Bitcoin Marketcap
$360B
Gold Marketcap
$10.97T
BTC Settlement Volume (24hr)
$4.44B
BTC Inflation Rate (next 1yr)
1.81%
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Bitcoin & Traditional Assets ROI (vs USD)
BTC vs Traditional Assets ROI:
Bitcoin
Gold
S&P 500
1 year:
+172%
+23%
+16%
2 year:
+363%
+47%
+36%
3 year:
+138%
+40%
+39%
4 year:
+2,534%
+53%
+63%
5 year:
+5,939%
+68%
+73%
Data Source: Messari.io, bitcoincharts.com
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.
Bitcoin Price Closing History by Level
Days Bitcoin Closed Above:
Price
Days Above
% of Bitcoin's Life
$19,380
0
0
$19,000
1
0.02%
$10,000
283
6.52%
Data Sources: Messari.io, bitcoincharts.com
What is it: This the number of days in which bitcoin "closed" (trading level at midnight UTC) above various price levels.
Why it matters: This can give a sense of where bitcoin is currently trading relative to past cycles.
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:
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- Many factors have lined up for BTC in the past year, and Ari's anecdotal experience is the result.
- The macro environment, with the Fed almost doubling its balance sheet in a matter of months, has gotten everyone's attention.
- Big name investors such as Stanley Druckenmiller, Paul Tudor Jones, and Bill Miller have made positive statements about BTC recently or announced they own it.
- And Bitcoin has matured substantially since its last wave of huge interest in 2017. The plumbing around it, from qualified custodians, to more regulatory clarity, has de-risked many operational aspects around owning the asset for fund managers and HNWs alike.
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.
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- Mr Rieder joins a growing list of traditional-markets money managers publicly expressing positive views towards bitcoin.
- With notable investors such as Paul Tudor Jones, Stanley Druckenmiller, and Bill Miller publicly making positive statements about bitcoin recently, career and sentiment risk is reduced for capital managers generally when considering a bitcoin allocation.
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:
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- This is a significant milestone in the seemingly inevitable march towards the Fed monetizing most United States debt issuance
- The more the Fed monetizes (prints), the more attractive hard assets like Bitcoin become
- The Fed's willingness to purchase USTs indicates a path for yields to stay low, in turn pushing money managers to seek returns higher up the risk curve
Mexican billionaire Ricardo Salinas Pliego (net worth: $13.2B) disclosed via twitter that 10% of his "liquid portfolio" is currently invested in bitcoin:
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- The trend of notable investors & ultra-high-net-worths disclosing bitcoin holdings continues
- In addition to the position disclosure, Mr. Salinas' recommended Saifedean Ammous' book "The Bitcoin Standard", which makes a broad case for Bitcoin as the key monetary reserve asset.
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:
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- This is reminiscent of Paul Tudor Jones' May 2020 Macro Outlook where he said "Bitcoin reminds me of gold when I first got in the business in 1976"
- Fitzpatrick's analysis is interesting, given its mixture of both fundamental analysis of bitcoin's properties plus the macro backdrop, as well as technical price analysis.
- This is yet another example of the rapid mainstreaming of Bitcoin on Wall St. that has been a hallmark of 2020.
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."
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- Senator Lummis the first US senator to openly own bitcoin
- Her election bolsters the list of bitcoin-friendly members of congress
- Wyoming has emerged as a key state in terms of recognition of bitcoin as a key asset class, and friendly regulation.
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:
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- As governments are forced to drop rates and do more QE, bond yields will continue to fall.
- Negative yielding debt showcases how difficult it is for asset managers to find a desirable place to park significant capital
- The more negative yielding debt outstanding, the more attractive alternative places to park capital (like BTC) start to look.
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.
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- Grayscale has had record inflows for several consecutive quarters
- Gold ETF inflows appear to be trailing off, while BTC inflows are strong and steady
- Bitcoin is starting from a much smaller base than gold, and could therefore run a lot farther in % terms.
- These dynamics led Paul Tudor Jones to observe earlier this year that bitcoin is the "fastest horse" among inflation hedges.
Ryan Watkins of Messari reports that Square Cash bitcoin purchases in Q3 nearly doubled the then-record-setting Q2:
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- This is a clear exponential trend, showing strong broad retail demand for BTC
- Square Cash is a payments app that lets users easily buy bitcoin (and only bitcoin)
- Square's CEO is Jack Dorsey, CEO of twitter, which has led to periodic speculation that Twitter will incorporate bitcoin somehow
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.
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- There is often chatter over which party is best for Bitcoin, but it doesn't matter long-run
- US must debase the currency one way or another
- Long term, bitcoin holders win, likely at the expense of bond holders
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:
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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.
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- There's no free lunch - currency and bond holders ultimately pay the price for running the printing presses.
- Bitcoin is coming into its own as a store of value asset with broad appeal, just as the case for US treasury bonds is tremendously weakening.
- Bitcoin's monetization ultimately comes, probably, at the expense of bond holders
Lyn Alden compares year-to-date performance of various asset classes, showing Bitcoin's clear out-performance:
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As Paul Tudor Jones noted in his May 2020 Macro Outlook Letter regarding Bitcoin vs other potential inflation hedges: "At the end of the day, the best profit-maximizing strategy is to own the fastest horse". Check out our dynamic multi-asset ROI chart here.
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.
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- As Mati points out in his tweet, "Bitcoin = digital gold".
- BTC responding at all directly to macro events indicates its increasing fitness as a global macro asset class.
- As can be seen from the chart, bitcoin moved a bit more on the upside, but less on the downside, than gold in this case.
Glassnode has an interesting 'accumulation address' metric defined, which tries to quantify store-of-value behavior. Such behavior is hitting all-time-highs:
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- This is an interesting metric, providing insight from on-chain data into investor behavior
- Store-of-value (SoV) use/behavior is what drives market-cap for an asset that has no cash flow, so quantifying this is extremely valuable
- Increasing SoV use is not surprising as Bitcoin further cements its position as digital gold against the current macro backdrop.
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:
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- Chart implies this current bull market can go on for quite some time
- Each cycle seems to take longer than previous one
- Longer cycles with muted extensions vs prior runs intuitively makes sense as BTC gets larger as an asset class.
Glassnode highlights a 3yr high in the % of BTC supply that hasn't moved in 2yrs:
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- As with any store of value, the desire to hold it for long periods is what drives high marketcap
- We can see from this chart, that during periods of high holding behavior (people sitting on coins for 2yrs+), price tends to rise.
- Bull markets tend to end when this number falls significantly
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.
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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.
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- This report nicely contextualizes bitcoin against other money bases
- It highlights the scale of bitcoin's potential, and the trajectory it's been on for some time.
Lyn Alden notes on twitter:
YTD through June, over $3T in net Treasury issuance occurred for stimulus, and foreigners only bought $194B. So, the percent of US federal debt held by the foreign sector has dropped to the lowest percentage in over a decade, and the biggest buyer during this year was the Fed.
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- This is more data showing how deeply supportive of markets the Fed has become.
- They are being forced to buy most new bond issuance, given lack of demand from other sources.
- This amounts to fairly direct monetization of the debt, which almost always has extremely inflationary results.
Today is the 49th anniversary of when President Richard Nixon severed the final ties between the dollar and gold. The US had been creating and spending more dollars than it had gold reserves for decades, and markets were forcing the US to finally admit it, lest USD holders convert too much to gold thereby draining US gold reserves completely.
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- This event terminated the Bretton Woods international monetary system that had been in place since the end of World War II, and kicked off the full-fiat-money experiment.
- The US was effectively admitting to printing more money than was implied by the gold it had in reserves.
- This triggered a massive repricing in gold, to which Paul Tudor Jones alludes when he said recently (May 2020) that "Bitcoin reminds me of gold when I first got into the business in 1976".
Publicly traded company business intelligence company MicroStrategy ($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.
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- Companies seeing bitcoin as a macro-diversification hedge fit for prudent treasury allocation is a new, but we think inevitable, wave of bitcoin adoption.
- Bitcoin is increasingly being understood as digital gold and an asymmetric investment play by wider audiences.
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:
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- Central bank asset purchases are now the status quo
- "QE Forever" was a joke after the 2008 crises; but probably a reality now
- Central bank asset purchases ramp financial assets, exacerbating wealth-inequality
- Assets viewed as stores of value (potentially anything with limited supply) tend to outperform in the face of unlimited central bank liquidity
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.
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- Given US debt levels, QE indefinitely is likely a requirement for keeping rates low enough to pay treasury holders.
- The Fed probably assumes this will likely create CPI inflation in addition to money supply inflation, and is therefore setting the stage for running higher than target CPI numbers.
- Naturally this is bullish for inflation-hedge assets such as bitcoin, gold, and probably stocks as well.
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.
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- This opens up a whole new tranche of regulated financial services providers (banks) to offering bitcoin-related services
- Other FIs that rely on regulated banks for custody now have far more options
- This sends a broader signal that bitcoin is a legitimate asset class (to those who may still have doubts)
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.
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- The 2020s may be equivalent to the 1940s, in terms of QE financing goverment fiscal spend and creating real inflationary pressures.
- Assets that do not offer yield, but have limited supplies (eg, commodities), typically do well in these environments
- Bitcoin is a commodity with gold-like store-of-value properties, but is starting from a much smaller base than gold, and therefore can much more easily outperform
- Bitcoin is significantly de-risked vs 2017 in terms of network effect and supply assurances
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'.
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Danielle points out a number of things, with macro relevance to Bitcoin
- The Fed somewhat-knowingly uses suspect inflation-metrics such that they can continue policies that create inflation.
- The Fed has tacitly concluded that there's no alternative path to perpetual balance sheet expansion; things are too far gone.
- This will create global conflict, specifically with China and perhaps Russia.
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.”
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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:
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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:
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These critiques are nothing new. CaseBitcoin addresses all of them on our critiques page. Brief rebuttals include:
- Bitcoin is 65x undervalued relative to gold
- The developed world is experimenting with unprecedented monetary stimulus and MMT politics; this time may, in fact, be different
- Gold went to all-time-highs in the money-printing aftermath of the Financial Crisis; bitcoin is starting from a 65x smaller base
- Bitcoin is uncensorable in addition to fixed-supply; the only digital asset that can't be taken from its owner
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:
- Bitcoin is experiencing institutionalization via various investment products, futures, lending instruments, etc
- Bitcoin is increasingly relevant on the macro-stage as a new asset class
- Central bank monetary policy, accelerated by Covid-19, amplifies bitcoin's value prop and accelerates market adoption
- The current political environment is consistent with the end of debt-supercycles, and the consequent rise of MMT creates an environment where bitcoin can thrive.
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The investment case for bitcoin is especially strong right now, because:
- Bitcoin is maturing as an asset class (more tools and financial instruments that institutions can use)
- The broad macro environment is highly supportive, with long-term debt super-cycle trends accelerated by Covid-19
- Bitcoin's upside is tremendous relative to other store-of-value assets (such as gold), given that it's starting from a much smaller base.
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.
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- Bitcoin's inflation rate is now below gold's, and below the Fed's fiat target
- The 3rd halving event transpired algorithmically, and predictably, just like the two before it, and the 30 to come over the next century.
- Bitcoin is the only money system to reduce supply credibly and predictably, far into the future, eventually capping out at just shy of 21,000,000 BTC to ever be produced.
- Combined with the inflation rate threshold just crossed, this makes bitcoin the hardest money system ever devised.
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:
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Tudor Jones makes four extremely btc-bullish points:
- Bitcoin reminds him of gold in the 70s
- Bitcoin is an inflation-hedge in our era of rapidly increasing money printing
- The best way to play the money-printing theme is long BTC
- Putting several hundred basis points of his flagship fund into BTC indicates some conviction, and sends a strong signal to other big money managers
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.
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- Once again, the EU is experiencing political strife under financial pressure.
- This is setting up for another Eurozone crises, as we saw in 2011.
- The 2011 crisis sparked gold's all-time-high run as investors sought alternative monetary assets.
- This time it may cause investors to take a deeper look at bitcoin.
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!
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- The Fed's Bullard confirms rates will remain low for years
- Alternative assets thrive in a low rate environment as investors hunt for yield
- 🚀 Bitcoin, Gold
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.
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- Tech driven deflation is increasing exponentially
- Central banks must counter with huge amounts of new money, else banking system collapses
- This can't go on forever
- Bitcoin is poised to be a huge long-term beneficiary as people seek to escape an increasingly unsustainable system
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.
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- Coinbase crashing during big moves has been a consistent theme since 2013.
- There are other places for retail to buy bitcoin now. Bullish.
Alex dissects bitcoin's price movements during the Jan 7th Iran attacks, finding remarkable (and bullish) correlation:
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- Bitcoin was highly correlated to gold during this event.
- And anti-correlated with S&P500.
- This suggests BTC is a maturing chaos-hedge macro-asset.
Yan makes the high-level macro case for bitcoin; discussing how his family's past helped him intuitively understand the necessity of non-government money, and his path to bitcoin.
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Yan is deep on bitcoin on both macro-economic and technical levels. A must listen.
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