🚏 We’ve traveled this (Silk) Road before 

It appears the US government might be settling up a bitcoin sale made back in January. 

Eagle-eyed onchain sleuths noticed a wallet known to be owned by the Department of Justice moving BTC to a Coinbase address. The first transfer was for 0.001 BTC – around $65 as of Tuesday’s prices. Given the small amount, it was probably a test transfer in preparation for a larger sale of the long-held coins. 

Government officials then moved a much larger lot of 30,175 BTC (almost $2 billion) previously part of a single input. The majority of these coins were then returned to the government’s wallet. 

This process, while confusing to those not shoulder-deep in the ecosystem, is inherent to how transactions on the Bitcoin blockchain work: If an input is used in a transaction, it must be spent in its entirety. The sender gets back the excess in change. It’s a way to make sure every bitcoin remains accounted for in the blockchain’s ledger. 

We can’t know for sure, but Tuesday’s moves were likely a post-trade settlement for around 2,900 BTC the DOJ said back in January it would sell. It appears whoever bought the coins got a pretty good deal. At the time, the trade was worth around $129 million, based on Tuesday’s prices, though, the bitcoin comes out to more than $190 million. 

The DOJ has been seizing and offloading bitcoin for a decade. The last confirmed sale was about a year ago, when US government officials parted with 9,861 BTC — worth about $216 million. 

When bitcoin prices started soaring toward the end of 2023, the government’s bitcoin stash skyrocketed in value — from around $5 billion to $8 billion in less than three months. We’d recommend holding on to the coins for a little longer, but who knows what kind of operations the feds are trying to fund.

And, of course, hindsight is 20/20. 

Proceeds from federal sales of seized assets go to the Assets Forfeiture Fund, which can be used for expenses related to forfeiture operations, like storage and appraisal costs. 

This includes the $215,000+ in transaction fees the US government is known to have accrued when selling seized BTC in 2023. 

— Casey Wagner

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💰 Saylor’s personal BTC stash grows

MicroStrategy co-founder Michael Saylor is nearly done offloading 315,000 shares of his company, according to SEC filings. He originally disclosed his plan to sell shares in early January. 

Saylor’s selling roughly 5,000 shares a day, meaning his sales could be done right before the halving takes place later this month. He’s banked nearly $280 million thus far from his sales, selling at an average price of around $900 a share. 

Saylor’s transactions are a mixture of straight sales and options exercises, according to the SEC filings. 

Saylor previously said that the sale would allow him to “address financial obligations” and add bitcoin to his personal holdings. MicroStrategy embarked on a bitcoin buying spree this year, adding to its holdings of 200,000 bitcoins. The company has also gone through two senior notes offerings, allowing it to keep buying as bitcoin holds on to $65,000.

MicroStrategy is currently trading around $1,500 per share, down $500 from its 52-week high. 

While it’s not uncommon for an executive to take profit and sell off shares that they’ve accrued at their company, the timing for Saylor’s transactions comes as the stock — over the past year — has soared over 440%. 

MicroStrategy’s stock has benefitted from bitcoin notching fresh all-time highs ahead of the halving as well as interest from investors following the launch of multiple bitcoin ETFs. Over the past five days, the stocks shed gains as it dipped below $1,600. 

Before his share sales this year, according to OpenInsider data, it appears that Saylor hadn’t sold stock of his company since 2012. 

While the stock sales aren’t uncommon, the timing is remarkable for Saylor. His payday, after he’s done selling, could be near $300 million. He managed to mostly offload the shares before the stock started facing pressure from traders as well as short sellers such as Kerrisdale Capital. 

— Katherine Ross

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📈 FDV: a $354B meme 

There’s plenty strange about crypto, but the pesky business of actually valuing them is right up there.

Goldman Sachs’ Sharmin Mossavar-Rahmani recently showed as much in a Wall Street Journal interview. She lamented that it’s impractical to value crypto as there’s no cash flow, dividends or earnings — making it impossible to be bullish or bearish at all.

Crypto natives might say Mossavar-Rahmani is suffering from TradFi brain. Those concepts don’t map well to crypto, the thinking goes, as they incorrectly assume tokens and the blockchains that underpin them operate like businesses.

Protocol development is generally funded by token allotments, not revenue or cash flow. Builders and collaborators keep a chunk of the token supply to sell down the line to pay for overheads like salaries and marketing.

These allotments are mostly what separates crypto market caps — price multiplied by circulating supply — from their fully-diluted values (FDVs). FDVs represent the value of all tokens in existence: circulating supply plus tokens still to be unlocked and distributed.

The metric, much like market capitalization, poorly reflects reality in crypto, particularly in cases with only a small percentage of total supply circulating. After all, at what price does one value tokens that will be unlocked in three or five years time?

Excluding bitcoin, there's a $354 billion difference between the market caps of the top-100 cryptocurrencies and their FDVs right now. At the start of last year, that figure was only $219 billion.

If released right now, top-100 emissions would immediately add almost 20% to the total crypto market capitalization, and in about one third of cases, would multiply market caps right off the bat, sometimes many times over, including worldcoin (WLD), sui (SUI), sei (SEI), aptos (APT) and bittensor (TAO).

The kicker is that the value of yet-to-be-unlocked supply will balloon as crypto markets find traction and prices rise, which will only muddy valuations further.

A great irony of crypto — despite itself offering a refuge from real-world inflation in some cases — is that it persists under a heady mix of high prices and high supply inflation. Works great in a bull market, but can get ugly during the bears.

— David Canellis

Welcome to The Works 👋 Your daily slice of crypto (and not-so-crypto) from around the Web.

• The stablecoin business is about to become a family one, Bloomberg writes of Nick Van Eck’s new venture. 

• Per a new WSJ profile of Goldman Sachs exec Sharmin Mossavar-Rahmani, not everyone is a believer as the Wall Street megabank embraces crypto.

• Lithuania is on the cusp of shaking up its crypto startup ecosystem via a new licensure scheme, Bloomberg reports. 

• Chris Skinner asks the question nobody thought of: “What if I am the token?” 

• As once happened with crypto, American universities are building out courses focused on artificial intelligence, the WSJ writes.

It’s filing season, meaning we’re about to see a slew of 13Fs drop as institutional managers disclose their holdings with the Securities and Exchange Commission.

This is the first time we’ll have a chance to look over who’s buying the bitcoin ETFs. Burkett Financial Services, a financial planner in South Carolina, was among the first to disclose it holds shares of BlackRock’s bitcoin ETF, according to a 13F filed this week. 

The firm, obviously, isn’t huge. But the disclosure helps begin to answer one of the big questions right now: who’s actually buying?

Remember, it’s still early days for bitcoin ETFs. Some asset managers aren’t even fully on board yet. But these disclosures will show who’s on time to the party while others debate how to get there.

— Katherine Ross