The Daily: Microsoft set to vote on bitcoin investing, MicroStrategy 'highly unlikely' to be forced to sell its holdings and more

It's Friday! In today's Daily, Microsoft shareholders are set to vote on a bitcoin investing proposal, MicroStrategy is "highly unlikely" to be forced to sell its bitcoin, demand for bitcoin call options surges for the first expiry after the U.S. election and more.

Meanwhile, Polymarket claims there's no evidence of market manipulation in U.S. election bets despite slippage issues on the decentralized predictions platform.

Let's get started.

Microsoft's bitcoin investing vote

Tech giant Microsoft, with a market cap of over $3 trillion, is apparently considering investing in bitcoin, according to a Securities and Exchange Commission filing on Thursday.

• The company placed an "assessment in investing in bitcoin" as a shareholder voting item on the agenda for its December 2024 annual meeting.
• The proposal was put forward by The National Center for Public Policy Research, a conservative think tank linked to Project 2025.
• Any eligible stockholders with sufficient equity and duration of holdings can propose items for a shareholder vote, covering changes in corporate operations or policies.
• However, the company only has to include proposals that are deemed relevant and meet the eligibility criteria of the SEC, with the outcome typically decided by a majority shareholder vote while the board may recommend a stance on each item.
• In this case, Microsoft's board of directors recommended voting against the proposal, deeming it "unnecessary" as the firm's management "already carefully considers this topic."
• The company clarified that it already assesses a broad range of assets, including bitcoin, for diversification and inflation protection, noting that volatility is also a consideration in its investment evaluations.
• "Microsoft continues to monitor trends and developments related to cryptocurrencies to inform future decision making," it said.
  If the proposal were to pass, Microsoft would become the largest publicly traded bitcoin investor, surpassing MicroStrategy and Tesla.
• "If you want to make the next trillion dollars for MSFT shareholders, call me," MicroStrategy founder Michael Saylor urged Microsoft CEO Satya Nadella on Friday.

MicroStrategy 'highly unlikely' to be forced to sell bitcoin as stock reaches 25-year high

Analysts at BitMEX Research argued it's "highly unlikely" that MicroStrategy will be forced to sell its bitcoin holdings due to its current debt structure, though "anything is possible."

• The business intelligence firm is the largest corporate holder of bitcoin, with 252,220 BTC, currently valued at over $17 billion, at a total cost of around $9.9 billion.
• MicroStrategy's stock reached a 25-year high on Thursday following a 10% rise, with its $44 billion market cap trading at a substantial premium over its bitcoin holdings' net asset value.
• The company has used equity offerings to help fund its acquisitions, raising $4.25 billion since embarking on its bitcoin strategy in 2020.
• MicroStrategy founder Michael Saylor has previously stated he has no intention of selling the company's bitcoin, but some question if its high debt and the asset's significant volatility could eventually force a sale, risking a price drop.
• As MicroStrategy's bonds are not currently a major part of its capital structure, forced bitcoin sales to meet bond obligations remain unlikely, according to the analysts.
• So, while the stock trades at a premium, there's minimal incentive to sell, but if the debt increases, so does the risk, and the possibility of forced sales in a bitcoin downturn could rise, they warned.

Bitcoin call options see surge in demand for first expiry after US election

Deribit CEO Luuk Strijers noted that bitcoin call options are double the number of put options set for the Nov. 8 expiry, signaling bullish sentiment for the days immediately following the U.S. election.

• Derivatives traders expect brief but significant bitcoin price volatility around the time of the U.S. presidential election on Nov. 5, he added.
• Arbelos Markets CEO Joshua Lim echoed Strijers views, suggesting bitcoin is increasingly positioned as an inflation hedge and election proxy.
• Meanwhile, Standard Chartered Global Head of Digital Assets Research Geoff Kendrick said bitcoin could approach its all-time high of over $73,000 by Nov. 5.

JPMorgan says tokenized Treasuries to challenge but not fully replace stablecoins

The $2.4 billion tokenized U.S. Treasuries niche is growing as an alternative to the $180 billion stablecoin market but is not expected to fully replace them due to regulatory and liquidity constraints, according to JPMorgan analysts.

• These tokenized assets offer yield benefits without the risks of lending, which appeals to stablecoin users, yet they are limited to accredited investors, narrowing their market reach.
• Major stablecoin issuers like Tether's USDT and Circle's USDC do not share reserve yields with users, which not only supports revenue, but may also avoid a securities classification, the analysts noted.
• However, tokenized Treasuries could still partly replace stablecoins in specific roles, like collateral in crypto trading or holding idle cash in DAOs and venture funds, they said.

Farcaster's monthly revenue drops 96% compared to peak

Decentralized social media protocol Farcaster's monthly revenue has fallen dramatically from its February peak, down 96% from $415,900 to only $15,825 so far in October, according to Dune Analytics data.

• The once-hyped project raised $150 million in a Series A round earlier this year, positioning it as a unicorn with a valuation of $1 billion, with participation from Paradigm, a16z crypto and Haun Ventures, among others.
• However, the subsequent decline in Farcaster's use has been stark, which analysts attribute to a lack of new content and ecosystem projects, alongside scalability challenges beyond the crypto community.

Looking ahead to next week

• Eurozone and U.S. GDP figures are out on Wednesday. Eurozone CPI inflation numbers are due on Thursday, alongside U.S. jobless claims and PCE data. U.S. nonfarm payrolls are released on Friday.
• Cosmoverse 2024 in Dubai and the Plan ₿ Forum in Switzerland conclude over the weekend.

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