2021.05 - Thank Me Later
TLDR:
BREAKING: BTC pumps on the wake of Tesla announcement (they bought $1.5B in BTC)
The great migration of corporations into Bitcoin has started. Right now you still have an advantage: you can move faster than them. So stop reading this, buy some BTC and thank me later.
The Stance
My personal opinion on where the ball might be heading.
The first wave of newcomers to this cycle bought under $20k. Ask me how they’re doing.
The second wave of newcomers bought under $40k. Maybe, if you hurry, you can still be among them.
On February 3rd Microstrategy graciously hosted a Bitcoin for Corporations event in which they walked through the different possibilities and hurdles corporations face when first developing their Bitcoin strategy.
Let me be clear on this: Corporations need a Bitcoin strategy, just like one day they realized they needed an online strategy, and then a social media strategy, and then a remote collaboration strategy.
Not all companies understand this yet of course. But the smart ones do. Over 8,000 people from more than 6,000 corporations attended Microstrategy’s event. And by the looks of it some of the attendees started putting in their personal purchases right away. After a well-deserved month-long breather, it seems BTC has gotten its strength back and has already tapped $40k again.
It will take corporations some time before they can reorient themselves into a position where they are able to start executing on a Bitcoin strategy.
This is one of those decisive moments for newcomers.
5 years from now, when Bitcoin has been comfortably sitting on six-digit pricing for a while (and if you don’t think this will happen, you probably haven’t been paying attention) will you be able to say you bought under $50k?
I hope you will, it’s a great feeling.
There was a lot of high-quality content at the Microstrategy event and I’ll be linking to it, but if you only do one thing, watch this hour-long conversation, thank me later:
Michael Saylor and Ross Stevens:
Bitcoin Macro Strategy
Long Bitcoin
Recent news that keeps me bullish on Bitcoin —"long / bullish" means you have the expectation something will rise in value.
Tesla buys $1.5B of Bitcoin
The long-expected announcement finally came.
Not your keys, not your coins
A man who recently served a 2 year prison sentence in Germany (for covertly mining Bitcoin on other people’s computers) has been released. With his arrest, the police claimed they had “seized 1,700 Bitcoin”, but it turns out the man never gave them the password to the coins. They remain unable to access them.
I don’t want to make any claims on this man’s moral standing. But his story highlights an important aspect of Bitcoin: it’s hard to confiscate.
This is one of many reasons why it’s an invaluable tool in the struggle to protect human rights. For a deeper look, check out this great video by Alex Gladstein:
Visa to release Bitcoin API
Bitcoin keeps making inroads into the traditional financial system. This week Visa, in partnership with Anchorage, announced an API that would allow traditional banks to buy, sell and hold Bitcoin and other digital assets through their apps.
The move is significant because it significantly reduces technical, infrastructure and regulatory headaches for banks.
DCA - Gigachad Style
Dollar Cost Averaging —buying at regular intervals regardless of price— has been a well-known strategy for investors across different asset classes and it has proven to be one of the smartest ways to accumulate Bitcoin.
Not content with their $1B+ Bitcoin holdings, Microstrategy seems to be DCA’ing $10M per month into Bitcoin. My respects for Michael Saylor and team.
Big BTC Energy
The relationship between Bitcoin and energy is one of the topics often misunderstood by newcomers / outsiders. You’ll often hear nonsense about all the “energy wasted to mine Bitcoin”. The good news is whenever you hear that the odds are good that the author doesn’t really understand the subject / is pushing an agenda.
I’m not well-informed enough to have built a definitive position on renewable energy, but I know enough to be skeptical of claims that it’s a magic key to a sustainable future. Both wind and solar energy consume significant amounts of fossil fuel in their manufacture, operation and/or disposal.
Crypto Wars
crypto- | ˈˌkrɪpˌtoʊ | concealed; secret.
The monopoly over fiat money will not be given up without a fight.
Don’t Hate the Player
You may not remember this, but less than 3 weeks ago —before they’d filled their bag one assumes— Scott Minerd had this to say about the price of Bitcoin:
“I think for the time being, we probably put in the top for bitcoin for the next year or so… and we’re likely to see a full retracement back toward the 20,000 level”
Fast Forward to Mr. Minerd last week:
I said it last week and I’ll say it again: Don’t trust the talking heads. They are working on their own self-interest, not yours. They will do their best to convince you to sell their Bitcoin to them. Don’t.
House Money
Ruffer made big news a few months ago when they announced a $600M allocation to Bitcoin. An old, conservative firm their entry into the space lowered the career-risk for corporation executives to consider a Bitcoin position.
This week, they announced that they’d decided to take profits to cover their costs, so they are now “playing with house money”.
I understand their decision and it’s in character with being a conservative firm. But given that their original allocation to BTC was comparatively small to the rest of their portfolio, I think they made a mistake by leaving a lot of upside on the table.
This serves to illustrate something we’ve said before:
They may be big corporations, that doesn’t mean they have strong hands.
BANNING Bitcoin - Nigeria Edition
Nigeria is now pushing some still-confusing legislation around making Bitcoin harder to use, banks potentially closing the accounts for people transacting in cryptocurrency.
Short Fiat
Recent news that makes me bearish on the legacy financial system —"short / bearish" means betting it will go down in value.
Printer To Keep Going BRRR
To be fair, they probably have no other choice at this point, but Democrats are doing their best to expedite a $1.9 Trillion relief proposal. This is horrible for people holding cash and good for people holding Bitcoin and other scarce assets.
Price Discovery
This is the section where I talk about price with an updated weekly price chart. If this is your first time here, there’s a “how to interpret” guide below the chart.
Breaking Highs
At $38,858 Bitcoin just had it’s highest weekly close ever.
You’ll notice in the char that the “water level” has risen to $20k+
This means that —unless something spectacular happens— it’s unlikely that BTC would drop below $20k at this point and looking t the sand and bedrock it will probably never fall under $9k again.
Breaking News
Tesla announced they had purchased $1.5B worth of Bitcoin. BTC pumped to over $44k on the news. Need I say it? It was inevitable.
Each candle in the chart represents one week. Click on the chart to expand.
How to interpret the Bitcoin Surfing chart:
Think of Bitcoin's price-action as a kite-surfer:
Bitcoin uses its board to stay above water and wants to catch some air.
When it catches air, it tends to keep rising but if it rises too fast (it's feet no longer touch the board) it can stumble.
If it falls off the board, it tends to keep falling until it regains its footing (may need to touch water or sand for that).
Water and sand arrest the fall and help it push itself back up.
If it goes up so much that it gets close to (or into) the Stratosphere, it will probably crash down all the way into the sand and may need to tap the bedrock level before pushing up again.
