Cryptocurrency analyst James Van Straten made headlines on the first day of July in a new assessment of the Bitcoin price. The analyst expects a new wave of declines in Bitcoin between July 1 and July 10, saying the price could fall towards the realized price range around $53,000.
According to Van Straten, the general market expectation for Bitcoin is “a bottom of $40,000 in October.” However, analysts point out that the crowd is often wrong about such predictions and argue that Bitcoin could price in the expected October bottom even sooner. Van Straten also pointed out that Bitcoin is already pricing in a halving event in April 2024, suggesting a similar “pre-pricing” scenario could occur this time as well.
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The analyst also focused on Strategy’s capital structure. Van Straten noted that four of the company’s six convertible bonds, totaling $3.2 billion in nominal value, are still trading above their nominal value. He said that even though MSTR stock is trading around $85, down about 85% from its all-time high, it shows that bond investors are pricing in a high probability of principal repayments.
Van Straten said the drop in MSTR stock has made the price of convertible bonds more similar to credit products than stock options. The analyst assessed that the market is pricing in the possibility of a future recovery for Bitcoin and MSTR, or that Strategy may refinance the debt before maturity.
So while credit investors still view Strategy’s convertible senior notes as “payable,” equity investors are far more panicked, Van Straten said. The analyst said that while the company’s capital structure suggests Strategy will remain solvent, the upside potential for the common stock has significantly diminished.
*This is not investment advice.
