Bill BarhydtFounder & CEO

We are chopping around what I believe is a price bottom. The market is in a sideways channel, which could persist until late in the third quarter or early fourth quarter. While this draw down feels significant, Bitcoin's volatility has actually compressed compared to the dramatic drops of previous cycles.

Retail money is looking for exponential growth stories, and right now, artificial intelligence has captured that narrative. During the pandemic, retail speculative capital flowed into crypto, but that capital rotated into tech stocks. However, this level of speculation is unsustainable because AI has a real profitability problem.

Many layer one platforms have broken token economics because their transaction costs are so low that they do not generate sustainable revenue. Without a viable business model to support block space usage once it is at a premium, these foundations are forced to dilute users through staking inflation.

Ethereum's decision to migrate transaction value to layer two networks was a massive architectural mistake. It starved the base layer of economic value, causing fees and revenue to accrue entirely to layer two networks, leaving the main Ethereum chain economically stuck.

Layer two technologies are highly interesting technically, but economically they perpetuate the problem. For instance, centralized deployment means networks like Base do not charge significant fees because they do not require distributed incentives to participate, leaving the underlying block space unmonetized.

As we approach artificial superintelligence, these systems will need a native, trustless transaction processing layer to transact with other agents. They will not use old banking rails or install traditional databases. Decentralized blockchains are the natural rails for self-aware AI transacting.

The clear killer use case remains borrowing and lending against Bitcoin. As a fiduciary, our job at Abra is to build on top of decentralized networks to provide wealth management and banking services, giving clients liquid and safe options to access capital using Bitcoin collateral.

Since Ethereum cannot natively understand Bitcoin, we use wrapped Bitcoin tokens like TBTC or WBTC. These act as stablecoins representing the underlying Bitcoin held in custody. We wrap the Bitcoin so clients can borrow against it, earn yield, or stake assets within the Ethereum DeFi ecosystem.

By marketing preferred shares like Stretch to retail investors at a fixed rate, they imply that the par value of the shares will remain stable. If the share value drops significantly, those investors face a net loss. This forces MicroStrategy to buy back shares or sell Bitcoin to maintain the peg.

Even if MicroStrategy had to buy back all their preferred shares, it would only require a temporary sale of Bitcoin, potentially causing a short-term price drop of five to ten thousand dollars. It is an experiment that will not kill MicroStrategy, Bitcoin, or the crypto industry.

I would rate it as fifty-fifty. Next week is a critical week, and many of us will be in Washington. If we do not pass the bill before the summer recess, the upcoming midterms and potential political shifts in the House could push any regulatory progress back by several years.

We have already registered as a registered investment advisor and secured licenses to build a protective moat around our business. The passage of the Clarity Act would make that moat wider and thicker, giving us and our clients the regulatory certainty needed to invest confidently.

The main issue is conflict of interest and insider trading. If an outcome can be influenced by someone with access to the prediction market, it becomes unethical. However, we should rely on buyer beware and common sense rather than expecting the government to regulate every stupid decision.

As governments try to enforce know your customer checks on AI models, developers can use zero knowledge technology to prove compliance safely. However, with open-source models running locally on laptops, global policing will be highly difficult, and open-source encryption will ultimately prevail.

We appointed a new chief financial officer, a chief legal officer, a head of corporate development, and a head of global marketing. This expansion brings in fintech and crypto regulatory expertise to drive our global growth and prepare our token issuance platform.

We announced our intentions to go public via a merger with a special purpose acquisition company in April. The execution is progressing well, and we are getting public market ready. While regulators have the final say, we hope to list on the NASDAQ in the coming year.