Crypto Currents: Strategy reports Q2 $14.05B unrealized gain on digital assets

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STRATEGY REPORTS $14.05B UNREALIZED GAIN FOR Q2: In a Monday regulatory filing, Strategy (MSTR) disclosed that the fair value of the company’s bitcoin is reflected within the consolidated balance sheets each reporting period-end. Its unrealized gain on digital assets for the quarter ended June 30 was $14.05B, which will result in a net gain for the quarter ended June 30, partially offset by a related deferred tax expense of $4.04B, the company disclosed. “Upon adopting ASU 2023-08 on January 1, 2025, the company is no longer required to account for its bitcoin under a cost-less-impairment accounting model and it no longer establishes a deferred tax asset related to bitcoin impairment losses. Instead, the company establishes a deferred tax liability if the market value of bitcoin at the reporting date is greater than the average cost basis of its bitcoin holdings at such reporting date, and any subsequent increases or decreases in the market value of bitcoin increase or decrease the deferred tax liability,” the filing stated.

COINBASE DOUBLE DOWNGRADE: On Thursday, H.C. Wainwright double downgraded Coinbase (COIN) to Sell from Buy with a $300 price target. The firm cited valuation for the downgrade. It still views Coinbase as a “Best of Breed” crypto exchange and remains positive on the sector. However, the stock’s valuation has “outstripped near-term fundamentals” following the 150% rally since the April lows, the analyst said.

Meanwhile, Barclays raised the firm’s price target on Coinbase to $359 from $202 and kept an Equal Weight rating on the shares. Heading into the Q2 reports for the brokers, asset managers and exchanges, the firm said trading activity was “generally robust” through the quarter. The Federal funds rate remains supportive for net interest income through the rest of the year, the analyst said. Barclays sees the trading environment as “fairly robust.”

Additionally on Tuesday, KULR Technology Group (KULR) announced it had secured a $20M credit facility with Coinbase Credit. The agreement establishes a multi-draw loan facility initially totaling up to $20M, which will be available to KULR upon execution of the credit facility. The company intends to use the net proceeds to fund its strategic bitcoin accumulation goals.

BIT DIGITAL SHIFTS ENTIRE TREASURY TO ETHEREUM: Bit Digital (BTBT) announced Monday the completion of its transition to an Ethereum treasury strategy. Following the close of its recent underwritten public offering, the company raised approximately $172M in gross proceeds and has deployed the net capital to purchase Ethereum. Additionally, Bit Digital sold approximately 280 BTC and used the proceeds to purchase additional ETH. Prior to the offering, Bit Digital held 24,434 ETH as of March 31. Following the additional ETH acquisitions funded by the net proceeds of the public offerings and the sale of its bitcoin position, the company has accumulated approximately 100,603 ETH.

“We believe Ethereum has the ability to rewrite the entire financial system. Ethereum’s programmable nature, growing adoption, and staking yield model represent the future of digital assets,” said Sam Tabar, CEO. “Bit Digital is aligning itself with Ethereum’s long-term potential and positioning itself as a focused Ethereum treasury platform in the public markets. We are starting with exposure to over 100K ETH for now but we intend to aggressively add more so we become the preeminent ETH holding company in the world.”

CIRCLE INITIATIONS: On Tuesday, Mizuho initiated coverage of Circle (CRCL) with an Underperform rating and $85 price target. The firm is bearish on the shares, saying it sees 25%-30% potential downside to the fiscal 2027 consensus revenue estimate of $4.5B. The consensus estimate does not fully account for the upcoming interest rate cuts and also overstates the medium-term growth potential of Circle’s USDC stablecoin, the analyst said. Mizuho is also concerned about the company’s rising distribution costs.

Meanwhile on Thursday, Baird initiated coverage of Circle with a Neutral rating and $210 price target.

SEMLER SCIENTIFIC INITIATIONS: Benchmark initiated coverage of Semler Scientific (SMLR) on Tuesday with a Buy rating and $101 price target. Semler, which spent the first 15-plus years of its existence as a specialized healthcare company focused on chronic disease detection, announced “a bold strategic pivot” in May 2024 when it adopted bitcoin as its primary treasury reserve asset, the analyst noted. As of July 2, Semler had amassed about 4,636 bitcoins for $430M, which translated to an average cost of $92,753 per bitcoin, and its BTC Yield is 294%, while its valuation has lagged those of other companies that last year made bitcoin acquisition the primary focus of their corporate strategies, the analyst added.

On Wednesday, Maxim initiated coverage of Semler Scientific with a Buy rating and $95 price target.

OTHER CRYPTO NEWS:

• Trump Media (DJT) files registration statement for Crypto Blue Chip ETF
• Robinhood (HOOD) says staking now available for U.S. customers
• Ripple selects BNY (BK) to custody Ripple USD reserves
• Galaxy Digital (GLXY) announces integration with Fireblocks
• Canaan (CAN) price target lowered to $2 from $3 at B. Riley

CRYPTO STOCK PLAYS: Publicly traded companies in the space include Bit Digital, Coinbase, Core Scientific (CORZ), Greenidge Generation (GREE), Mara Holdings (MARA), Strategy, Riot Platforms (RIOT) and TeraWulf (WULF).

PRICE ACTION: As of time of writing, bitcoin rose roughly 9% this week to $117,602 in U.S. dollars, according to CoinDesk.