Howdy! Ed here. 

If Bitcoin is flirting with all time highs, why are retail investors so meh about the top cryptocurrency? 

That was the big takeaway this week as a number of major companies reported third quarter earnings and shared details about their growth plans.

On Wednesday, Coinbase reported that slumping retail crypto action had taken a bite out of its top line in the third quarter; revenue came in at $1.2 billion, 4% below Wall Street’s expectations. 

Investors immediately dumped Coinbase’s shares, which fell 17% by Friday. As Liam Kelly reported, the performance showed how retail investors were wary of returning to the crypto market in true bullish fashion in the three month summer period. 

Sure enough, the retail trading unit’s revenue declined 7% from the prior quarter, which is not a good sign.

Likewise, PayPal, the global digital payments processor, reported on Tuesday that the crypto it was holding on behalf of customers dropped 11% in the third quarter. 

Ben Weiss wrote that PayPal’s Ether holdings fell even more — 27% — which outpaced its price decline in the three-month period.

To be sure, Bitcoin’s recent price surge past $70,000 has come after September 30 closed out the third quarter, and analysts say fourth quarter numbers could reverse the trend. 

But a larger dynamic is at work — institutional investors appear to be more bullish on Bitcoin than the rank and file traders who drove the last monster rally in 2021.

Thanks to more action from professionals, Bitcoin’s volatility has dropped 40% from 2020 to September, according to data from Volmex. 

That’s a massive sign that sticky money is hodling through the cryptocurrency’s ups and downs, which is what institutions tend to do. 

At the same time, longtime Bitcoin bulls such as Michael Saylor are cranking up their buying. 

This week, MicroStrategy, Saylor’s business intelligence platform, pledged to raise $42 billion in debt and equity capital to buy more Bitcoin in the months to come. 

As Joanna Wright reported, MicroStrategy is already sitting on an $18 billion Bitcoin hoard, which has made it a proxy for the cryptocurrency.

“We’re going to promote global adoption of BTC as a treasury reserve asset,” Saylor told investors on Wednesday’s earnings call. 

Yet it’s a febrile moment in crypto. Bitcoin miners are becoming increasingly anxious about consolidation in their capital-intensive industry. 

As Tim Craig wrote, Bitcoin’s halving cycle is reducing the number of reward tokens available to miners, which is spurring the big fish to eat the smaller fish. 

In response, several players, including Loka Mining, are introducing a decentralised futures market for their hash rates. The idea is this will help smaller miners strengthen their financials and fend off suitors. 

As ever, the crypto market moves fast and the retail funk of the third quarter may quickly change by the end of the year.

Coinbase just flashed a warning sign about the crypto market

The US crypto exchange’s decline in retail trading action hurt its top line, and raised questions about dynamics in the marketplace.

PayPal’s slumping crypto holdings signal what’s really driving Bitcoin’s $72,000 surge

The payment processing giant’s crypto coffers fell by double digit sums in the third quarter.

Inside the Bitcoin miner trade fighting to keep Satoshi’s dream alive

Bitcoin’s halving cycles are raising fears of an ‘existential threat’ to the ethos of crypto, but a few firms have a potential solution — futures for hash rates.

Post of the week

Michael Saylor outlined MicroStrategy’s $42 billion capital raising plan this week. Its goal: buy more Bitcoin.

DL News is an independent news organisation that provides original, in-depth reporting on the largely misunderstood world of cryptocurrency and decentralised finance. From original stories to investigations, our journalism is accurate, honest and responsible.