The Wolf Den #923 - Slicing The Pie
There Are Many Ways
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In This Issue:
Slicing The Pie
Why Does Bitcoin Have A Halving?
The Importance Of May 15
Tether Crosses $100B
$500M More
Dencun Was A Success
Bitcoin Hits New All-Time High & Will "Eat" Gold
Slicing The Pie
One of the fascinating aspects of the ETF going live is the constant stream of professional commentary from the 10 issuers, each promoting Bitcoin to their clientele in unique ways. Bitcoin means different things to different people, and this diversity is evident in the issuers' discussions about the asset.
Today, I'd like to share some of the best commentary I've seen from the issuers to highlight the various perspectives on Bitcoin. Enjoy.
Just for reference, I used Blockwork’s Bitcoin ETF Tracker for the AUM figures.
BlackRock - IBIT AUM - $15.4B
Bitcoin can be thought of as both a store-of-value asset and a payment asset; for both of these use cases, network size and adoption are critical. As such, bitcoin has a competitive advantage over any would-be challengers, which is why it has not been surpassed.
Bitcoin is the world’s leading and most widely adopted cryptocurrency and the first form of internet-native money to gain widespread global adoption.
It’s like digital gold and I believe that you still can buy a slice of pizza with it, but you can’t buy a slice of pizza with palladium or gold. You could buy and sell your Bitcoin, no different than gold…
There’s a lot of merit to it, there’s a lot of opportunity. It is a great store [of value]…It can be an asset that can be cross-border… Maybe this is one of the reasons why China has banned it. If you’re in a country where you’re fearful of your future, fearful of your government or you’re frightened that your government is devaluing its currency by too much deficits, you could say this is a great potential long-term store of value.
Fidelity - FBTC AUM - $9.2B
We believe bitcoin is a unique asset because it has both the adoption curve of a
disruptive technology and the supply characteristics of gold; e.g., built-in scarcity.
Understanding the case for bitcoin requires a recognition that it has at
times exhibited many different dimensions—a venture asset that trades 24/7, a
buy-and-hold investment, or a gold-like inflation hedge and aspirational money.
We also view bitcoin as a category of alternative investments, and believe that such less-correlated assets may merit consideration in an environment where the traditional 60/40 portfolio has struggled.
Our analysis suggests portfolio allocations of 2%–5% could have an outsized
positive impact in an optimistic adoption scenario, allowing annual retirement
spending to increase 1%–4%, while limiting the loss to annual retirement income
to less than 1% if bitcoin were to lose all its value.
ARK/21 Shares - ARKB AUM - $2.8B
By unlocking a new mechanism to store and transfer value, cryptocurrencies have the opportunity to create an open foundation of strong assurances in wealth and monetary integrity. ARK believes cryptocurrencies will contribute more dramatically and profoundly to the evolution of monetary systems than any other breakthrough in history.
In the absence of central enforcement, its integrity is likely to be a function of its openness and transparency, a shift away from old world central banks and monetary institutions.
Grayscale - GBTC AUM - $27.6B
Investors may want exposure to Bitcoin for portfolio diversification, as an alternative to fiat currency investment, to hedge against conventional markets, and more.
Bitcoin is a macro asset that, in our view, competes with the US Dollar and physical gold—two traditional “store of value” assets. The Federal Reserve has signaled that it may reduce interest rates this year, and neither US political party appears focused on reigning in large peacetime budget deficits.
In addition, for certain investors, Bitcoin may have advantages over physical gold because, for example, it is easily portable: Bitcoin is available anywhere in the world as long as holders have access to the internet and their private key. In our view, rising demand for Bitcoin comes primarily from investors concerned about the medium-term outlook for the US Dollar and seeking an alternative “store of value” asset.
Bitiwise - BITB AUM - $2B
Bitcoin’s creation in 2009 marked a paradigm shift in the global financial and monetary system. Just as the internet radically transformed the ways we share information, the blockchain technology behind bitcoin radically enhances the ways we can exchange and store value.
While the retail market was the first to embrace bitcoin, it is institutional adoption that will drive widespread growth. We’ve already seen notable inroads—think of the launch of bitcoin futures contracts or El Salvador’s designation of bitcoin as legal tender—but that is just the tip of the iceberg.
Bitcoin presents a unique opportunity for professional investors. As an asset exhibiting strong fundamental growth and typically low correlations to major asset classes, its asymmetric return profile has demonstrated return-enhancing and even risk-reducing outcomes when added to traditional investment portfolios. As such, its potential benefits make a compelling case for investors to have at least a small allocation in their portfolios.
VanEck - HODL AUM - $515M
Bitcoin interest among institutional investors has also increased. Hedge funds, asset management firms, and endowments are increasingly recognizing bitcoin’s potential as a store of value and as an effective portfolio diversifier, specifically, when looking through the lens of an uncorrelated asset that has the potential to hedge against inflation. Approximately $50B worth of bitcoin are now held by ETFs, countries, public and private companies.
Bitcoin’s decentralized nature makes it impervious to geopolitical events or economic policies that may lead to currency devaluation, such as QE (quantitative easing) or excessive government spending.
Bitcoin may also enhance risk-return profiles. As the chart below shows, a small allocation to Bitcoin significantly enhanced the cumulative return of a traditional 60% equity and 40% bond mix while only minimally impacting overall volatility.
Unlike fiat, which can be printed by governments and central banks, bitcoin has a fixed supply, with supply growth decreasing by 50% roughly every 4 years with the halving events.
Not included in the list above are Invesco/Galaxy, Valkyrie, Franklin Templeton, and Wisdom Tree, all of which offer their own valuable insights worth exploring. The key takeaway here is that Bitcoin's value proposition cannot be limited to a single idea or concept.
Bitcoin is a hedge against inflation, a store of value, digital gold, scarce, idiosyncratic, a diversifier, an alternative investment, censorship-resistant, a geopolitical hedge, open and transparent, cross-border, auditable, a high-return, 24/7, anti-fragile asset.
I almost lost my breath typing that sentence, and I'm sure I missed some important points, but we'll leave it at that. Bitcoin's beauty lies in its universal accessibility, making it easy to sell to anyone on the planet, ensuring its continued demand.
At $73,000, Bitcoin only needs a 37.67% increase to reach $100,000. In the world of Bitcoin, a 37% increase can occur in less than a month. That being said it's important to anticipate significant pullbacks along the way. They will happen.
I also anticipate that alt season will surpass our expectations. Many of these filers are eager to see an ETH ETF and have a unique investment case for Solana as well. Good times are ahead; just be patient if your coin isn't exactly where you want it to be.
Good things come to those who wait.
*There are no charts today, I’m having computer issues
Why Does Bitcoin Have A Halving?
As the halving approaches, I intend to periodically share educational content about its significance. Today, I'd like to address the question: Why does Bitcoin undergo a halving?
Supply Control: If there were no programmed halving, Bitcoin would continue to reward miners with the original 50 BTC per block, and there wouldn't be a 21 million supply cap unless rewards suddenly ceased one day. The halving serves as a methodical transition, ensuring a gradual reduction in daily supply over time.
Scarcity and Value: Bitcoin wouldn't be a scarce asset without the supply control mechanism of the halving. Satoshi understood that scarcity increases as the supply issuance decreases.
Economic Incentives: The halving is also intended to align economic incentives within the Bitcoin network. As the block reward decreases, miners are incentivized to prioritize transaction fees, which helps ensure the network's security and sustainability.
Predictability: The halving occurs approximately every four years (every 210,000 blocks), making it a predictable event in Bitcoin's lifecycle. This predictability is important for investors and miners in the Bitcoin ecosystem, as it allows them to plan and adjust their strategies accordingly.
The Importance Of May 15
It didn't occur to me until Matt Hougan pointed it out: we'll soon learn the identities of some major buyers of the spot Bitcoin ETF this May. See below.
“For everyone wondering "who is buying" bitcoin ETFs, I'd circle May 15th on your calendar. Investors with more than $100m in AUM have to file reports with the SEC called ‘13-F Filings’ disclosing their publicly traded holdings. Those filings are due 45 days after the end of the calendar quarter. While they don't capture everyone -- and are just a snapshot in time -- I think some of the names on those filings will surprise people (to the upside).”
When the market learned that Tesla, Square, and MicroStrategy were acquiring Bitcoin, it surged wildly, dominating discussions. Companies acquiring Bitcoin may be incentivized to remain quiet about their purchases for as long as possible, fearing further price increases. May 15 will be exciting, even if the investors turn out to be lesser-known hedge funds or investment firms.
Tether Crosses $100B
Crypto opinions are so backwards sometimes. Tether crossed the $100 billion market cap milestone, and my timeline is flooded FUD alleging that Tether colluded with the authorities. In reality, Tether assisted the DOJ and FBI with a $1.4 million asset seizure to return funds to a victim of fraud. Despite critics' attempts to bash Tether, the company simply performed a commendable act and is demonstrating its willingness to comply with regulators, much like any other registered company would. Tether's contributions to the space, including its Bitcoin purchases and investments, which are often overlooked, are still underappreciated. The constant spread of FUD actually reinforces my bullish outlook on Tether's long-term success and its position in the sector. Crypto would be fundamentally different without Tether, and for that, we owe our gratitude.
$500M More
Unbelievable.
Buy Bitcoin—> Bitcoin Goes Up—>MSTR Stock Goes Up—> Raise Money —> Buy Bitcoin… Rinse and repeat.
MicroStrategy is proving it will continue this pattern until the stock or Bitcoin cools off. At that point, the company will likely return to buying in smaller increments from company profits. Until then, Michael Saylor is committed to trading every asset in his possession and taking out as much debt as possible to acquire Bitcoin—a strategy that is both genius and risky.
Dencun Was A Success
Ethereum Finalizes 'Dencun' Upgrade, in Landmark Move to Reduce Data Fees
The Dencun hard fork has been a resounding success, significantly slashing layer 2 fees. Interestingly, the market has seemingly snubbed ETH holders in favor of rallying Solana, for reasons unknown. Whether Solana's surge is directly tied to Dencun remains uncertain, but it's remarkable how price dynamics can craft narratives. The positive impact of this upgrade will be increasingly felt by projects like Arbitrum, Polygon, Base, and other layer 2 solutions, making DeFi more accessible to developers and newcomers alike. There's no need for frustration; the upgrade unfolded precisely as planned.
Bitcoin Hits New All-Time High & Will "Eat" Gold
James Butterfill, Head Of Research at CoinShares, and Matt Hougan, CIO of Bitwise, join me to discuss the latest in crypto: Bitcoin reaching $73K and ETFs experiencing record inflows. Chris Inks will join in the second part to share some interesting trades in crypto and beyond.
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