BTC Settlement Volume (24hr)
BTC Inflation Rate (next 1yr)
BTC Settlement Volume (24hr)
BTC Inflation Rate (next 1yr)
BTC vs Traditional Assets ROI:
What is it: This shows bitcoin's ROI vs other potential inflation hedge assets.
Why it matters: As with the historical bitcoin price table, we see bitcoin's extreme outperformance vs other assets here as well. Bitcoin's relatively small size, plus fundamental properties, yield extreme outperformance when even relatively small funds-flows find their way to BTC.
Days Bitcoin Closed Above:
% of Bitcoin's Life
Cory Klippsten, CEO of Swan Bitcoin, observes that Bitcoin is currently trading at double its 2017 all-time-high when priced in Turkish Lira:
Biden unveiled Janet Yellen as his pick for Treasury Secretary, yesterday, suggesting a tight working relationship between treasury and Jerome Powell's Fed. Powell's recent re-orienting of the Fed towards tolerating higher inflation and focusing more on employment goals dovetails well with some of Yellen's recent comments:
“While the pandemic is still seriously affecting the economy we need to continue extraordinary fiscal support, but even beyond that I think it will be necessary,” Yellen said Oct. 19 on Bloomberg Television. “We can afford to have more debt,” she added, because interest rates will probably be low “for many years to come.”
In Pantera's November 2020 Blockchain Letter, titled Bitcoin Shortage, they observe that bitcoin volumes on Paxos, the underlying crypto partner for PayPal, have gone through the roof since PayPal enabled crypto purchases on Nov 12th:
Pantera goes on to note that it looks like PayPal alone - after just one week of operation - is "buying almost 70% of the new supply of bitcoins".
CIO of Blocktower Capital, Ari Paul, tweeted today shedding some light on where the bitcoin buying pressure has come from that's pushed BTC from $10,000 over the summer, to over $18,000 today. In short: HNWs. Ari explains:
Anthony Pompliano ("Pomp") tweeted video of a CNBC interview this morning with BlackRock CIO of Global Fixed Income & Head of Global Allocation, Rick Rieder. Mr Rieder compared Bitcoin to gold, saying:
Do I think [bitcoin] is a durable mechanism that will take the place of gold to a large extent? Yeah I do...
Additionally, Mr Rieder took specific note of millennials' acceptance of digital money systems generally in making the case that bitcoin is here to stay and is something to pay attention to.
Liz Ann Sonders tweeted a chart from Bianco Research showing that the US Federal Reserve now holds more US Treasury bonds than all other central banks combined:
Mexican billionaire Ricardo Salinas Pliego (net worth: $13.2B) disclosed via twitter that 10% of his "liquid portfolio" is currently invested in bitcoin:
A report by Citibank Managing Director Tom Fitzpatrick surfaced over the weekend, drawing strong fundamental analogies between bitcoin today, and the gold market of the 1970s. The report cites recent macro-economic events as analogous to closing the gold window in the early 1970s, and Bitcoin as "21st century gold", experiencing rapid monetization and financialization in response to structural macro changes.
Fitzpatrick goes on to analyze bitcoin's price cycles, and arrives at perhaps the largest medium term institutional price target we've seen for BTC: $318,000 by the end of 2021:
Incoming US Senator from Wyoming, Cynthia Lummis, discusses how she wants to make bitcoin "part of the national conversation", how she thinks bitcoin "fits the bill" as a store of value, and comments on bitcoin's finite supply as a key factor in her belief that bitcoin will be "an important player in stores of value for a long time to come."
Eric Pomboy of Meridian Macro Research pointed out last week that there's now $17.05 trillion in negative yielding debt globally, a new high:
In a recent report on the Grayscale Bitcoin Trust, JPMorgan took a look at flows into BTC products vs Gold ETFs, and concluded:
What makes the October flow trajectory for the Grayscale Bitcoin Trust even more impressive is its contrast with the equivalent flow trajectory for gold ETFs, which overall saw modest outflows since mid-October. This contrast lends support to the idea that some investors that previously invested in gold ETFs such as family offices, may be looking at Bitcoin as an alternative to gold.
Ryan Watkins of Messari reports that Square Cash bitcoin purchases in Q3 nearly doubled the then-record-setting Q2:
Luke effectively points out that the US government has no choice, no matter which party is in office. The dollar must be debased to keep the economy functioning.
Crypto Voices Update #10 is out, documenting bitcoin's progress as a global monetary asset. Now #10 in terms of monetary base, outside of gold and silver:
Dan Tapiero comments on the longer-term effects of Jerome Powell's pandemic response, noting the unprecedented rise in US M2 and ramifications for US treasuries as a a good investment vehicle.
Lyn Alden compares year-to-date performance of various asset classes, showing Bitcoin's clear out-performance:
Bitcoin and gold were very correlated during Fed Chair Powell's "Jackson Hole" speech earlier today. They both "faded the fed" fairly quickly, but the correlation is significant and undeniable nonetheless.
Glassnode has an interesting 'accumulation address' metric defined, which tries to quantify store-of-value behavior. Such behavior is hitting all-time-highs:
Research and data firm Coinmetrics charts each of Bitcoin's major market cycles, from bull market start to the eventual top. If history is any guide, the duration of bitcoin's cycles are extending:
Glassnode highlights a 3yr high in the % of BTC supply that hasn't moved in 2yrs:
Last week we covered public-traded company MicroStrategy's decision to put $250mm of their corporate treasury into Bitcoin as a prudent move to hedge inflation. Today, we see another annoucement to this effect by online graphics company Snappa. CEO Christopher Gimmer explains the reasoning behind the move:
After pouring over the research myself, I believe that massive amounts of quantitative easing combined with fiscal stimulus will continue to result in currency debasement. In addition, I expect governments to keep doing more of the same in attempts to fight the natural deflationary pressures of technology. In order to hedge this risk, we’ve chosen to adopt Bitcoin as a primary reserve asset on our balance sheet.
More companies are viewing BTC as a prudent diversification strategy for treasury holdings as macro-concerns regarding fiat sustainability intensify. This trend can be thought of as analogous to companies that operate internationally hedging currency risk by holding various other currencies. More companies are simply realizing they are exposed to *fiat* risk no matter where they operate, and are starting to see BTC as an appropriate hedge.
Additionally, Mr. Gimmer referenced a number of key pieces we catelog in the CaseBitcoin Library:
Crypto Voices Q2 "Global Monetary Base" report puts bitcoin as the #10 money in the world, excluding gold and silver.
This report - released via tweet storm - takes detailed stock of the landscape of money globally, from fiat M1/M2/M3 discussion, to gold and silver, to bitcoin, and trends between them.
Lyn Alden notes on twitter:
YTD through June, over $3T in net Treasury issuance occurred for stimulus, and foreigners only bought $194B. So, the percent of US federal debt held by the foreign sector has dropped to the lowest percentage in over a decade, and the biggest buyer during this year was the Fed.
Today is the 49th anniversary of when President Richard Nixon severed the final ties between the dollar and gold. The US had been creating and spending more dollars than it had gold reserves for decades, and markets were forcing the US to finally admit it, lest USD holders convert too much to gold thereby draining US gold reserves completely.
Publicly traded company business intelligence company MicroStrategy ($MSTR) disclosed today that they acquired 21,545 BTC (~$250m) as part of capital allocation strategy for their corporate treasury.
They cited the following key reasons for the allocation:
This investment reflects our belief that Bitcoin, as the world’s most widely-adopted cryptocurrency, is a dependable store of value and an attractive investment asset with more long-term appreciation potential than holding cash. ... MicroStrategy has recognized Bitcoin as a legitimate investment asset that can be superior to cash and accordingly has made Bitcoin the principal holding in its treasury reserve strategy.”
“We find the global acceptance, brand recognition, ecosystem vitality, network dominance, architectural resilience, technical utility, and community ethos of Bitcoin to be persuasive evidence of its superiority as an asset class for those seeking a long-term store of value. Bitcoin is digital gold – harder, stronger, faster, and smarter than any money that has preceded it.
The IMF Executive Board concluded a consultation with the United States, during which they suggest that the US Federal Reserve has room for more asset purchases:
The Fed has been laying the ground-work recently to try and run inflation higher than their official 2% target, in order to "make up" for inflation being lower than target for much of the past decade.
The Office of the Comptroller of the Currency (OCC) formally stated today that nationally chartered banks can hold cryptocurrencies on behalf of their customers. This has been a long-standing regulatory block to banks and other financial institutions being able to provide bitcoin-related services to customers.
Peter Van Valkenburgh at CoinCenter explains:
National banks entering the game expands that competition and may also allow more traditional institutional investors to deal in cryptocurrencies. Several regulated entities are bound by financial regulatory laws to use and only use chartered banks for custodial services, and in a world where chartered banks are not holding crypto that can leave several investors with a defacto ban on large scale participation in crypto markets.
Lyn Alden joins Nic Carter to discuss the global monetary system, QE, inflation, parallels to the 1930s and 1940s, and what it may mean for Bitcoin.
Lively conversation between QTR and Danielle Di Martino Booth, a former Federal Reserve insider, and author of 'Fed Up - An Insider's Take on Why the Federal Reserve is Bad for America'.
Danielle points out a number of things, with macro relevance to Bitcoin
Fidelity surveyed 774 "large institutional investors" and found that over 25% reported that they hold bitcoin.
Tom Jessop, President of Fidelity Digital Assets, noted: “Europe is perhaps more supportive and accommodating.....[that could] be just things going on in Europe right now, you got negative interest rates in many countries. Bitcoin may look more attractive because there are other assets that aren’t paying return.”
We would like to see how the survey was constructed, as these numbers seem high. While it's clear institutional involvement has been accelerating, we are very surprised to see 25% ownership of bitcoin. In any event, the report indicates further legitimization for institutional ownership of bitcoin following Paul Tudor Jones' bullish macro letter identifying bitcoin as the best way to play coming inflationary macro pressures.
Crypto prime broker Grayscale has purchased 50% more BTC than miners have mined since May 11th, as shown here:
No matter how you slice it, this is bullish for bitcoin. Critics rightly point out that much of that demand is likely due to accredited investors playing the spread between the underlying spot price and the $GBTC asset which is trading at a premium, but that still translates to net buying pressure. Dan Matuszewski, former head of OTC at Circle and now founder of trading firm CMS Holdings discuss this further in a twitter thread.
Goldman Sachs released a report today discussing broad macro topics, as well as gold and bitcoin. Suffices to say, they are not fans of either gold or bitcoin, summarizing their thoughts on bitcoin with this slide:
These critiques are nothing new. CaseBitcoin addresses all of them on our critiques page. Brief rebuttals include:
Messari takes a macro-oriented and data-driven approach to making a very strong investment case for Bitcoin, culminating in a comparison to gold which suggests a 6300% upside potential:
The core thesis is build around the observations that:
The investment case for bitcoin is especially strong right now, because:
At 4:02 EDT today bitcoin's 630,000th block was mined, marking a once-every-four-years reduction of the rate at which new coins are issued on bitcoin's blockchain. That rate now works out to 1.85% annualized, which is below both the Federal Reserve's 2% inflation rate target, and most importantly for the up and coming "digital gold", below gold's estimated newly mined annual supply.
Bitcoin's halving is no surprise, as it's been built into the codebase since bitcoin launched in 2009. It is the 3rd halving event in a series of 33 hard-coded halving events which take place automatically, and without human deliberation, through the year 2136. This makes bitcoin the only money system which will credibly and predictably reduce its supply over time.
Paul Tudor Jones says he's allocating potential "low single digit percentage" of his flagship BVI macro fund to bitcoin, on the grounds that it's probably the best inflation hedge, and reminds him of gold in the 1970s.
Other macro traders were quick to point out that the signal this sends to the rest of the institutional money world is the real story here:
Tudor Jones makes four extremely btc-bullish points:
In the aftermath of the great recession, the Eurozone experienced an existential crisis as political tensions flared over how to deal with deeply indebted member states such as Spain, Italy, Portugal, and Greece. Here in 2020, it's happening again. These countries were hit harder than most by corona-virus, and Europe's lack of fiscal and monetary union means political strife, instead of the shotgun (but happy) marriage of Mnuchin and Powell which allowed the US to act swiftly and in size.
Get ready for years of Eurozone bickering and, dare we say, countries threatening to leave the EU. Again.
Fed official confirms that interest rates will remain low for years, not months. Of course - since there's no way the US government could pay back its debts if rates aren't extremely low forever!
Jeff Booth convincingly lays out the case for tech-driven deflation as the defining macro narrative, and how it requires central-banks to inject exponentially increasing amounts of new money into the system. Jeff goes on to suggest bitcoin as one of the few ways to play this trend, and emphasizes its asymmetric return profile.
It's been a joke since 2013 that Coinbase crashes during big moves. Their largely retail customer base flocks to the site and they still can't handle the spikes.
Alex dissects bitcoin's price movements during the Jan 7th Iran attacks, finding remarkable (and bullish) correlation:
Yan is deep on bitcoin on both macro-economic and technical levels. A must listen.