Oddbean

Talk of ETF approval misses the forest for the trees. It's not just about immediate reactions or flows It's about the recognition of $BTC as an institutional asset. Pensions, endowments, insurance investment portfolios, etc., will soon be entering the arena with passive buy-side flows for the long term. In December 2020, Mass Mutual invested $100m into bitcoin. https://t.co/xdMyT7Dxxi MASSIVE.... except not really. Mass Mutual manage $235b in assets, with long-dated fiat liabilities. https://tinyurl.com/yz3b4hpn $100m of $BTC is a ~0.05% allocation... Large institutional investors don't purchase something to flip it the next month. They are constructing portfolios for multiple decades. A 0.05% allocation is just the start. There are many more many more Mass Mutuals out there, and all of these allocators are staring at their bond portfolio which is -50% from ATHs, questioning previous assumptions they held. The endorsement by the likes of Larry Fink isn't a sign that Larry is suddenly a bitcoin bull, it's a sign that clients are knocking on BlackRock's door, asking for a vehicle to gain exposure. The narrative violations are strong. Passive accumulation starting from the $69k ATH has you +45% right now on your bitcoin position. The same passive allocation into long bonds has you -12%. "But the volatility!" Again, it's a misunderstanding of time horizon. A ~1% allocation to an asset that they don't plan to liquidate for years/decades, with an extremely strong sharpe ratio, is within their risk profile. If you want proof, just look at the rest of their portfolio... - No, the orange coin is not going away. - No, it did not die when FTX collapsed. - Yes, supply is more tightly held than ever before. - Yes, perpetual credit expansion of the fiat monetary system is an ongoing reality. - No, there is no sense of fiscal austerity present ANYWHERE. - Yes, this illiquidity means marginal flows into the market sends the price higher, which is why all of these institutions will start with a tiny ~0.05% stake, while continuing to passively allocate steadily for the long-term. Reinforcing this all is the shift in narrative and negative bias around 'energy usage' and mining, evidenced by new academic papers on mining as a tool for balancing the grid and monetizing waste energy: - Bitcoin could support renewable energy development, Cornell Engineering, https://t.co/EZopJJAM2i - Leveraging Bitcoin Miners as Flexible Load Resources for Power System Stability and Efficiency, Co-authored by former ERCOT CEO, https://t.co/PEpGE65la1 - From Mining to Mitigation: How Bitcoin Can Support Renewable Energy Development and Climate Action, ACS Sustainable Chemistry & Engineering, https://www.resistance.money/research/mining_to_mitigation.pdf The landscape and profile of the asset has shifted. It's not about the ETF, it's about the reason WHY the ETF is coming. Institutional exposure has been given a green light. It won't happen all at once, but understand the shift that is underway. Bitcoin has been passively accumulated by individuals and retail for sometime now, while institutions mostly watched the madness from the sideline. This is changing. Welcome. https://m.primal.net/HRqB.jpg https://m.primal.net/HRqC.jpg https://m.primal.net/HRqD.jpg