BTC and ETH Rally and Michael Saylor Steps Down as MicroStrategy CEO. MicroStrategy Inc. recently reported a $1.062 billion loss in its second quarter, largely due to a $917 million impairment charge related to its bitcoin holdings. Since its November 2021 high, bitcoin is down more than 65%. The impact of the Dot Com Bubble is also explored.
Cryptocurrency price rally
Michael Saylor, the billionaire CEO of microStrategy, has announced his resignation. He’s lost a whopping $1.2 billion in the Bitcoin crash. While there are some criticisms of Saylor’s decision, the company says he will remain executive chairman and be involved in company strategic decisions. In a statement, Saylor stated that splitting his responsibilities would allow him to pursue two corporate strategies. He’s also a big believer in cryptocurrencies and is a major backer of Bitcoin.
The decision comes on the heels of MicroStrategy’s disappointing quarterly earnings report. The software firm reported a loss of $1 billion and took an impairment charge of $917 million on its cryptocurrency holdings. The company’s stock fell by nearly 59% during the quarter and was trading at a 45% loss compared to the end of last year.
Michael Saylor, the co-founder of MicroStrategy, is stepping down as CEO. He will be executive chairman while continuing to focus on Bitcoin strategy. His replacement is Phong Le. MicroStrategy is currently the public company with the largest treasury of Bitcoin.
MicroStrategy is facing a financial crisis and has a massive $2.4 billion in long-term debt. Combined with $46.6 million in interest expenses, MicroStrategy may not be able to meet its obligations. One option is for it to sell off nearly $2 billion in bitcoin holdings to raise capital.
The company has been a huge proponent of bitcoin, but markets have turned against it. As of June 30, the cryptocurrency was trading at $23,132, down from over $64,400 at the beginning of this year. As a result, the company took an impairment charge of $917 million. The company will continue to run the Bitcoin acquisition strategy as Saylor remains executive chairman.
MicroStrategy CEO steps down
MicroStrategy, a leading independent publicly traded business intelligence company, has announced that Michael Saylor will step down as the company’s CEO effective July 1. He will be succeeded by Phong Le, who has been the company’s President since July 2016. Phong led MicroStrategy’s successful transition from a traditional software business to one that’s centered on the cloud. He also led the company’s expansion in the areas of embedded analytics and enterprise analytics. Moreover, he has a proven track record of building a high-performing leadership team.
Saylor will stay on as the company’s executive chairman and will continue to focus on the company’s long-term corporate strategy and innovation. In addition, he will continue to oversee the company’s Bitcoin acquisition strategy. MicroStrategy will also appoint a new president to replace Saylor as the company’s CEO.
MicroStrategy’s decision to make a major change in its leadership structure comes as a shock to investors. The company posted a massive loss of $917 million during the second quarter, largely due to the massive fall in Bitcoin’s value since last November. While this is a negative development for the company, it does not mean the end of the world for MicroStrategy.
MicroStrategy’s executive team is attempting to fill the void, which has occurred following a $1.06bn loss for the second quarter. Saylor will remain on the board of directors as chairman and CEO, and will focus on the company’s Bitcoin acquisition strategy and related Bitcoin advocacy initiatives.
Despite the announcement, Saylor is still tweeting as usual. As of writing, the company has lost nearly $1 billion on Bitcoin. Its shares have plunged 51% since the start of the crypto winter. So far this year, Saylor’s departure has only prompted further uncertainty for investors.
MicroStrategy had a net profit of $69.4 million in the second quarter of 2022, an increase of $6.0 million over its December 2021 earnings of $63.4 million. However, the company will face financial challenges if the price of Bitcoin falls to $3,562.
Ethereum Merge protocol still unfinished
The Ethereum Merge is the next big protocol update for the Ethereum network. It will merge the Proof-of-Work mainnet with the Proof-of-Stake Beacon Chain (PoS). The new network will use validators instead of miners to process transactions and will reduce the amount of ETH issued. The Merge is still a long way off, but it will significantly improve the way the Ethereum network functions.
The Merge is a major engineering feat and will require extensive human coordination. The Ethereum network has hundreds of billions of dollars in market value, so it is important to get it right. The Merge is scheduled to take effect when the cumulative difficulty of all Ethereum blocks reaches a specific number. This figure is called the total terminal difficulty or TTD. The developers of Ethereum set the TTD at 58,750,000,000,000,000 last August. It is expected to be reached by the end of September.
While Ethereum price has jumped thanks to improved sentiment about the protocol, it’s still some time away from the final launch. The Ethereum Foundation met Thursday to discuss Merge. CEO Tim Beiko mentioned that the Ethereum Merge launch date could be September 19 if all goes well. Before that, the Ethereum Foundation needs to complete Merge’s testing on Goerli and make sure everything works properly before launching it.
A merger between Ethereum and bitcoin may be near, but until then, the blockchain is largely unfinished. Despite this, Ethereum has led the rally since June’s low. It dropped to $900 amid panic following the collapse of Three Arrows Capital, but today rallied past $1,900 after launching the Goerli testnet.
The protocol has not been finished, but the company continues to work on it. Its documentation website is “badly out of date,” but it is expected to be updated in June or July of this year. It will include formal specifications, architectural diagrams, and mathematical descriptions of the code.
Impact of Dot Com Bubble on cryptocurrency space
The cryptocurrency space is experiencing a speculative period that reminds many of the late 90s Dot Com Bubble. Like that era, it’s susceptible to the fear of missing out. Rather than getting caught up in the hype, it’s best to invest in a project with a proven track record, stable whitepaper, and roadmap. The market is volatile, so it’s crucial to keep your distance from it.
The dot com bubble destroyed $5 Trillion worth of value. While most companies ceased trading, many survived and even recovered from the crash. Some, like Cisco and Qualcomm, lost huge amounts of stock and market capitalization. However, they later recovered and eventually exceeded their peak bubble valuation.
However, cryptocurrencies have one major advantage over dot coms: decentralization. The decentralized nature of cryptocurrency makes it a great alternative to worldwide fiat currency. But unlike the early dot coms, most governments still do not fully understand its advantages and disadvantages. For example, recent regulation in South Korea spooked the market and led to fluctuations in the bitcoin price. This is likely to happen again as other regulatory agencies follow suit.
The dot com bubble, which exploded in the early 2000s, spurred the creation of Internet companies based on online technology. However, these companies failed to make a dent in the retail industry. As a result, the Dot-com bubble popped.
The Dot Com Bubble was also fueled by speculative investment in new businesses. In particular, the NASDAQ Composite Index jumped 582% between 1995 and 2000, fueling over-optimism and careless investing. Many of the companies became overvalued, largely because investors lacked fundamental analysis. Companies like Cisco and Yahoo suffered huge losses and went out of business.
Some Wall Street investors have compared Bitcoin’s rapid growth to the dot-com bubble. This bubble occurred after a period of massive technological advancement, particularly during the 1990s. Internet usage exploded, and Internet-based companies increased dramatically. Although the price of Internet-based products skyrocketed, the price was also inflated.
While cryptos are isolated from the larger financial system, they may prove to be a buffer against financial system intervention. While the housing market was linked to multiple aspects of the financial system, cryptocurrencies tend to matter more to their individual holders. As such, the damage caused by a cryptocurrency bubble collapse will be less than the effects of the housing bubble in 2008.
