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Selling Bitcoin doesn’t mean you’re not bullish: Cypherpunk CEO

Cypherpunk is one of the first public firms in the world to ever invest in Bitcoin and it opted to sell 100% of its crypto by June 2022.

Despite a massive wave of liquidations on the cryptocurrency market, some companies that sold their crypto over the past few months are not bearish on Bitcoin (BTC) at all.

Canada-based investment firm Cypherpunk Holdings was one of the companies that opted to sell crypto amid the crypto winter of 2022, liquidating 100% of its Bitcoin and Ether (ETH) by June. One of the first public companies in the world to ever invest in Bitcoin, Cypherpunk said at the time that it maintained its long-term “bullish outlook on crypto” despite selling all its digital coins.

One may find Cypherpunk’s crypto liquidation somewhat odd as the company’s stock is publicly trading under the ticker symbol HODL on the Canadian Securities Exchange. The acronym is widely used in the crypto community to refer to “Hold On for Dear Life,” or the bullish strategy of holding onto Bitcoin no matter what the market circumstances are.

According to Cypherpunk CEO Jeffrey Gao, crypto investors can still remain bullish despite cashing out their crypto from time to time.

“We’re in this business because we are net bullish on crypto over the long term,” Gao said in an interview with Cointelegraph. Cypherpunk can go back into Bitcoin or into “any crypto or any basket of crypto” tomorrow if they want, and those are ​​”certainly opportunities” that the firm is actively pursuing, the CEO noted.

Gao said that the industry has seen forced liquidations as even “supposedly the most sophisticated” institutions like Voyager, Three Arrows Capital and Celsius got involved in operations that were “completely devoid of risk management.” According to the CEO, the absence or near absence of risk management is what really separates the crypto industry from something that is more mature. Gao added:

“Going forward, that mentality towards risk management while still being bullish over the long term is very important. […] You can be bullish on crypto, but you can still sell out of the market.”

According to Gao, Cypherpunk started the liquidation process in early May, right before the Terra (LUNA) — now renamed Terra Classic (LUNC) — network collapse, with the algorithmic stablecoin TerraUSD (formerly UST) losing its U.S. dollar peg on May 10. “By the time that it happened, we probably offloaded about 30% or 40% of the risk,” Gao said, adding that Cypherpunk then sold another portion when BTC briefly traded above $30,000 in late May. “The final one-third we probably got rid of was sometime in June,” Gao noted.

Related: Elon Musk: US ’past peak inflation’ after Tesla sells 90% of Bitcoin

“We basically made no progress, but we also avoided much of the capital destruction,” Gao said. He went on to say that he is very optimistic about altcoins like Ether and Solana (SOL), despite some issues with the Solana ecosystem issues in early August.

“Over the longer term, at least at this point in time, I would be more bullish on Bitcoin conservatively than those other tokens. But over the next two or three months, I’m probably more partial towards Ethereum and Solana,” the CEO noted.

Bitcoin hodling activity resembles previous market bottoms: Glassnode

Bitcoin’s price had just topped $21,000 at the time of writing — meaning around 45% of BTC holders have an “on-paper loss,” according to Glassnode.

The majority of Bitcoin (BTC) has been hodled for at least three months in behavior bearing a striking resemblance to previous Bitcoin market bottoms, says blockchain analytics firm Glassnode.

In a Saturday tweet, Glassnode noted that more than 80% of the total U.S. dollar-denominated wealth invested in Bitcoin has not been touched for at least three months.

This signifies that the “majority of BTC coin supply is dormant” and that hodlers are “increasingly unwilling to spend at lower prices,” said the firm.

Bitcoin’s price is $21,013 at the time of writing, down almost 70% from its all-time high of $69,044 in November 2021. The current price puts around 45% of Bitcoin holders with an on-paper loss, according to crypto intelligence firm IntoTheBlock.

According to the Glassnode chart, other times that saw similar levels of Bitcoin hodling were during the end of the bear markets of 2012, 2015 and 2018.

Last week, Coinbase’s head of institutional research, David Duong, wrote in a July 12 report titled “The Elusive Bottom” that on-chain data suggests that recent BTC selling has been carried out “almost exclusively” by short-term speculators. Long-term BTC holders “have not been selling into the market weakness,” he added.

“These holders own a highly concentrated ~77% of the total supply, which is down slightly from 80% to start the year but still quite high,” he explained before adding:

“We see this is a positive sentiment indicator as we believe these holders are less likely to sell BTC during turbulent periods.”

Earlier this month, Glassnode analysts noted that the Bitcoin market had seen an almost complete purge of “tourists,” noting that activity on the network is at levels concurrent with the deepest part of the bear market in 2018 and 2019.

Related: Bitcoin ready to attack key trendline, says data as BTC price holds $20K

Glassnode revealed that the number of active addresses and entities had seen a downtrend since November 2021, implying new and existing investors alike are not interacting with the network.

Additionally, the number of non-zero BTC addresses has reached an all-time high of 42,530,652, according to the firm.

Despite ‘worst bear market ever,’ Bitcoin has become more resilient, Glassnode analyst says

Though on-chain metrics point to the worst Bitcoin bear market on record, they also highlight hodlers’ growing resilience.

While the current bear market may be the worst on record, on-chain metrics signal that the Bitcoin (BTC) network is becoming increasingly resilient, said Glassnode analyst James Check during a recent interview with Cointelegraph. 

In particular, Check refers to the amount of Bitcoin holders who don’t sell even in extreme market conditions, which has become much higher than in previous bear markets. 

“Cycle after cycle, that floor of hodlers is higher, the amount of activity is higher,” Check said.

Check also points out that shrimps, the entities who hold less than one Bitcoin, are accumulating at a record pace, surpassing the levels of the 2017 bull market’s peak.

“The shrimp are essentially seeing this is a an immense period of value,” he explained. 

Check out the full interview on our YouTube channel and don’t forget to subscribe!

In this together: Musk and Saylor down a combined $1.5B on Bitcoin buys

Tesla and Microstrategy have a combined impairment loss of almost $1.5 billion —will they HODL on?

As the bear market bites, holding crypto investments can be a tough pill to swallow. Consider two of the largest bag holders of publicly traded companies. They are down by almost $2 billion dollars on their Bitcoin (BTC) buys. 

According to Bitcointreasuries.net, the 130,000 and 43,00 Bitcoin held by Microstrategy and Tesla, respectively, are worth considerable sums less.

The top “Hodlers” of Bitcoin according to Bitcointreasuries.net

For Microstrategy, Michael Saylor splashed out almost $4 billion ($3,965,863,658) on 129,218 BTC, approximately 0.615% of the 21 million total supply. The Bitcoin price nosedive has ripped away earlier gains: The investment is worth $3.1 billion ($3,074,987,824), a loss of $900 million. Plus, in premarket trading on Monday, Microstrategy stock (MSTR) plunged to its lowest levels in months.

For Elon Musk, whose Tesla automotive company bought over 40,000 Bitcoin during the 2021 bull market, his $1 billion profit has gone south. The cost basis of $1.5 billion for 43,200 BTC, or 0.206% of the total Bitcoin supply, is now worth $1 billion ($1,017,789,280), down almost $500 million.

The total impairment loss (the loss in value) shared between the billionaire Bitcoin believers is roughly $1.4 billion. Given that both companies are publicly traded, the July quarterly results will dissect precisely how much each company is down on its Bitcoin assets.

At one point during November last year, Bitcoin surpassed Tesla’s market capitalization. Currently, Tesla’s market cap is roughly $721 billion while Bitcoin languishes at less than half a trillion dollars. Equally, the total market cap for crypto is plummeting, falling below one trillion dollars.

For Microstrategy, the situation is darker still. Saylor will have to top up a loan if and when the price of Bitcoin hits $21,000.

Saylor had previously patched things up with investors, sharing that the $205,000,000 loan it had taken out requires $410,000,000 collateral. Nonetheless, moneybags Microstrategy has more than 115,000 BTC it could pledge if the price continues to flatline.

Related: Crypto winter survival guide: Community shares game plan for the bear market

Ultimately, if the fallout from Celsius’ reported “insolvency” spreads, there could be more pain on the horizon. For some Bitcoin believers, such as Bitcoin’s first restaurant chain Tahini’s, “nothing has changed.” They will continue to accumulate, albeit at much lower prices.