Remember when the first “Bitcoin President” was elected? Bitcoin went up 60%, from under $70,000 in November to and all-time high of $108,000 by the middle of December. Since then, nothing.

How is that possible? If everyone is buying Bitcoin, why has it entered a new consolidation pattern? Here’s a closer look:

Bitcoin is trading today, February 1, 2025, at the same price it was on December 5, 2024, around$102,000.
And a one-month view shows a down-channel:

Is the bull market over?
I doubt it.
In the last twelve months, Bitcoin has increased by 145%, which does not sound like the end of a bull market. It has also fallen 7% since its all-time high, which does not look like a crash to me.
Bitcoin is a highly volatile asset. Long-term holders, or HODLers, are sitting on massive gains, so it is only reasonable to assume that they would cash in some of their coins, and that’s what they are doing.
It’s perfectly logical.
Bitcoin could correct back to $90,000 or even $70,000, which would be expected.
Microstrategy Inc.
This brings us to our favourite Bitcoin proxy, MSTR—Microstrategy Inc.
Over the past year, it has been highly volatile, but it is trading in a nicely sloping up channel:

At the moment, it is roughly in the middle of the up channel. Resistance is around $183 and $293, which are conversion prices of some of their convertible debt. A drop to $250 would not violate the channel, and neither would a pop-up over the all-time high of $525.
They announce earnings after the market closes on Wednesday, February 5. I expect it to be a non-event. Future earnings will be much more interesting.
The new FASB accounting rules, specifically ASU 2023-08, are set to significantly impact MicroStrategy due to its substantial holdings in Bitcoin. Here’s a detailed breakdown of the implications:
Under the new rules, effective January 1, 2025, companies can measure digital assets like Bitcoin at fair value, allowing for unrealized gains and losses to be recorded in net income each reporting period. This change departs from the previous practice of only recognizing impairment losses. For MicroStrategy, this means recognizing the current market value of its Bitcoin holdings, potentially reflecting a more accurate financial health on its balance sheet.
Adopting the new accounting standard could significantly increase MicroStrategy’s reported EPS. Estimates suggest that early adoption could increase the company’s 2024 beginning retained earnings by approximately $3.1 billion, translating to a massive gain per share, potentially over $300 for the first quarter of 2024. This could dramatically affect how investors perceive MicroStrategy’s profitability.
Note that these accounting rule changes don’t change Microstrategy’s business. They just allow them to recognize Bitcoin unrealized gains as income. So, for the uninformed investor or computer algorithms, it will appear that MSTR has generated a massive profit. That could move the stock price, but not until the new rules come into force for reporting periods after January 1, 2025.
So, how do you play it, assuming you believe the price of Bitcoin will trend higher?
The obvious answer is to buy and hold.
The more aggressive answer is to sell covered calls against your holdings of Microstrategy. The trick here is to decide how far out you issue the calls.
Over the last month, Microstrategy has traded in the range of $285 to $405. It closed on Friday at $335. If you don’t want to risk losing your shares you sell calls at $410. At the close on Friday the MSTR $410 calls, expiring February 21 (so two weeks out) closed at $8.60. That’s a “juice” of $8.60 / $335 = 2.5%. So, in theory, you could generate 2.5% every two weeks, or 65% return per year, simply by selling far out-of-the-money calls.
The risk, of course, is that if Microstrategy runs to over $405 in the next two weeks, you lose any further upside. Perhaps you don’t care. If your shares get called at $405, you’ve made $70 in addition to the premium, a return of 21%, which isn’t bad for two weeks’ work.
I’ve sold calls over the last two weeks and pocketed the premium, because MSTR was relatively stable. I will likely do the same again this week.
Of course you don’t have to own the underlying shares. You could buy long-dated call options, and then sell covered calls against them. More risk, more return.
Tariffs
Finally, how will the Trump Tariffs impact Canada?
I have no idea. I assume it will be much ado about nothing. Trump is using the threat of tariffs to get what he wants (better border security). The Canadians will make some efforts, and Trump will ease off.
That’s my guess, but who knows.
Tune in next week and find out.
Bitcoin, Microstrategy, Tariffs and Market Uncertainty
by JDH on February 1, 2025
Remember when the first “Bitcoin President” was elected? Bitcoin went up 60%, from under $70,000 in November to and all-time high of $108,000 by the middle of December. Since then, nothing.
How is that possible? If everyone is buying Bitcoin, why has it entered a new consolidation pattern? Here’s a closer look:
Bitcoin is trading today, February 1, 2025, at the same price it was on December 5, 2024, around$102,000.
And a one-month view shows a down-channel:
Is the bull market over?
I doubt it.
In the last twelve months, Bitcoin has increased by 145%, which does not sound like the end of a bull market. It has also fallen 7% since its all-time high, which does not look like a crash to me.
Bitcoin is a highly volatile asset. Long-term holders, or HODLers, are sitting on massive gains, so it is only reasonable to assume that they would cash in some of their coins, and that’s what they are doing.
It’s perfectly logical.
Bitcoin could correct back to $90,000 or even $70,000, which would be expected.
Microstrategy Inc.
This brings us to our favourite Bitcoin proxy, MSTR—Microstrategy Inc.
Over the past year, it has been highly volatile, but it is trading in a nicely sloping up channel:
At the moment, it is roughly in the middle of the up channel. Resistance is around $183 and $293, which are conversion prices of some of their convertible debt. A drop to $250 would not violate the channel, and neither would a pop-up over the all-time high of $525.
They announce earnings after the market closes on Wednesday, February 5. I expect it to be a non-event. Future earnings will be much more interesting.
The new FASB accounting rules, specifically ASU 2023-08, are set to significantly impact MicroStrategy due to its substantial holdings in Bitcoin. Here’s a detailed breakdown of the implications:
Under the new rules, effective January 1, 2025, companies can measure digital assets like Bitcoin at fair value, allowing for unrealized gains and losses to be recorded in net income each reporting period. This change departs from the previous practice of only recognizing impairment losses. For MicroStrategy, this means recognizing the current market value of its Bitcoin holdings, potentially reflecting a more accurate financial health on its balance sheet.
Adopting the new accounting standard could significantly increase MicroStrategy’s reported EPS. Estimates suggest that early adoption could increase the company’s 2024 beginning retained earnings by approximately $3.1 billion, translating to a massive gain per share, potentially over $300 for the first quarter of 2024. This could dramatically affect how investors perceive MicroStrategy’s profitability.
Note that these accounting rule changes don’t change Microstrategy’s business. They just allow them to recognize Bitcoin unrealized gains as income. So, for the uninformed investor or computer algorithms, it will appear that MSTR has generated a massive profit. That could move the stock price, but not until the new rules come into force for reporting periods after January 1, 2025.
So, how do you play it, assuming you believe the price of Bitcoin will trend higher?
The obvious answer is to buy and hold.
The more aggressive answer is to sell covered calls against your holdings of Microstrategy. The trick here is to decide how far out you issue the calls.
Over the last month, Microstrategy has traded in the range of $285 to $405. It closed on Friday at $335. If you don’t want to risk losing your shares you sell calls at $410. At the close on Friday the MSTR $410 calls, expiring February 21 (so two weeks out) closed at $8.60. That’s a “juice” of $8.60 / $335 = 2.5%. So, in theory, you could generate 2.5% every two weeks, or 65% return per year, simply by selling far out-of-the-money calls.
The risk, of course, is that if Microstrategy runs to over $405 in the next two weeks, you lose any further upside. Perhaps you don’t care. If your shares get called at $405, you’ve made $70 in addition to the premium, a return of 21%, which isn’t bad for two weeks’ work.
I’ve sold calls over the last two weeks and pocketed the premium, because MSTR was relatively stable. I will likely do the same again this week.
Of course you don’t have to own the underlying shares. You could buy long-dated call options, and then sell covered calls against them. More risk, more return.
Tariffs
Finally, how will the Trump Tariffs impact Canada?
I have no idea. I assume it will be much ado about nothing. Trump is using the threat of tariffs to get what he wants (better border security). The Canadians will make some efforts, and Trump will ease off.
That’s my guess, but who knows.
Tune in next week and find out.