The hot summer months usually mark a quiet period for markets, but there are no signs of a lull so far this year.
While the upper house election last weekend likely had a limited impact on stocks, the trade deal announced shortly after certainly got things moving. The Nikkei 225 index surged over 3% on 23 July and is creeping up on ¥42,000 as I type today.
Shigeru Ishiba may have lost his ‘mandate from heaven’, but the Japanese auto industry is saved!
Perception really is a funny thing. Automaker stocks surged yesterday as investors cheered a 10% ‘reduction’ in US import tariffs from the 25% touted by Trump. However, before Trump took office, the tariff on cars was 2.5%. So there has actually been a 12.5% increase. Trump’s big stick negotiation tactics may be crude, but they appear to be working.
By the way, Weston Nakamura isn’t buying the coincidental timing of the trade deal announcement.
Probably the biggest pressure release for markets will be the end of tariff uncertainty. If Trump can secure a similar deal with the EU, then we are likely through the worst of it.
He’ll still have to come up with a pretty big distraction from the Epstein files, though, so we should stay on our toes.
Anyway, moving swiftly on
I find a lot of people struggle to understand the concept of currency debasement. If this is you, I highly recommend this episode of Forward Guidance with Raoul Pal and Julien Bittel:
You only actually need to listen to the first 10 minutes to get the picture, although it’s all good stuff.
A quick summary:
Governments restructured their debts after the ‘debt jubilee’ that followed the 2008 financial crisis, forming an almost perfect 4-year liquidity cycle
We’re in the 4th year of that cycle now, where the larger part of the debt is due
The liquidity that gets added never really gets taken back and is rising at a rate of around 8% per year
That is about the rate of debasement of fiat currency
If you divide an asset by the rate of global liquidity, you find out it’s true performance vs debasment
The S&P 500 is basically flat, same with other countries’ indexes
Gold is also flat, as it should be
The only assets that outperform debasement are tech stocks and crypto
Governments are now just servicing their debt. i.e. paying interest and not repaying the principal. GDP is falling due to the declining birth rate and shrinking labour force. And so, governments are debasing currency to pay for the debt.
Until political parties appear that are willing to tackle this problem, elections and politics are pretty much meaningless when it comes to investing. And, of course, no party wants to deal with the giant elephant in the room as it will mean years, likely decades of pain. That’s the reality. If you don’t want your spending power to get eroded over time, you need to be invested appropriately.
Now, should you only own tech stocks and crypto? Clearly not. But, in my humble opinion, you would be crazy not to have an allocation to them.
Incidentally, the Bitcoin 4-year cycle dovetails remarkably neatly with the 4-year liquidity cycle. I have come to realise that this is also not a coincidence. In fact, BTC lags global M2 money supply by around 90 days. Here is Julien Bittel’s chart of projected M2 from back in May:
Are you surprised that BTC is now near $120k? You shouldn’t be!
Now imagine if the Fed cuts rates in the next few months…
As long as that M2 line keeps going up, expect risk assets to follow. If you see it turn down later this year, that’s the purest signal possible that the Bitcoin bull market is nearing its end.
Inject that chart directly into my veins!
If you want to get deep into the weeds on liquidity, Arthur Hayes writes some entertaining posts. His latest is here. Be warned, Arthur is a liquidity/crypto uberbull.
Meanwhile, here in Japan, stocks are in celebration mode. I don’t see any reason to fade the mood, although my bullishness is always tempered by the fact that I’m living right here next to the canary in the debt/demographics coalmine.
You can only worry so much, though. Stay cool, and if the world ends, it will probably be a great time to buy stocks!
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.
I’ve been getting asked about Bitcoin storage lately, so I thought I’d write a post on the topic. People rightly point out that one of the major obstacles to mainstream adoption of BTC is how difficult it is for the average person to store it safely. It’s actually one of the reasons I believe we are still relatively early in the adoption cycle, as it’s simply a problem waiting to be solved. Or at least made easier.
People have perhaps become all too accustomed to handing their assets over to ‘trusted third parties’ for safekeeping. Looking after your own Bitcoin keys is a degree of responsibility that most people are simply not used to taking on. It’s actually one of the things that fascinates me about the asset class – you have the choice of how much you want to actually be in control of your money. Custodial services are going to become more sophisticated going forward, but there will always be purists who want to manage their own keys.
What keys?
Non-Bitcoin people are probably already confused by the term ‘keys’. Put simply, you do not actually store Bitcoin itself. You store the private cryptographic keys that give you permission to access that Bitcoin. If you do not have access to your own keys, the coins can be taken from you – hence the mantra that forms the title of this post.
This doesn’t necessarily have to be done online. You can simply write your keys down on a piece of paper. If you are lucky enough to have a photographic memory, you can even store them in your head! Most people are going to want to use some kind of wallet, though.
Exchange risk
People generally purchase Bitcoin on an exchange. It’s very tempting to just leave it sitting right there. After all, it’s password protected, and you have set up 2FA. What could go wrong?
Exchanges get hacked. It’s happened many times before, with some of the biggest hacks occurring in Japan. Non-Bitcoin people may even have heard of Mt Gox, which went down back in 2014. It was by no means the last exchange to get hacked, with Coincheck suffering an attack in 2018 and DMM getting hacked more recently. Exchanges may also fail due to fraud and mismanagement, as FTX did in 2022.
Japan is interesting, as the FSA is incredibly strict and requires exchanges to keep enough reserves to cover customers in case of a hack. It’s actually one of the few countries in the world where you stand a reasonable chance of getting your money back in the event of a breach. But do you really want to take the chance?
What about small amounts?
If you only have a small exposure to Bitcoin, buying a cold storage wallet, setting it up and managing it seems like a lot of hassle. I get why people sometimes just leave coins on the exchange. However, everyone has a point where the amount of money becomes too big to stomach a loss, especially from a well-documented risk that you should have known better about taking. It’s really up to you to decide when you have reached that point.
Here’s the thing, though: people tend to think in terms of today’s value. They look at the amount of BTC they have and today’s price and say, “ok, I’m not going to go to the trouble of moving my coins off the exchange for this trivial amount”. What I would encourage people to do is think in terms of potential future value – if you lose your Bitcoin today, it’s gone. If the BTC price rises to $1 million per coin in ten years, how mad are you going to be that you didn’t protect it???
If it’s on the exchange, not your keys, not your cheese. North Korean hackers will never stop trying to get it!
Here are a few things to consider if you have decided it’s time to start looking after your holdings:
Online/offline
The first tradeoff comes with online vs. offline wallets, sometimes also referred to as hot and cold wallets.
It’s pretty simple: if your wallet is on a device that is connected to the internet (hot), it’s very convenient to use, but more susceptible to an attack. That’s why you hear Bitcoiners talk about putting their coins in cold storage. Take the keys offline, and it is much more difficult for a bad actor to get to them.
Custodial/Non-custodial
Once you have decided you want to get your keys offline, your next choice is whether to get a third party to handle it for you or do it yourself.
Of course, custodial services mean trusting someone else to manage your keys. The good ones will do this very well, perhaps better than you can yourself, but they won’t do it for free. You have to be very careful choosing a custodian and making sure that they really have your coins in cold storage and are not, in fact, lending them out to other parties and putting them at risk. Do your homework! If something doesn’t add up, there will be a reason. If a custodian is offering you a high rate of interest on your BTC, for instance, you are going to want to know where that yield is coming from and whether your coins are being put at risk to generate it.
Maybe custodial isn’t the easy route after all – it does require significant due diligence. Even after that, you have to trust the custodian to do what they say they will do.
Non-custodial cold storage
What most Bitcoiners have already figured out is that if you want a job done properly, you should do it yourself! Assuming we are not just writing our keys on paper or memorising them, this means purchasing a hardware wallet.
There are many hardware wallets available. The two best-known are made by Trezor and Ledger. I have used both and prefer Trezor, but it’s just my personal preference.
In terms of how to use these devices, I will try to keep it simple for now: buy one and follow the instructions to set it up! Tech-savvy people will find it easy. If you live in the world and have set up new computers, phones and other devices, it’s not going to be too difficult. Getting your ageing parents to use one might be a stretch…
When you set up your device, you will be guided through the process of generating a seed phrase. Here’s a definition from the Leger website:
You will want to handle your seed phrase properly. It essentially functions as a master key to access your private keys. And, if you lose or damage your hardware wallet, you can use the seed phrase to recover your keys on a new device.
Some basic rules:
Do not share your seed phrase with anyone
Do not store it online – this is not an email password that you put in a Google document or in a made-up contact in your address book! If anyone gets access to your seed phrase, they can steal your funds!
Do not type your seed phrase into anything other than your device, no matter who asks you to do so! If you keep everything safe, you will rarely need to use it at all.
Beware of emails from Trezor or Ledger saying there is a problem with your device and you need to follow a link, plug it in and enter your seed phrase to protect your funds! These emails are scams and will result in your wallet getting drained – no matter how real they may look, do not click anything!
I know this sounds a little scary, but welcome to taking responsibility for your own money! You also need to be careful accessing hardware provider websites, too – bookmark the link and access from there. These days, people tend to just Google ‘Trezor’ and click the top result – scammers work hard to get fake websites to the top of the rankings to catch people who do this. (This goes for any website, but especially where there is money or your private data at risk)
You should write your seed phrase down and store it somewhere safe. There are numerous devices available that are more sturdy than a piece of paper. I have had my wife walk in on me as I am punching a seed phrase into a metal plate – that wasn’t a simple conversation, but it was easier than explaining that the keys to my crypto ended up in the bin by accident…
Consult the experts
I am probably relatively crypto security savvy. But I am by no means an expert. I highly recommend that you consult the experts if you are going to self-custody your coins. Fortunately, I have just the guy for you!
Jameson Lopp has put together a trove of useful Bitcoin information on his website. He has tested and written up most of the Bitcoin wallets there are and published the information here: Recommended Bitcoin Wallets
He has also tested most of the seed backup devices – to destruction in some cases! His basic conclusion is that the more bells and whistles a backup device has, the more chances you have to mess it up. It’s hard to beat the simplicity of punching the phrase into a piece of metal!
Lopp is Co-founder & Chief Security Officer of Casa Hodl, which offers a range of solutions to help people store their Bitcoin more effectively. I’m not going to try to explain multisig here, but in a nutshell, it is a level of security which requires more than one user to approve a transaction using private keys. As the numbers get bigger, paying for better security begins to make sense.
Anyway, I’m not here to sell Casa’s services; I’m saying that Jameson Lopp has already done most of the research for you and generously published it on his website so you can learn. Check out his site and follow him on X @lopp
My two cents
As you have probably realised, some people possess far greater knowledge on storing Bitcoin and crypto than I do. However, if you want to know how I organise it, I can tell you.
Like with investments, I take a diversified approach. I think it’s important to learn how to take responsibility and self-custody, so I do that. However, I also live in a wooden house in an earthquake-prone country, and I am not entirely confident in looking after all of my Bitcoin. So, I also use Xapo Bank for third-party custody. I have written about them here: Banking your Bitcoin
If you ever decide to open an account with Xapo Bank, please use my referral code (SMM-XAT-EJG) or the referral link in that post. I have an ‘influencer’ deal with them, and I am surely the worst influencer they have ever had!!! It would be nice to actually help them get a customer now and then, and it won’t cost you any more than it would if you went directly to them. I am very comfortable recommending them.
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.
I keep seeing posts declaring the 60/40 portfolio dead. No sh*t, Sherlock! Markowitz’s Modern Portfolio Theory dates back to 1952. I learned that 60/40 was no longer relevant in 2005. Where the hell have you been?
In case you are not familiar with it, the 60/40 refers to the traditional portfolio strategy that allocates 60% to stocks and 40% to bonds. The stock part aims for long-term growth while the bonds smooth out the volatility in rough periods.
Markowitz advanced this idea by blending a range of assets to produce a more efficient portfolio, recognising that the typical investor wants reasonable returns without excessive risk. See my post on Asset Allocation for more on this.
Can’t I just long equities?
Yes, it’s perfectly acceptable to just average into one or two stock ETFs and hold them for the long term, especially if you’re young. In fact, you can do that and read no further – you don’t need any help!
However, if you believe in passive investing and market indexing, which many people do these days, you must understand that the market encompasses more than just stocks.
Also, if you are investing a significant amount of money, it’s unwise to be 100% invested in one asset class, unless you have specific knowledge and overwhelming conviction. (which, by definition, a passive investor does not)
What’s a lot of money then? Great question! It’s different for everyone, but let me put it this way: If you are a passive investor, 100% in stocks, and you are starting to get concerned about the damage a market crash could do to your net worth, you might be getting close!
The funny thing about the 60/40 idea is that young people these days are probably already allocated 60/40, but to tech stocks and crypto!
Yeah, crypto, so where does that fit in?
This question is doing the rounds. If crypto is a new asset class, then where does it fit in a diversified portfolio? How big should the allocation be?
— The Wolf Of All Streets (@scottmelker) July 1, 2025
We can argue all day about whether the allocation should be closer to 10% or 40%. It clearly depends on an individual’s situation, risk profile, level of conviction, etc. The notable thing about this article is how it mixes up the whole Bitcoin vs. crypto terminology.
It mentions Bitcoin to start, but then it refers to crypto. So you should be putting 10-40% of your portfolio in what exactly? Bitcoin ETFs? Cryptocurrencies? Which ones? It’s not very clear.
I mean, they’re all the same thing, right?
Not even close! And ETH is the second-largest digital asset. Think how many coins have gone to zero since 2017! In my opinion, if you’re going to allocate part of your portfolio to this asset class, you need to get smart about it.
Here’s a pretty solid definition:
I’m not saying you can’t have mad conviction on a particular coin and hold it as an investment. If you have that level of certainty, then go for it. Hardcore XRP hodlers don’t care what I think, and they shouldn’t. They believe in the coin. But should the average investor put 10% of their net worth into it? Of course not!
The mainstream media are leading lambs to the slaughter if they can’t get their terminology straight.
Here’s the only truly investable cryptoasset in my humble opinion. Doesn’t it look beautiful?
Uncorrelated assets for the win
The modern portfolio enhances 60/40 by adding assets that are uncorrelated or only lightly correlated to stocks and bonds. That’s how you achieve better risk-adjusted returns. (similar or better returns with less risk) Back in 2005, I never imagined a shiny new, uncorrelated asset would emerge. It really is a remarkable thing.
Here’s a quick summary: between April 2022 and March 2025, Bitcoin’s correlation to the rest of the asset universe was 36%. People like to compare Bitcoin to tech stocks, but its correlation to them was only 40%. These levels are significantly lower than traditional assets’ correlation to each other, which typically comes in at around 60-70%. This makes Bitcoin an ideal asset to add to a diversified portfolio in order to beef up returns without meaningfully increasing risk.
What makes Bitcoin especially interesting is how sometimes it behaves like a risk asset, like equities, and other times, it acts as a defensive asset, like gold. Over time, it is expected to become more of a gold-like store of value asset.
“This makes Bitcoin unlike any other asset in the market. It is structurally independent, behaviorally adaptive, and still offers significant asymmetric upside relative to legacy safe-haven assets. For portfolio construction, Bitcoin stands out as both a potential long-term hedge, and a high-impact diversifier at present.”
Adding a 1% allocation to Bitcoin to a modern portfolio over the 3 years resulted in stronger risk-adjusted returns. (It improved both cumulative returns and shape ratios)
Adding Bitcoin did not increase downside risk.
When scaling up to a 5% Bitcoin allocation, the risk-adjusted returns were even stronger, and the volatility remained manageable. Interestingly, they also tried a 3% allocation to the top 5 cryptoassets and achieved a similar uplift in performance without greatly increasing the risk.
So what’s the conclusion to be drawn here? You don’t have to go 40% into Bitcoin! Just a modest allocation increases portfolio efficiency without meaningfully increasing risk.
What are we trying to do again?
The whole point of investing is to beat inflation in your base currency. Doing it most efficiently with the least amount of risk is just being smart.
You can be overweight certain satellite holdings if you have a high level of conviction in them.
I still run a boring diversified portfolio, despite currently exceeding the recommended daily dosage of Bitcoin and Japanese stocks.
What’s my level of certainty?
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.
You may have noticed a theme in my last two posts: markets have no top, because fiat has no bottom. If fiat money is programmed for debasement, then assets priced in fiat are equally programmed to increase in value over time.
We just got another example this weekend. When America struck at Iranian nuclear sites, the stock market was closed. However, crypto trades 24/7. Sure enough, Bitcoin dumped from $103k to $99k as everyone geared up for full-scale war. Then, this morning, after Iran’s token retaliation and the announcement of a ceasefire, it popped back above $105k.
Gotta be quick to buy those dips!
I have learned through experience that trying to trade geopolitical events is a waste of time. Unless you work at the Pentagon, you have zero edge. By the time you are positioned for a particular outcome, the situation has already shifted or resolved, and the move is done.
Case in point:
These events usually have far less of an impact on markets than people expect.
Or, as the kids like to say these days: Nothing ever happens.
That chart is a little hard to see, I know, but you probably get the picture. All these ‘big events’, and the stock market just goes up and to the right. FYI, it came from a 2016 blog post called A history of share prices by Kieron Nutbrown, former head of global macro fixed income at First State Investments in London.
Investing can pretty much be summed up as a long-term bet on the nothing ever happens narrative. The only gauge you need to watch is global liquidity. When that rises, asset prices go with it, and it’s going up forever, Laura.
In other news
Obviously, you can’t take the ‘nothing ever happens’ narrative too literally. Lots of things happen, but mostly they don’t have much influence on the big picture.
Japan is perhaps the most ‘nothing ever happens’ country in the world! Considering the absolute mess Western governments are in, it’s neat how Japan just keeps chugging along. Nobody expects leadership to get better, and people have pretty much accepted that electing the ‘other guys’ will just mean more of the same, but with less predictability.
However, things do change! On 25 June, the Financial Services Agency meet to discuss the possible reclassification of digital assets. (article here) If this goes ahead, it could mean that crypto will be taxed like stocks and could also pave the way for Japan-based crypto ETFs.
When I posted this article on X, I was met with comments about how this discussion has been ongoing for years, nothing ever changes, blah blah. But, I actually think it may happen this time. The FSA is well aware that the current classification doesn’t make a lot of sense, and the election of Trump and his positive stance towards digital assets appear to have motivated the powers that be to get with the program.
Time will tell, but my bet is that this goes ahead and is implemented from 2026.
If I’m right, this will probably be the pin that pops the Metaplanet bubble. The whole reason for buying a Bitcoin proxy was to avoid BTC gains being taxed as income. Take that away and demand for the stock should fall, although maybe not until next year, when it is actually implemented.
Until such a time, the Bitcoin/crypto proxy companies will likely continue to trade feverishly. A few weeks back, Beat Holdings (9399), a company formerly known as Xinhau Finance, jumped on the bandwagon and announced a Bitcoin treasury strategy. Bizarrely, they are buying the BlackRock IBIT ETF rather than Bitcoin itself. Not so bizarrely, they updated their website to look just like Metaplanet’s! The stock went vertical shortly after the announcement and is now bouncing around like a ping pong ball. Expect more of these before the year is out.
Something sensible
I am mostly out of Metaplanet and have just kept a relatively small holding in case Q3 gets as crazy as I think it might. So I now have some dry powder to allocate over the summer. Needless to say, this money will be going somewhere more sensible. With the USD/JPY still trading at ¥145, I will keep most of this in yen for the time being.
I came across this list of Noteworthy DX stocks from METI. These are companies identified by METI as being at the forefront of digital transformation. I already bought a couple of names from here and will perhaps add to them over time if they work out.
I also started a position in Renesas Electronics (6723) after reading this article. There were some interesting comments in there.
Luckily, Renesas doesn’t seem to have suffered any damage from its US partner Wolfspeed announcing that it is going into Chapter 11 bankruptcy…
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.
BlackRock’s IBIT Bitcoin ETF recently hit $70 billion in assets under management. Do you know how long it took to get there? 341 days. That’s 5 times faster than it took their gold ETF (GLD) to reach that milestone. Bitcoin moves at a different speed.
Remember when the Bitcoin ETF launch was supposed to be a sell-the-news event? The midcurvers did it again.
On 6 June, Metaplanet announced an accelerated 2025-2027 Bitcoin acquisition plan, targeting 210,000 BTC by 2027. The company started this new phase with a 555 million share issue, with expected proceeds of $55.4 billion, to buy more Bitcoin. You can find the whole plan outlined here. You have to hand it to these guys for having mega conviction. Go, go, go!
If the ETFs were the catalyst for the 2024/25 bull market, Bitcoin treasury companies have been the other major force driving ongoing demand. Michael Saylor’s Strategy (formerly Microstrategy) hoovered up another 1,045 BTC on 9 June and now holds 582,000 Bitcoin acquired at an average price of just over $70k. Strategy has a nice overview of the company metrics here.
All this makes you wonder how the BTC price isn’t higher…
Not that $108k BTC is cheap, but institutional demand for the orange coin is surging, with copycat treasury companies springing up almost daily.
So why isn’t BTC at $150k? Probably the number one reason is that retail fever has yet to show up in this cycle. Maybe people got too badly burned by FOMO in previous bull markets. Or maybe Bitcoin at $100k+ just feels too expensive.
There’s also a lot of selling going on. OG whales, who accumulated coins at far lower prices, are cashing out. It turns out that $100k really is a magic number in that respect.
At some point, those guys will be satisfied and look to hold the rest of their stack for even higher prices. It feels like we might be getting close. Whether retail shows up or not remains to be seen. Part of me hopes they don’t – this is the herd that buys at the highs and ends up getting burned. Part of me is resigned to the fact that there is always a level of buzz where they can’t resist jumping in. It is what it is.
Where do we go from here?
If you managed to ignore the haters and the naysayers and accumulate the best-performing asset in the world and then sit on it this cycle, congratulations. That’s no mean feat!
Now don’t screw it up!
What do you think this is going to look like in another 4 years? How about 8 years? Hey, maybe governments will rein in their rampant spending and start behaving responsibly. Perhaps they’ll pay down some of that debt instead of creating more.
I’ve been writing about this stuff since 2017, imploring people to educate themselves on Bitcoin. I’m still shocked how few people have made the effort.
“I only invest in things I understand.”
Oh really? Explain to me how that bond fund you own works. What’s the sector breakdown in that stock index ETF you’ve got there?
Hey, if you’ve actually spent the time on Bitcoin and decided it’s not for you, that’s cool.
Or maybe your hobby is hunting Japanese deep value stocks, and you’re not interested in doing anything else – this one I can respect. If you’re happy and you don’t care, it’s all good.
But most people are just a combination of lazy and slaves to their own biases.
If this is you, you have until about the end of 2026 to change it or get left behind.
Times are changing
This summary thread on GMI’s ‘Everything Code” is worth 5 minutes of your time. That’s the reading time. It might take a little longer to digest.
The Tldr: Human productivity is heading down, to be replaced by robots and AI. More debt is coming. Debt to GDP is going up only. Spending power gets vaporised. Tech stocks and Bitcoin are the two things that can still outperform the debasement, and one is way more efficient than the other.
Things are going to get weird and very difficult for a while. It’s not a good scenario to sleepwalk into.
Death and taxes
“But, what about the tax on crypto?” This concern is understandable. Japan’s taxation on crypto is indeed heinous. Personally, I think it will change and be taxed like stocks sooner or later. But I might be wrong.
What is occurring is the financialization of Bitcoin. It’s crossed over to tradfi already. Don’t miss this. Pretty soon, you won’t have to sell your Bitcoin. You’ll be able to borrow against it.
No capital gains if you don’t sell. It’s how the rich spend their money.
It’s already here with various institutions, including Xapo Bank – I wrote about it in Banking your Bitcoin. This stuff is only going to get easier and more accessible. Just sit tight a little while.
What’s the game plan?
Bitcoin still has room to run this year, but next year is likely to be brutal. It will be ok to laugh at it again. You will feel smart for not owning it.
Metaplanet and other copycat BTC treasury companies might even turn out to be the FTX/Luna of this cycle. One or more of them could blow up spectacularly. This is not the time for FOMO. If you missed it, you missed it. Metaplanet is currently trading at a massive premium to its Bitcoin holdings. In the bear market, I would expect it to trade at a big discount.
However it works out, my thanks go out to this company for providing me with a larger-than-anticipated pile of dry powder to allocate this summer.
If you still have zero bitcoin exposure, 2026 is your best opportunity. You have until then to get your head around it and set aside some cash. Put the work in. Jameson Lopp has an excellent list of reputable Bitcoin news sites and newsletters here.
I talked to a young guy the other day, and every time I said Bitcoin, he came back with ‘crypto’. If you think these two are the same thing, you have some catching up to do. I cover this in The investment case for Bitcoin.
This cycle has been a real eye-opener in this respect. Every time Bitcoin pulls back 5%, crypto (meaning alts) gets destroyed. The bleed has been insane. You will go broke very quickly trying to outperform BTC – and why do you need to anyway?
Screenshot
The name of the game is to accumulate as much Bitcoin as you can, without putting yourself in the position where you could become a forced seller. You don’t have to go crazy, just average in when nobody wants it. ETFs are fine – you don’t have to go crypto native.
If you want to get excited about crypto, stablecoins are where it’s at. USDC founder Circle Internet Group’s (CRCL) IPO just blew away expectations. This could be the start of a gold rush in crypto IPOs. (I would be keeping an eye on Tether here) Societe Generale just announced that it will launch a USD-pegged stablecoin on Ethereum and Solana. I don’t think the average person on the street has any idea how easy it is to transact in stablecoins. Money is going to start moving so much faster.
The 2024/25 bull cycle may well accelerate from here. Things could get crazy. Maybe we’ll even get the alt season traders have been waiting for. Do what you have to to accumulate more BTC, and don’t be scared to set aside some dry powder for next year.
Good luck!
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.
I am starting to see people discussing the idea that the stock market has been so pumped up on debt steroids that it simply won’t be allowed to go down for an extended period again. Normally, this kind of talk would be a massive flashing sell signal, but it’s not an idea that is being broadly discussed. It’s just popping up in pockets here and there.
Of course, stock markets go up and down. In fact, the mighty US market took a hit in April due to the Liberation Day tariff malarkey. But did you notice how quickly it bounced back? Pretty much a V-shaped recovery. Same in March 2020.
I’ve said it before: the money has been funny since the 2008 global financial crisis. Many institutions that should have gone under were propped up at the expense of taxpayers and we’ve been getting screwed ever since. Economies and big business have become addicted to liquidity.
Sounds like tin foil hat stuff?
That’s the MSCI World Index. See what happens after the 2008 crash?
Here’s the gold chart for comparison.
So, are the assets going up, or is the unit of account going down? Check out the purchasing power of a dollar over time.
Ding ding ding ding ding! So, 2008 clearly wasn’t the start of the pattern. It just intensified after that.
The Federal Reserve of St. Louis puts together some pretty charts, doesn’t it?
Take a look at this one – currency in circulation:
Hello! So, if you keep creating more dollars, the purchasing power of a dollar goes down, and the value of assets and other stuff goes up against your inflated currency. I’m picking on USD here, but everywhere else looks the same. Probably worse.
Here’s a question I get asked a lot: “How do I convince my very conservative partner that we need to invest more?”
Answer: Just teach them that the market is going up forever!
If assets are going up forever, you’d better own some! You probably don’t need to fret too much about timing the market. Just make sure you keep a nice cash reserve so you don’t have to dip into your investments in a crisis, and yolo the rest into stocks, commodities, real estate, bitcoin and anything else that isn’t cash in the bank.
Of course, this is all somewhat tongue-in-cheek. But is it really much more complicated than that?
Please don’t misunderstand. Stocks can still go down 30-50% at any time. Bitcoin can still dump 50-80% and probably will next year. You should be prepared for these outcomes and never let yourself become a forced seller. But, over the long term, these assets go up and to the right because the denominator is cooked. Did you notice how long the whole DOGE ‘let’s reduce wasteful government spending’ drive lasted? It’s not even June, and Elon and Trump are melting down in public.
If you’re wondering why you have to become a money manager just to break even with inflation, here you go:
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.
You might have noticed an uptick in articles covering bonds recently. In particular, bond yields and bond auctions. Bonds are confusing, and it’s often easier to just go and read something else, but you might be getting the sense that something is happening in the bond market. Like it’s trying to tell us something.
The market always finds something to worry about, and usually, those worries are temporary. This year alone, we’ve had inflation, stagflation, recession, tariffs, and trade wars, and the sky hasn’t fallen yet. But now the market is worried about bonds. And it’s not just worried about US treasuries. The same concerns surround UK gilts, Euro bonds, and Japanese government bonds.
This week, the US 30-year treasury yield has been flirting with the closely watched 5% level. Last Friday’s Moody’s US credit downgrade got things rolling. Then, on 21 May, there was a weak treasury auction, and the 30-year closed at 5.09%.
As yields move inversely to price, rising yields indicate that investors are selling bonds. The weak treasury auction, like recent weak gilt and JGB auctions, illustrates a lack of appetite for new bonds. So why are people so worried about bonds these days?
It’s the debt, stupid
At 237%, Japan is the heavyweight champion in debt-to-GDP. The UK is at 96% and the US is at 124%. None of these figures is encouraging. Japan is clearly not paying that back. The UK economy is in disarray, and you may remember Liz Truss almost blowing up the bond market in September 2022.
Trump talks a lot of smack, but his big beautiful tax bill is only going to inflate the problem over time. Anyone who believes he is going to cut deficit spending lives in MAGA fantasyland.
The bond market clearly doesn’t like it.
Is it happening?
The macro-heads I read are all fixated on yields, deficit spending and the massive risk flashing in the bond market. But is something really going to break, or is this just another worry that will soon make way for the next thing?
I’m not going to macro larp here, and I dislike doomers, so here’s a solid thread from Capital Flows on why we could be at an inflection point. It’s recommended reading for anyone trying to get their head around the current situation.
The tldr: Central banks are behind the curve – surprise! Meanwhile, banks are issuing debt like there’s no tomorrow. These big credit deals are feeding money into the economy and preventing a slowdown in growth. When central banks fall behind in a credit cycle like this, bond markets can crash because growth and inflation risewhile everyone expects a recession.
Does this mean I should not own bonds?
This is an important question. For traders, the trade is definitely sell long-term bonds. (TLT)
For investors with a diversified portfolio, should they be dumping their bonds and buying gold, copper, bitcoin, etc? I don’t think so. This is short-term tactical thinking and only for people who know what they are doing. By nature, a strategically diversified portfolio is always going to contain some assets that aren’t doing so well. Right now, it’s just the turn of bonds. Unless your time frame has changed dramatically, you can just sit tight.
Big developed economies losing control of yields is a scary proposition, and they are likely to do whatever they can to kick the can down the road and avoid the pain. Just last month, a surge in treasury yields caused Trump to back down on tariffs, remember?
Is this why Bitcoin is ripping?
It’s one of the reasons, yes. BTC is fundamentally a release valve for macro liquidity (I was dying to say that, but I got it from Capital Flows too!) What it means is, the more liquidity that gets pumped into the system, the higher the BTC price goes.
BTC is also going up because it’s at that stage of its own 4-year cycle. But it’s funny how that seems to align so well with global liquidity cycles. There’s probably a bit of mileage left in this bull market yet!
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.
“It never was my thinking that made the big money for me. It always was my sitting. Got that? My sitting tight! It is no trick at all to be right on the market. You always find lots of early bulls in bull markets and early bears in bear markets. I’ve known many men who were right at exactly the right time, and began buying or selling stocks when prices were at the very level which should show the greatest profit. And their experience invariably matched mine–that is, they made no real money out of it. Men who can both be right and sit tight are uncommon.” – Jesse Livermore, in Edwin Lefèvre’s “Reminiscences of a Stock Operator”
We are so back!
Little more than 6 weeks after Donald Trump nuked markets with his “Liberation Day” blusterf**k, stock indices are right back where they started. Congratulations on surviving! The circus is far from over, but it feels like we just went through boot camp on how to operate under this administration. My personal goal from now on is to ignore every word the man says and focus on what actually gets done. There is way too much noise!
Anyway, check in on the doomers. They probably need to come out of the bunker, touch some grass and catch some Vitamin D.
The great dealmaker is in Saudi Arabia now, doing deals, I presume. Note the presence of Nvidia’s Jensen Huang among the tech CEOs there with him – I would not bet against that company to emerge from the chaos stronger than ever.
So what’s going on?
Checking on the news, Nvidia isn’t the only AI/semiconductor play catching a bid. Advantest, Tokyo Electron and Disco are all perking up too.
Softbank Group is also on the rise after posting its first full-year profit in four years.
Department store operator Mitsukoshi Isetan announced an expected net profit of ¥60 billion for the current fiscal year, up 14% year-on-year. Those tourists must be spending hard while we plebs struggle to buy rice!
Things don’t look so rosy for the Japanese auto industry, though, with Honda and Nissan crumbling under the uncertainty around tariffs. There is more than tariffs at play here as both have struggled with sales in the US and China. The two companies abandoned plans to join forces earlier this year and who knows where they go from here. Nissan is clearly worse off and will shut 7 vehicle plants and cut 20,000 jobs globally.
Come for the global recession fears, stay for the long-term debasement of the yen!
USD/JPY is back around ¥147 after the BOJ needed a breather from raising rates. If they are planning to wait for some respite from global economic uncertainty before hiking further, we will be back in the ¥150s soon.
Wakey wakey
“If you own crypto, I can’t stress this enough: the best thing you can do is go to sleep for about 3 months. Block out the noise.” – I wrote this in my opening post of the year in January. There have been many dips and ‘it’s so overs’ since then, and yet here we sit in mid-May with Bitcoin back over $100k.
It’s probably time to start paying attention again. Metaplanet is creeping back towards the highs. I sold half of my holding in the run-up in Jan/Feb, and it’s looking like time to start averaging out the rest. Maybe take out half in the next few weeks and save the rest for Valhalla?
Even Ethereum has woken up!
Alts have been battered in the dips. With a tidal wave of ETF inflows, BTC dominance shows no sign of slowing down. Alt holders would like to see the orange coin break the all-time high and then chill for a while. Will they get their alt season? The exit is narrow and it won’t be open for long…
Where does BTC top? Gun to my head, I say we get a run now, followed by a quiet summer, then one more assault on the summit in autumn.
However, if you are looking to take profit, don’t listen to me or any other people on the internet. Nobody knows anything. The smart money is scaling out already. Execute your plan.
If you are a long-term BTC investor, and for at least part of your stack you should be, all you gotta do is sit tight!
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.
Remember when everyone thought a Trump presidency would be business-friendly?
I admit to belonging to that camp initially. Stocks soared the first time he was elected, when most people expected them to tank. They also ripped between the election and the beginning of his second term, as people bet on a golden age of deregulation. Remember all the tech CEOs at the inauguration?
And then the madness began.
I’m not interested in getting into political commentary, but I will say this: it really couldn’t have been handled much worse. Anyone who has read Chris Voss’s book knows that you don’t start a negotiation with belligerence and threats and expect everyone to come meekly to the table. Anyway, my opinion doesn’t matter. The markets have spoken. So far, Trump 2.0 has been an unmitigated disaster.
Wall Street is openly disussing a “Sell America” trade. The great dealmaker must hate that one. It’s happening, though – look at treasury yields, look at the S&P 500, look at the dollar. And look at gold!
Gold isn’t just a safety trade here. It represents a stampede away from USD-denominated assets. European and emerging market stocks are also seeing inflows, but they come with their own risks as the haphazard tariff ‘negotiations’ blunder ahead.
So what happens now?
Is America really done? Does gold go up forever?
No and no are the short answers. However, the world is clearly changing before our eyes. Here’s an excellent thread summarising Howard Marks’ recent comments on what is happening. Like it or not, globalisation made a lot of things cheaper. As countries become more inward-looking and focus on domestic production, prices will rise. America is still expected to outperform in the long run, but it will need to work harder to attract capital. It is no longer the obvious go-to market, at least while all this chaos is raging.
Can gold still go higher? For sure, but it’s starting to look like Bitcoin does in blow-off top phases. Weekly cycles also suggest it is close to a top. If you’re a long-term diversified investor, continue to hold it. If you’re looking for the next trade, then digital gold is where it’s at.
Even the macro guys are starting to agree that Bitcoin looks good right now. This article from @fejau_inc puts it all together nicely and is a must read.
Here’s the conclusion from that piece for easy reference: “And so, for me, a risk-seeking macro trader, Bitcoin feels like the cleanest trade after the trade here. You can’t tariff bitcoin, it doesn’t care about what border it resides in, it provides high beta to a portfolio without the current tail risks associated with US tech, I don’t have to take a view on the European Union getting their shit together, and provides a clean exposure to global liquidity, not just american liquidity.
This market regime is what Bitcoin was built for. Once the degrossing dust settles, it will be the fastest horse out of the gate. Accelerate.”
Meanwhile, the Financial Times reported that Howard Lutnick’s son, Brandon is cooking up a $3 billion Bitcoin acquisition investment vehicle with Cantor Fitzgerald, Softbank Group, Tether and Bitfinex. Reuters summary here.
Is the yen strengthening going to hold?
If you are looking for proof that capital is flowing out of America, it’s right there in the exchange rate, currently around ¥142 to the dollar. It’s quite possible the yen could strengthen further from here, but beware the orange man running his mouth. If Bessent can put the gag on him for a while and they get a few wins on the board in terms of trade deals, then the picture can change very quickly.
Yes, I’m aware that the typical trade deal takes around 18 months to complete. Most likely Trump extracts a few concessions from the major partners, including Japan, and declares some ‘tremendous trade deals’. Then he can move onto pumping the markets back up before the mid-terms.
Long term, I believe the yen is cooked. Nothing has changed there. Short term, we could be at ¥120 just as easily as ¥160 in a month or two. Who knows?
So, sell America or not?
Traders gotta trade, and right now the trade is sell America for anything else you can lay your hands on. For long-term investors, I would view cheaper US asset prices as an opportunity to accumulate. Don’t change your monthly investment allocation too hastily!
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.
One of the major obstacles to wider Bitcoin adoption has always been the issue of storing and spending coins. Fortunately, it is getting easier to do both.
I bought my first Bitcoin on Xapo in 2017 and have been storing part of my holdings there ever since. Back then, Xapo served as both a super safe custodian wallet and a trusted platform to buy, sell and store Bitcoin. In the last few years, it has become much more than that.
There are many ways to manage Bitcoin storage, but here is my strategy:
Do not leave Bitcoin sitting on an exchange
Learn how to self-custody securely
Diversify risk by storing some BTC with a trusted custodian
Bitcoin purists will likely agree wholeheartedly with points 1 and 2 while vociferously objecting to point 3. That’s fine; I get it. However, I live in a wooden house in an earthquake-prone country, and I’m not entirely comfortable having all of my BTC in one place.
Also, I like to have the option to spend some of my Bitcoin or borrow against it if I want to. That’s not so easy to do with the keys sitting on a hardware device.
Furthermore, I value having a functional USD account. I have plenty of experience with offshore banks, and none have been as easy to use as Xapo Bank.
That’s why I’m still using Xapo Bank today.
Xapo Bank’s history
Xapo was first founded in 2013 and provided a secure cold-storage product using a distributed network of physical bunkers. Yes, you read that correctly! Xapo combined cutting-edge key technology and good old underground physical vaults to protect its clients’ coins. In 2021, Xapo expanded its services, founding Xapo Bank. Headquartered in Gibraltar, the company is licensed as a bank and Virtual Asset Service Provider (VASP) by the Gibraltar Financial Services Commission.
Xapo Bank’s services
Xapo Bank’s account is entirely app-based and enables Bitcoin customers to hodl, transact, earn, grow and borrow. It also now offers stock and ETF trading.
Users control a main BTC and USD account, which can be used for day-to-day transactions. Then there is the savings account, which pays interest on USD and Bitcoin holdings. And finally, there is the BTC vault for secure cold storage.
The USD savings account currently pays 3.5% annual interest, and the BTC savings account pays 0.5% per year. (rates are subject to change)
Xapo Bank has also just launched a new BTC Credit Fund, offering a simple way for people to grow their Bitcoin by earning up to 4% APY on their holdings.
The Bitcoin trading fees are very competitive, and both Bitcoin and USD can be transferred easily and inexpensively from the app.
Users can opt for both physical and virtual debit cards, issued by Mastercard and VISA (depending on their country of residence). The cards pay 1.00% cashback, and the really neat thing is you can choose whether to spend your USD balance or your BTC balance. People often complain that you can’t pay for stuff in Bitcoin – well, now you can!
ATM withdrawals are also free up to some thresholds.
Along with BTC, users can also access S&P 500 and NASDAQ stocks and ETFs to grow their balance.
Customers who need cash but don’t want to sell their Bitcoin can borrow against their BTC holdings at an initial loan-to-value of 20%. The cash arrives in under a minute, ready to use through debit cards, bank or crypto transfers.
Borrowing against Bitcoin may also be a clever way to avoid triggering a taxable event. I have been trying to find confirmation of this for Japan tax residents and have not been able to find anything so far. Selling or spending crypto creates a taxable event. However, it seems likely that borrowing against crypto does not – please note, this is not tax advice, and readers should do their own research before taking action.
One thing is for sure: borrowing against Bitcoin is a smart way to avoid selling at inopportune times, when the market is down, and still benefit from future asset appreciation.
Ok, it sounds amazing, but what does it cost?
Of course, all of these services come at a cost. Membership is USD 1,000 per year.
Some people struggle to come to terms with paying the annual fee. My take on it is that it’s worth it for an easy-to-set-up and use overseas USD account alone. I have used several offshore banks previously, and the transaction fees were significant. Many have a minimum balance requirement with higher costs if you fall below the threshold.
With debit cards, savings accounts and the BTC vault, Xapo Bank is offering a premium banking service at a manageable cost. I can tell you that the app is very smooth and easy to use, and for a hodler like me, the appreciation of BTC over time easily covers the fees. If BTC trades at over USD 100,000, then 1 BTC in the savings account earning 0.5% annual interest already pays half the cost!
The customer service is top-notch, too. Customers have a dedicated Account Manager, whom they can contact by email or chat on the app. If there is a security issue and a bad actor tries to take control of your account, the account manager will get on a call with you to verify your identity and take action to protect your account.
How to open an account
Opening an account is simple: Click here, and all you need is an ID or passport and a quick selfie. Personal information is verified using your mobile phone.
Referral program: Use this link or referral code XRP-HFF-MR and receive US$42 per month in BTC for 12 months. (To qualify each month, you must have an active paid membership and maintain a minimum of USD 5000 or its BTC equivalent balance in an eligible Xapo Bank account during the cycle)
Any questions?
I am a satisfied customer and have been using Xapo since 2017. Feel free to ask me anything in the replies or via the contact form.
If you have questions for Xapo Bank, check out the FAQs on the website and get in touch with them directly!
If you use the referral link/code to sign up as a member with Xapo Bank, I may receive a small commission, at no additional cost to you.
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 