July 5th, 2023 | 07:40 CEST
Cryptos and precious metals with buy signals - MicroStrategy, Defiance Silver, Bitcoin Group
Table of contents:
"[...] In our experience, the local communities are supportive and friendly. [...]" Steve Cope, President, CEO and Director, Silver Viper
MicroStrategy continues to build
The man has nerves of steel and stuck to his bullish opinion even during the crypto winter of the past two years when Bitcoin temporarily traded below USD 16,000. In a Bloomberg interview, Michael Saylor, co-founder and long-time CEO of MicroStrategy, the Company with the largest Bitcoin holdings globally, commented on the future of the largest cryptocurrency. According to him, there is only one direction: "North". For him, Bitcoin is the only institutionally investable asset in the crypto sector, while he rejects investments in altcoins.
Bitcoin Hodler sees the current SEC measures against Binance and Coinbase as positive for the development of Bitcoin. Additional driving forces for the rising virtual currency are the upcoming bitcoin halving in April 2024 and the increased hash rate.
For about USD 347 million, MicroStrategy acquired another 12,333 BTC last month at an average price of USD 28,136. That brings the Company's total holdings to 152,333 BTC at an entry price of USD 29,688, representing a total value of USD 4.73 billion. MicroStrategy's market capitalization is USD 4.90 billion. Thus, at current levels, the profitable software business comes for free.
Defiance Silver - Best positioned
The precious metals markets are also sending positive signals. Gold held its ground at the psychologically important USD 1900 mark and has since been turning upwards. Silver has been in an intact upward trend since August 2022 and should generate a strong buy signal if the resistance at USD 24.50 is exceeded. Exploration companies like Defiance Silver benefit disproportionately from a long-term bull market, especially if one takes a closer look at the company's positioning.
With a market capitalization of CAD 36.45 million, a cash balance of around CAD 8 million and drill programs funded through for the current year, the main focus of the management, which is equipped with decades of experience, is on the historic Zacatecas silver district, historically Mexico's largest silver producer with 6.2 billion ounces produced. Defiance Silver's properties, including the highly prospective San Acacio project and the 100% owned Lagartos mine, are close to the deposits of producers such as Pan American Silver, Fresnillo, Newmont and Agnico Eagle. In addition, the Company still holds options on the Lucita and Panuco properties.
For San Acacio, an initial resource estimate of 16.9 million ounces of silver based on 44 drill holes totaling 10,200 m has already been determined. Since then, an additional 20,000 m has been drilled, and significant intersections outside the current resource have been identified. The recent results from 4 of 10 targets showed outstanding values. For example, drilling encountered the highest grade and widest mineralization ever drilled on the property, with top grades of 157.30 g/t silver over 41.83 m, including 15.96 m of 379.90 g/t silver.
Defiance Silver Chairman and CEO Chris Wright stated that due to the diligent target acquisition and modeling work, the continued potential had been demonstrated to outline a large mineral system within the historic San Acacio mine area on the Veta Grande vein system. Defiance Silver's shares, which trade in Frankfurt and Toronto, have been trading sideways at CAD 0.16 for months. The highest price was recorded in May 2021 at CAD 1.07.
Bitcoin Group - Undervalued crypto player
The German holding company, focusing on innovative and disruptive business models and technologies from the areas of cryptocurrencies and blockchain, also lost ground in the past fiscal year. Revenues decreased to EUR 8.34 million after EUR 25.39 million. EBITDA was EUR 1.37 million, down from EUR 19.75 million as of December 31, 2021. In addition, earnings per share fell into negative territory at minus EUR 0.48, down from a prior-year profit of EUR 2.67 per share.
Bitcoin Group's balance sheet position remains strong despite the cloudy fiscal year. The equity ratio increased from 72.99% in 2021 to 77.23% now. Cash balances decreased to EUR 14.88 million from EUR 20.28 million as of the 2021 balance sheet date.
A more detailed analysis is required for the net crypto holdings of the Bitcoin Group. As of the end of 2022, these stood at EUR 70.8 million, compared to EUR 181.1 million in the previous year. However, the price of Bitcoin has increased by around 90% since then, while Ethereum has increased by around 65%. Estimating a Bitcoin to Ethereum share of around 90% of the holdings would result in a value of around EUR 148 million.
Not included is the 100% stake in futurum bank AG, which operates a trading platform for digital currencies under Bitcoin.de, and 50% of the shares in Sineus Financial Services GmbH, a financial services provider supervised by BaFin. In contrast, the stock market value of Bitcoin Group is only EUR 113.50 million.
Cryptocurrencies are poised for an auspicious comeback after a sharp correction. MicroStrategy, the Company with the world's largest Bitcoin holdings, continues to expand. In contrast, Bitcoin Group's portfolio has a much higher value than its current market cap. Defiance Silver is well positioned and should benefit disproportionately if precious metal prices continue to rise.
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