitrage and not lend out bitcoin like a traditional banking model.
  • "We think it’s a better idea to borrow $10bn from people who would be eager to lend and give them a 100 basis point more yield, and then lend to bitcoin for 30% to 50% interest with no counterparty risk," Saylor explained.
  • "Once you get past the volatility and learn to manage it, the bear-case scenario I foresee is bitcoin increasing by only 22% a year over the next decade. Who would pay you 22% interest?"
  • MicroStrategy has aggressively acquired bitcoin since 2020, with its current holding of 252,220 BTC valued at over $15 billion, against a total cost of around $9.9 billion and $4 billion worth of debt.
  • "We just keep buying more. Bitcoin is going to go to millions a coin, you know, and then we create a trillion dollar company,” Saylor said.

Paradigm invests $20 million in firm behind Layer 2 blockchain Odyssey

Paradigm has invested $20 million in Ithaca , a spinoff from the venture capital firm that is building a Layer 2 blockchain called Odyssey.

  • Paradigm's CTO, Georgios Konstantopoulos, will serve as Ithaca's CEO while continuing in his role at Paradigm, and Paradigm co-founder Matt Huang will act as Ithaca's chairman.
  • "Think of Ithaca as the company that is building the full stack of products and tools that developers need to ship faster and that consumers need to have less and less friction," Konstantopoulos told The Block.
  • Built using the OP Stack, Odyssey is currently live on testnet and will offer advanced features from Ethereum's future roadmap, including more powerful smart contract wallets for easier user onboarding.

Arkham plans to launch crypto derivatives exchange

Popular blockchain analytics platform Arkham plans to launch a crypto derivatives exchange in November, targeting retail investors in an attempt to compete with giants like Binance.

  • However, the exchange will not be available for U.S. customers and will be located in the Dominican Republic, where Arkham is currently in the process of obtaining a free-trade zone license, Bloomberg reported, citing a person familiar with the matter.
  • Arkham CEO Miguel Morel mentioned earlier this year that while it planned to explore new ways to monetize the platform in 2024, its core functions would remain free.
  • Arkham's native token, ARKM, has gained around 18% during the past 24 hours to trade at $1.53, according to The Block's Arkham Price Page .

Crypto whale loses $35 million in phishing attack

A crypto whale lost around $35 million worth of tokens in a phishing attack on the Blast network late Thursday.

  • The attacker tricked the victim into unknowingly signing a fraudulent "permit" message, which allowed the funds to be drained from their wallet, crypto anti-scam solution Scam Sniffer first noted.
  • The whale lost 15,079 Few Wrapped Duo ETH (fwDETH), a derivative of ether issued by DeFi protocol Duo on the Blast network, during the incident.
  • The attack caused a sharp decline in fwDETH's value, dropping over 90% from $2,000 to $100 before recovering to around $1,200, according to data from DexScreener.

China's fiscal stimulus announcement this Saturday could be market moving for bitcoin

China's upcoming announcement on fiscal stimulus measures this Saturday could inject fresh liquidity into risk assets, potentially boosting the crypto market, according to several analysts.

  • Bitfinex analysts expect increased volatility in bitcoin prices following the announcement, with potential market surprises if the measures are more aggressive than expected.
  • "Easing monetary and fiscal conditions puts a bid under risk assets, and crypto is likely to benefit," Digital Asset Group Managing Director Alex Tapscott told The Block.
  • Meanwhile, analysts at ETC Group pointed out that the global money supply has reached an all-time high, which has historically correlated with bullish trends for bitcoin.

Looking ahead to next week

  • UK CPI inflation figures are released on Wednesday. Eurozone CPI numbers and the ECB's latest interest rate decision follow on Thursday, alongside U.S. jobless claims data.
  • U.S. FOMC members Mary Daly and Adriana Kugler will speak on Tuesday.
  • The Future Blockchain Summit and the Avalanche Summit get underway over the next seven days.

Never miss a beat with  The Block's daily digest  of the most influential events happening across the digital asset ecosystem.


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Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.

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