This is the year of the recovery for the Bitcoin miners
Also how Warren Buffet is consistently beating the stock market and the yield curve is still inverted
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:
This is the year of the recovery for the Bitcoin miners.
Warren Buffet is consistently beating the stock market for 40 years.
Your monthly reminder that the yield curve is still inverted.
Each topic comes with a small explanation and one big chart. So let’s dive in.
In case you missed it, here are the other topics we covered this week:
The number one reason why the Federal Reserve won’t cut rates.
Bitcoin’s price is up, but you wouldn’t know by looking at the on-chain data.
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This is the year of the recovery for the Bitcoin miners
If you are looking to make a bet that’s highly correlated to the Bitcoin but with potentially much more growth attached to it then the Bitcoin miners are for you (read this for our thinking process).
But of course this is not a smooth sailing, up only bet. The miners are more volatile than Bitcoin itself. That’s good when the market goes up. However when the market goes down the corrections are more violent.
The good news though is that the market is going up now.
Take the example of Marathon. The stock was down as much as -95% from its all-time high at the bottom of the bear market.
But of course, if you have a long term view, down a lot means bigger recovery when the recovery happens.
And year-to-date MARA is up 219%, compared to +125% for Bitcoin over the same period. That a 1.8x multiplier. Expect more when the real bull market arrives.
Marathon is just an example of course. Most of the Bitcoin miners are showing the same pattern. There is real potential for asymmetric upside.
Warren Buffet is consistently beating the stock market for 40 years
The funny thing with Warren Buffet is that if you ask him where to invest your money he will likely tell you to put it in the SP500.
“No fund manager can bear the stock market consistently. You better just index the whole market.”
Meanwhile, since 1985, Berkshire-Hathaway is out performing the SP500 on almost every time frame. Which goes on to show that yes, you can beat the market consistently.
To be fair that’s not inconsistent with Warren Buffet’s advice. Most fund manager don’t do better than the stock market itself over long enough time periods. But that doesn’t mean some fund managers do outperform over the long term.
Your monthly reminder that the yield curve is still inverted
Since we are in the last quarter of 2023, I am once more reminding you that the US is at a high risk of a recession.
Yes the yield curve has been normalizing a little bit. Compared to six months ago the inversion isn’t as deep. That’s the consequence of the rising yield at the long end of the curve.
But regardless of this dynamic the yield curve is still inverted. And it has been like that for five quarters.
The US economic data does show clearly that we are in a recession yet. But the danger remains. So let’s see where that leads us.
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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