Are we having fun yet?
It’s been almost 8 months since my Bitcoin bull market prep post Bitcoin – Pump up the Volume. It feels like it’s time to check in and see how things are going. I don’t know how accurate Rekt Capital’s estimation of progress will turn out to be but it feels about right. When I talk to people about Bitcoin, which I probably do far too much, I’m still stunned to find how little the halving cycle is understood. Nobody is interested in buying in the bear phase, but when the price starts going up and making news, people start asking if they should be getting involved.
For those of us who bought in the bear market, this is supposed to be the fun part. However, the timeline has been strangely depressed. I think a lot of people got sucked into alts and memecoins when they were rallying earlier this year and are stuck there. This is why I tell beginners to focus on Bitcoin. As volatile as it may appear to outsiders, it is actually quite predictable. So, what’s going on at the moment?
ETFs
The spot Bitcoin ETFs that launched in the US in January have been wildly successful. Blackrock’s IBIT took just 137 days to reach $20 billion in assets. The fastest before that took 985 days. The ‘sell the news’ traders did not come out of this well. The five US spot ETFs are at around $56.5 billion in assets. There is nothing complicated here – increased demand for a finite asset is going to have an effect on price and year-to-date the leading crypto asset is up a little over +50%.
What’s more, Blackrock CEO Larry Fink, previously a crypto sceptic, is regularly on TV talking about his belief that Bitcoin is a legitimate financial instrument which has a role in portfolios. Note the repost from Michael Dell:
Playing defense
Larry might be talking his own book, but he has actually grasped another thing that the majority of people are missing: that rather than a get-rich-quick scheme, Bitcoin is actually a defensive asset that can protect against currency debasement and other economic ills.
I’ll say that again: Bitcoin is a defensive asset. Let’s be real here, it’s not going to replace fiat currency as the base layer of the financial system. Governments have far too much invested in the status quo to let it go. And they are going to continue recklessly printing fiat money and inflating their debt. That money is going to go down in value against hard assets over time. Read Harden up your assets for more on that.
Guess who else seems to have just changed their opinion on Bitcoin?
You think Dimon flipped and doesn’t own any? Dips are for buying in the bull market folks.
Ever the opportunist, Donald Trump has seized on the Democrat’s hostility towards crypto and is speaking at a Bitcoin conference in Nashville later this month. I like the orange coin much more than I like the orange man but a Trump victory in November would likely be a full-bull mania catalyst.
Who are your bets on for Prez these days?
Never mind the parabolics, it’s the banana zone!
Maybe this cycle will be different. Nothing is certain in life. We could be wrong here after all. But if we’re not, the next phase of the bull market is banana-shaped. Raoul Pal is a bit excited:
Ahhhh, liquidity
Summer in Japan officially starts now. It’s going to be a hot one and there will be much call for regular liquid refreshment. And, what comes after summer?
That’s right, rate cuts in the US!
Jerome Powell is now pretty openly signalling that he intends to begin cutting this year, possibly as soon as September. The market believes him too. The biggest investing lesson I learned in the last few years is that liquidity drives markets. Liquidity is coming back and Bitcoin is thirsty. Don’t get me wrong, stocks love liquidity too but Bitcoin slurps it up with the highest intensity of all.
I don’t know if I’m as bullish as Raoul, but I’m not far off.
So, to sum up, we’ve got an asset that has been through three consecutive 4-year bull/bear cycles and is potentially 40% of the way through the current bull phase. We’ve got a bullet-dodging potential US President speaking at a Bitcoin conference. We have the kings of fiat finance changing their tune. And JPow is about to cut rates.
Am I forgetting anything? Oh, yeah. Ethereum ETFs look set to go live next week!
Disclaimer: This should go without saying, but the information contained in this blog is not investment advice, or an incentive to invest, and should not be considered as such. This is for information only.
Smart Money Asia 