Adding Bitcoin to your balance sheet or portfolio is equivalent of adopting internet to your business. It’s an essential tool for navigating a world where money is broken.
People can do whatever they want with their bitcoin. Sometimes the reason may sound absurd to you, but you have to carry on and mind your own business. All I can say is, do not sell your Bitcoin.
Nobody becomes extremely wealthy merely by buying or selling real estate, equity, art, or any scarce, desirable asset. It's those who own and hold onto these assets that create generational wealth.
I was thinking US regulated Bitcoin ETFs can be globally accessible on day one. I was wrong. There are a lot of push back and prohibition coming from governments and companies like Vanguard and UBS.
Wealthy individuals understand their money isn't real, so they invest in scarce and desirable real assets like real estate, gold, art, and equity. Once they recognize Bitcoin as a finite, scarce monetary good, they'll buy in large amounts, driving its price so high that average people may not be able to afford a single Bitcoin.
我最近接受了台灣最具影響力的金融媒體《財訊》的採訪，討論了比特幣ETFs對比特幣以及財富管理的影響。
Recently featured in Wealth Magazine or 財訊, Taiwan's leading financial media, discussing the impact of Bitcoin ETFs on #Bitcoin and wealth management.
wealth.com.tw/articles/cac77…
Excluding GBTC, Bitcoin ETFs added approximately 68,933 BTC, creating a positive inflow of $2.8 billion in just about a week of trading days. This is equivalent to 36% of MicroStrategy's Bitcoin holdings, a number that took MicroStrategy about two quarters to achieve.
Acquiring scarcity can be highly addictive.
I learned this from all the Bitcoiners, art collectors, and wealthy people I've met.
They all obsess with scarcity. It’s a human nature and a part of our DNA.
In the light of Bitcoin ETFs and institutional adoption like BlackRock's, I want to express concerns about the future of Bitcoin-only companies.
ETFs will intensify competition for these companies. Most new investors, both retail and institutional, will likely prefer ETFs for Bitcoin exposure, leading to increased competition, reduced market share, and slower growth for Bitcoin companies.
Bitcoin ETFs offer an 'Amazon-like' experience: easy access with a single click, no extra KYC or brokerage, simplified custody, and straightforward exposure, leverage, and estate planning. Moreover, they have massive marketing budgets and a vast network of financial advisors. These are advantages that Bitcoin-only companies lack.
Bitcoin companies must find ways to differentiate from ETFs. This could be through education, self-custody, direct Bitcoin ownership, or technologically advanced Bitcoin products. The path isn't clear in the short term, but in the long term innovation is the key. These companies need to focus on building infrastructure based on Bitcoin and its layers, a challenging but necessary strategy to thrive and out compete institutional players.
The next four years will be critical. I expect many Bitcoin companies wouldn’t survive the competition and get out compete by the Wall Street incumbents. However for those who survive, they will become more valuable.
For full disclosure, I own shares in many companies focusing exclusively on Bitcoin. I express my views based on my investing experience in the Bitcoin industry and my role in running a family office. My unique blend of experience enables me to think critically about various aspects of the market that others might overlook.
Many people are unaware and underestimate the amount of international capital that will flow into Bitcoin ETFs.
My banker at UBS told me that every client will be able to buy Bitcoin ETFs once they start trading.
UBS has HNW clients everywhere, including US, China, Japan, Taiwan, Switzerland, and Singapore. They will sell Bitcoin ETFs to their billionaire clients just like they sell treasury bonds, corporate bonds, and funds.
If you think #Bitcoin will stop innovating after the introduction of ETFs, you don't understand its nature as a monetary protocol, and you are essentially betting against Bitcoin and its innovations.
As 2023 ends, I'm noting down my thoughts for the next 20 years about #Bitcoin 's evolution 📝👇
What is money?
Money functions as a store of value, a medium of exchange, and a unit of account. Bitcoin, serving as money, will eventually fulfill all these roles.
Currently, Bitcoin is in its store of value phase, protecting value from dilution. This phase might end in the next 8 years or after two halving cycles, with the Bitcoin ETF as a key indicator of this shift. At the end of this phase, Bitcoin could be trading at or above 1 million dollars.
Following this, we'll likely witness significant adoption and innovation in Bitcoin's layers and applications, focusing on its use as a medium of exchange. This phase will see a surge in companies developing on Bitcoin layers. Post this phase, Bitcoin might trade around 10 million dollars, with nearly everyone on the planet owning a wallet or using Bitcoin apps.
As for its role as a unit of account, I don’t see it happening in the next 20 years. I believe this will occur automatically after the store of value and medium of exchange functionalities have reached their maximum. My timeline for this to occur is before 2140, at which point Bitcoin will become the default money for everyone. https://image.nostr.build/fcfe0c4d6c3bc5d7e23598725c8e26ac99023ac24af29aa82db3734d3c271909.jpg
Bitcoin ETFs are a boomer thing. Yes, they will pump the price to the moon, and we must welcome that. But we, Gen Z, need to own the actual Bitcoin and take self-custody. This is how we can front-run them and win.
Here is my analysis on Block Inc's (known as $SQ) based on #Bitcoin per Share (BPS):
The BPS ratio, surprisingly low for a company that positions itself as a key player in Bitcoin infrastructure, offers an intriguing perspective on Block's valuation. Let's delve deeper.
Background: Renowned for its financial technology services, Block serves nearly 4 million merchants and 51 million users as of 2023. The company has significantly advanced Bitcoin initiatives through CashApp, Spiral, and TBD. CashApp, in particular, has facilitated billions in transaction revenue by providing easy access to Bitcoin. Jack Dorsey, Block's CEO, is a notable Bitcoin advocate and evangelist.
When analyzing BPS, a look at the table reveals a substantial increase in shares outstanding over time. Interestingly, the capital raised from share offerings was primarily used for acquisitions like Afterpay, rather than for Bitcoin purchases. Block's significant Bitcoin acquisitions include 4,709 bitcoins in 2020 and 3,318 in 2021, amounting to a total of 8,027 bitcoins. Since 2021, no additional Bitcoin purchases have been made.
The BPS trend, as depicted in the chart, shows no upward trajectory but a marked decline from 2021 to 2022, following an initial spike from 2020 to 2021. This sharp drop is largely attributed to share dilution. The discrepancy between Bitcoin per Share in dollars and the year-end stock price somewhat diminishes the relevance of BPS analysis. Nevertheless, for a Bitcoin-centric public company, this indicates a significant business premium relative to its Bitcoin holdings.
Examining the price action, Block's stock price has seen a 63.47% decrease from 2020 to 2023. Despite Bitcoin's 140% rally from its low this year, many Bitcoin mining stocks and MicroStrategy have outperformed Bitcoin, yet Block has only achieved a 23% return YTD.
This analysis, while not a comprehensive valuation of Block, underscores that despite its active involvement in Bitcoin, the company's actual Bitcoin holdings are relatively modest compared to its shares. Its stock price reflects a substantial business premium over its Bitcoin holdings and hasn't significantly benefitted from the current Bitcoin rally. https://image.nostr.build/e90e934c1d207f2f1fdf44c68f06b4402432d9e10645db337fa4fdff48b07507.jpghttps://image.nostr.build/552e38a39821f29a8325af027f978fec0d703d19f91d7615c32285962d683eeb.jpg
Based on my analysis of #Bitcoin per Share (BPS) on MicroStrategy ($MSTR), I am sharing some potential alpha:
The only instance when MicroStrategy's stock price traded below its Bitcoin per Share (BPS) in dollar terms occurred in 2022. This was when Bitcoin reached a new cycle low of $16,531, and $MSTR was trading at $141.57 per share, while its BPS in dollars stood at $189.54. This discrepancy indicated a significant buying opportunity. https://image.nostr.build/2aaa40d26d428be3db7965821a6b6a2f77c1d210af902afd27db81b1bb1fe6ff.jpg
Many say that once a #Bitcoin ETF is available, there will be no demand for proxies like $MSTR. I disagree.
A relevant comparison is between index funds and Berkshire Hathaway. Index funds track the S&P 500, while Berkshire is akin to a stock picker aiming to outperform the indexes.
Similarly, $MSTR could outperform a Bitcoin ETF as it offers strategic advantages like intelligent leverage and business opportunities in emerging technologies, mirroring how Berkshire outperforms index funds through strategic stock selections and business operations.
The GLD #Gold ETF, launched in 2004, marked the beginning of a nine-year bull run for gold. Remarkably, during the 2008 Great Financial Crisis, gold posted a positive return of 5.8%, and in 2009, it rose by 24.3%, even as the stock market plummeted.
In light of this, I anticipate a comparable trajectory for Bitcoin following its ETF launch in 2024. This suggests that even in the event of a recession in 2024, #Bitcoin could potentially yield positive returns.
https://image.nostr.build/5a5accd68a2b766bc90675d727ff2facd018fed6075a5f2d9c3edc823f267907.jpg
I want to present a case for #Bitcoin 's performance in the next few years. Instead of the typical four-year cycle with a blow-off top followed by an extended bear market, I believe there's a good chance we'll see an eight-year bull run, followed by a long, uneventful bear market lasting several years without any catalysts.
My reasoning is partly based on the Gold ETF launch in 2004. Gold experienced a remarkable nine-year bull run, followed by a three-year bear market, during which its value quadrupled. (See table below)
A similar scenario might unfold for Bitcoin following the launch of Bitcoin ETFs. We can anticipate continued year-over-year capital inflow from investors drawn to the world’s first asset with a finite supply. Consequently, Bitcoin's price has the potential to outperform Gold in its first nine years post-ETF.
My rough estimate is that Bitcoin could achieve a 10x increase, compared to Gold's 4x, following its ETF moment. This prediction considers the escalating geopolitical issues, overwhelming debt, and central banks' pivot to lower rates to monetize debt.
This is a quick analysis and my first long-form post. I'm working on a more detailed thesis for my fund. https://image.nostr.build/dbc70d70288b3f12eb6b889138cf700db64f1b74cc3a54d6865df92836beafe6.jpg
Half way through Invent & Wander. I wander why so many companies have forgot cashflow per share is the most important metric to measure a success of a business.
There is no other investment opportunity better than #Bitcoin in the next decade. More people are realizing this now. They are delaying to buy a house or a property.
This may sound discouraging, but to Gen Z: The door is closing fast. Once a Bitcoin ETF is real, boomers with fiat wealth will flood into Bitcoin, making it impossible to buy one BTC with just a salary. Prepare accordingly.
Today, I met a wealthy boomer woman during a tea ceremony. Intrigued by #Bitcoin , she shared her experience with me. Although she had traded MSTR and GBTC for exposure, she hadn't delved into the spot market. I ask her why. Her reason was straightforward:
The lack of time to set up an account and learn how to manage keys.
This is why a #Bitcoin ETF is transformative. It could forever change the landscape, making Bitcoin accessible to those who, like her, are searching for simplicity in getting exposure to Bitcoin.
FYI The tea ceremony 🍵 https://image.nostr.build/7f4ec5d74123f69234278e665b790a1a92aeeb1310ba78a82ea7c7399774662f.jpg
Agree owning key is important. However, the best one will satisfy her needs. And that’s why there are many solutions exist. That’s why self-custody and ETFs can both exist.
The market will always find ways to distract you from holding #Bitcoin . You will see people posting fake gains, chart technicals, and hyping up new projects. These can make you feel like you're missing out. Consider this a test if you haven't been tested yet.
For the next couple of months and year, holding #Bitcoin is the best strategy, as Bitcoin ETF, Bitcoin halving, and Fed rate cuts are happening simultaneously. Diversifying and gambling with other assets are unwise as they will only dilute your wealth.
Once #Bitcoin is financialized within the traditional financial system, we are going to see a massive capital inflow looking for scarce desirable digital money from all corners of the world.
Price is the signal for people who aren’t paying close attention to the fundamentals. Market sentiment can change very quickly once the price is on the rise.
An optimal strategy for a Bitcoin company is to aggressively accumulate Bitcoin during the bear market, either via private funding or excess cash on the balance sheet. Then, the company should aggressively expand its business when the bull market arrives.
In a high fee environment, onboarding people with non-custodial wallet can be very challenging and expensive. More people will be pushed to use custodial wallet. Lightning doesn’t fix this.
When running a bitcoin company, it is important to consider bitcoin treasury strategy. It is unacceptable to watch bitcoin price rising but you are under-allocate to the underlying asset you build on.
Everyone with money seeks scarce, desirable assets. This phenomenon is known as mimetic desire, where people often want what others want. #Bitcoin represents this desire in its most exemplary form.
There are two kinds of Bitcoin sellers right now:
1. Crypto traders who trade bitcoin for shitcoins.
2. Macro doomers who think recession is around the corner and therefore price will crash to 12K.
Ignore these losers.
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