MicroStrategy is getting close to the 1% club

Also AI beats blockchain in 2023 and are foreign investors really ditching the US dollar

Welcome to the Friday edition of the Ecoinometrics newsletter.

Every week we bring you the three most important charts on the topics of macroeconomics, Bitcoin and digital assets.

Today we'll cover:

1. MicroStrategy is getting close to the 1% club.

2. AI beats blockchain in 2023.

3. Are foreign investors really ditching the US dollar?

Each topic comes with a small explanation and one big chart. So let’s dive in.

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In case you missed it, here are the other topics we covered recently:

• Wall Street is reading too much from the FOMC.

• Are the miners cheap relative to Bitcoin?

• The small fish are back but the Bitcoin whales are still missing.

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MicroStrategy is moving towards the 1% club

Some people buy chocolate for Christmas; Michael Saylor buys Bitcoins.

This week, MicroStrategy announced that they have acquired about 14,620 Bitcoins for approximately six hundred million dollars. That brings the total amount of coins held by MicroStrategy to 189k.

How significant is this?

Well, that's 0.9% of the maximum supply of Bitcoin or 17% of the coins believed to be owned by Satoshi Nakamoto. It's a substantial amount, indeed.

MicroStrategy is nearing the exclusive club of institutions owning 1% or more of the Bitcoin supply. For context, Block.one holds something like 164k Bitcoins, MT.GOX has 142k BTC, and GBTC holds 625k BTC.

So MSTR is really in a unique position. And at this point, it's a race between MicroStrategy and upcoming ETFs.

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In 2023, AI beats blockchain

Still a couple of days to go until the official end of the year. But unless something dramatic happens we can already say 2023 has been a great year for Bitcoin. 

But if you look among other assets with market caps in the hundreds of billions dollars range there is one stock that managed to beat Bitcoin: NVIDIA.

As I'm making this chart:

• Bitcoin is up 163% for the year.

• NVIDIA is up 263% for the year.

The difference clear. ChatGPT came out at the end of last year and the hype around AI has been high during the whole year. Since NVIDIA is the major hardware company enabling AI it is natural that they have seen a continuous growth. Meanwhile Bitcoin didn't do much for a long time until the ETF narrative started to crystallize in October.

So AI beats Blockchain in 2023. But what about 2024?

There is a lot going on for Bitcoin in 2024: the halving, the spot ETFs likely to launch. But it isn't like AI is slowing down either.

Regardless of who beats who, what a time to be alive. I would have never imagined as a kid that I would witness the rise of AI and digital assets. Looking forward to the future.

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Are foreign investors really ditching the US debt?

Foreigners are getting rid of US debt papers. That's an argument that regularly makes the rounds. But how true is it?

I'm not going to dispute that some countries are less fond of the US debt that they used to be. And if you are looking at some specific stats it could feel that something big is happening.

Example, for more than 40 years the percentage of the US debt held by foreign investors steadily increased. In 2013 a third of the US debt for held by foreigners. But it all goes downhill from there. Especially since 2017 we are witnessing a complete reversal of that trend. 

As of last quarter only 23% of the US debt is held by foreigners. That's below the level just before the Great Financial Crisis.

But... if this number is lower in percentage, overall in absolute dollar amount, foreigners hold way more of the US debt than before. Almost $8 trillion today vs $5 trillion then years ago. 

So I'd say it is not so much that foreigners don't like holding on to US Treasury bonds anymore, it is more that the domestic demand has outpaced the foreign trend.

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That’s it for today. I hope you enjoyed this. We’ll be back next week with more charts.

Cheers,

Nick

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