In the world of crypto it is absolutely essential to do your own research. My advice, read a lot but approach everything with a critical mind.
Here are some stuff you should check out this week.
Nick
Bitcoin’s market size
Over the long run there are roughly three paths for Bitcoin:
Bitcoin goes to zero.
Bitcoin becomes another store of value asset on par with gold.
Bitcoin becomes the backbone of a new financial system.
I’m not going to handicap the probability of each scenario today.
Right now we are sitting between 1 and 2. But Bitcoin’s new level of scarcity following the halving is about to push us towards 2. And there is a long way to go in order to put the market cap of BTC on an equal footing with gold.
To reach Gold’s current market cap we’ll need to have one Bitcoin worth approximately US$ 500k. That’s 50x from the current level. For those who hesitate to buy in I think the situation is clear.
Buying Bitcoin now is an asymmetric bet. The upside is much greater than the downside. So what are you waiting for?
Whales selling
I’ve seen the interest for the Bitcoin derivatives market rise significantly since the start of the year. People are talking more and more about the futures and options market. The CME Bitcoin contracts are seeing a surge in trading activity. And everyone is trying to wrap their heads around what it means for the price of Bitcoin.
But the truth is that for now the main driver of big price movements is whales buying and selling spot BTC. The depth of the Bitcoin market remains small which means whales have a lot of power.
The typical market move would be something like a whale suddenly selling and driving the price down followed by the liquidation of long leveraged positions amplifying the fall.
In time, when the derivatives market get larger, they should have more influence on the price action. But in my opinion, for now it is still the other way round.
Bitcoin is gaining traction
Here is another survey on Bitcoin’s adoption.
This survey by Fidelity is focused on institutional investors in the Europe and the US. I’ll pull only one number and let your read the rest. Among the investors surveyed 36% are already invested in digital assets, mostly in Bitcoin. Those already invested are mainly crypto funds, VC, high net worth individuals and family offices.
According to Fidelity a large part of the big money is interested in digital assets as an investment but is not yet exposed. To me that screams plenty of opportunity on the upside.
Paul Tudor Jones Hodling
Check out this Max Keiser interview with Cointelegraph.
In there Max is predicting that Paul Tudor Jones will become a large hodler of Bitcoin. That’s possible, but for now it seems that PTJ is only getting long Bitcoin using cash settled derivatives. So I don’t think you can really call that hodling. Not your keys, not your coins. And with cash settled futures there aren’t even any coins to talk about…
But I’d be interested to know if PTJ owns any actual Bitcoin. When you run a big fund and you have to deal with compliance, making a cash settled futures play is the easiest thing you can do. So I understand the strategy here.
Maybe if compliance gets easier more of the traditional funds might have some hodling of physical BTC. We are not there yet.
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