The Wolf Den #974 - Godzilla Vs. King Kong
Bitcoin Vs. Nvidia
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In This Issue:
Godzilla Vs. King Kong
Lawmakers Urge The Approval Of ETH ETFs
The Biggest Rule Fight In Prediction Market History
There Are No Gods
Algorand Pokes Fun At Other Layer 1s
Ethereum's Big Moment: Will It Soar Or Crash?
Godzilla Vs. King Kong
Not many assets can compare to Bitcoin, which is a statement that applies equally to Nvidia.
Both are financial giants.
Hailing out of Santa Clara, California, and incorporated in Delaware, Nvidia is a technology company most known for producing graphic processing units (GPUs) for all things related to visual computing, including gaming, professional visualization, data center, and automotive applications.
Yesterday, for the first time in Nvidia's history, the stock hit the $1,000 mark following a stellar earnings report, a 10-for-1 stock split announcement, an increased dividend, and a 600% profit explosion. To all the boomers and Nancy Pelosi's of the world, Jensen Huang is Jesus reincarnated.
Bitcoiners may not appreciate what I'm about to say, but it's worth noting that Bitcoin isn't always the best-performing asset year-over-year; Nvidia often takes that title.
Take a look at the chart below, which shows a decade of performance for these two assets. Nvidia is represented by the green line, while Bitcoin is represented by the orange line. Credit to StatMuse for the charts.
“Between May 23, 2014 and May 23, 2024, NVIDIA (NVDA) has returned 21,558.8% and Bitcoin (BTC) has returned 13,048.3%.”
Maybe things are better over the past year? (December 31, 2022, to December 31, 2023) Nope.
“Last year, NVIDIA (NVDA) returned 233.6% and Bitcoin (BTC) returned 155.4%.”
Maybe if I pick just the right time frame (May 22, 2021 to May 21, 2024) Bitcoin wins… Once again, nope.
“Between May 23, 2021 and May 23, 2024, NVIDIA (NVDA) has returned 525.4% and Bitcoin (BTC) has returned 83.9%.”
It doesn’t really matter how you spin it - on a return’s basis, investors were better off buying Nvidia stock this past decade than Bitcoin. The only Bitcoin investors who have outperformed Nvidia were those that managed to acquire Bitcoin in its infant stages between $0 and maybe close to $10.
As for a little history on Nvidia, the company had its IPO on January 22, 1999, at $12/share. Since then, the stock has split a handful of times, not counting the recent 10-1 split announced a couple of days ago.
July 20, 2021: 4-1 split
Sept. 11, 2007: 3-2 split
April 7, 2006: 2-1 split
Sept. 12, 2001: 2-1 split
June 27, 2000: 2-1 split
After the 10-1 split that takes place in June, one NVDA share bought prior to June 27th, 2000, would equal to 480 NVDA shares today.
Nvidia is an absolute beast. A financial titan.
The recent 10% move pushed Nvidia’s market cap from $2.3 trillion to $2.5 trillion, putting the company within reach of Apple’s market cap at $2.87 trillion. With Bitcoin currently trading at the mid-$67,000 mark, Nvidia is pretty much twice the size of Bitcoin and still managing to pull off 10% days, which is absolutely unheard of.
If there haven't been any major moves by the time you read this letter, Nvidia probably has an equal or larger market cap to all of crypto combined. For Bitcoin to match Nvidia's current price, it would need to trade at about $128,00 or achieve a 1.9x increase. Depending on when you read this, Nvidia is likely less than 20% away from overtaking Apple as the second-largest company in the world.
So, should you be face palming yourself for spending God knows how many years in crypto and not buying a tech stock instead?
I don’t think so.
Bitcoin was invented in 2008, while Nvidia was founded in 1993, making Nvidia a far more mature asset than Bitcoin. Nvidia is twice as old as Bitcoin and enjoys greater household recognition than its rival. While Wall Street may debate Nvidia's valuation or price-to-earnings ratio, there is widespread agreement that Nvidia is an exceptional company. In contrast, Bitcoin is just beginning to gain mainstream acceptance and is often still doubted.
My high conviction bet is that Bitcoin will outperform Nvidia by a large margin over the next decade. Bitcoin is half the age of Nvidia and about half its size, with multiple growth spurts ahead. I can't envision a world in which Nvidia continues to grow at its current rate; however, I can see a world where Bitcoin climbs to $100,000, $250,000, $500,000, and beyond.
Nvidia is tackling a big problem and Bitcoin is tackling the world.
All this being said, investors who have conviction and knowledge about a particular sector should stay within that sector. I know crypto; that's the arena I choose to compete in. Therefore, it would be nonsensical for me to spend more than a few minutes thinking about specific investments in health, AI, travel, or commerce.
Still, everyone should own a little Bitcoin.
The Bitcoin vs. Nvidia debate is a fun thought experiment, but about as realistic as pondering Godzilla vs. King Kong. Investors can succeed with a multitude of strategies across an infinite number of sectors, avenues, and niches.
I know Bitcoin. My money is on Bitcoin. Bitcoin is king.
Last and final message: I can’t think of a better way to end the week than knowing the Ethereum ETF is officially happening. The SEC has signed off on the 19b-4 forms, so now we wait for the S-1s, and then it’s live. This gives issuers time to start rolling out advertisements, acquiring seed capital, and making phone calls to investors. Ethereum is NOT a security, and the political tune is changing.
Please watch this advertisement after you finish reading, it’s amazing.
You can view the official SEC filing HERE.
Lawmakers Urge The Approval Of ETH ETFs
U.S. Representatives French Hill, GOP Majority Whip Tom Emmer, Mike Flood, Josh Gottheimer, and Wiley Nickel have sent a bipartisan letter to Gary Gensler, urging the approval of the spot Ethereum ETF. While it would have been great if this had been sent a couple of weeks ago during the peak of the panic, better late than never. Additionally, this sentence stands out to me: “The SEC’s recognition of Bitcoin ETPs is a positive step and one in which we trust the Commission will continue for other digital assets.”
I didn’t expect today to be the day U.S. representatives would start suggesting that the SEC consider ETFs for additional assets. Approving assets beyond Bitcoin and Ethereum, which don’t have a futures market, would essentially require the SEC to rethink their criteria for establishing a spot ETF. Crazier things have happened in crypto, but I wouldn’t hold my breath on this. It might also be the case that the ‘boomer coins’—Ripple, Litecoin, and Bitcoin Cash—receive favorable ETF preference because they are still often listed first for some odd reason. If meme coins and shitcoins end up getting their own ETFs, it might be the clearest top signal ever.
In other regulatory news, the House passed the US Anti CBDC bill with 216 ‘yes’ votes and 192 ‘no’ votes. To the Senate it goes!
The Biggest Rule Fight In Prediction Market History
A massive debate has erupted on Polymarket over the semantics and nuances of ‘approval’ due to the vagueness of the Ethereum ETF approval rules on the site. As a result, many individuals are likely to get hurt, and Polymarket may have to make a difficult decision isolating a group of its voters.
The entire crowd who risked voting ‘yes’ despite the low odds over the past few months would be pretty pissed considering how low the odds were before. On the other hand, the crowd who risked voting for the crowded ‘no’ for technicalities reasons may feel betrayed. Enemies are going to be made.
Not only is gambling hard, but the rules might also get you even if you are ‘right.’
There Are No Gods
Don't idolize anyone in the crypto space, and be cautious of those who speak in absolutes. Michael Saylor, despite his many contributions, got this one wrong. It was evident that an Ethereum ETF would eventually come to fruition, yet he chose to believe otherwise. There are no gods in crypto; everyone is fallible.
“When Ethereum is not going to be approved. Sometime this summer, it will be very clear to everyone that Ethereum is deemed a crypto asset security, not a commodity. After that, you’re going to see that Ethereum, BNB, Solana, Ripple, Cardano—everything down the stack—is just a crypto asset security, unregistered. None of them will ever be wrapped by a spot ETF. None of them will be accepted by Wall Street. None of them will be accepted by mainstream institutional investors as crypto assets. This (Bitcoin) is the one universal consensus-accepted institutional-grade crypto asset in the world. There won’t be another one.”
Also, this was literally only three weeks ago. Don’t become blinded by your bags.
Algorand Pokes Fun At Other Layer 1s
At this make-believe grocery store, customers tried to pay with Bitcoin, but it took 27 minutes for the transaction to clear. When they tried with Ethereum, it incurred an extra $100 in fees. They then attempted to use Solana, but the transaction failed. However, when they paid with Algorand, it worked seamlessly. This commercial obviously overlooks the lightning network, layer 2 solutions, and the times when Solana does work, but that’s not the point. Competition is intensifying, which is great for keeping other chains accountable and driving innovation. Also, don’t let fun stuff like this bother you, it’s simply not worth your time.
Ethereum's Big Moment: Will It Soar Or Crash?
Today is the big day for Ethereum: we are all waiting for the SEC’s decision on ETH ETF. If ETFs are approved it will be a massive push not just for ETH for the whole crypto market. Also, yesterday U.S. House approved Crypto FIT21 Bill which is a big step for crypto regulation in the USA. I am joined by one of my favorite guests, Noelle Acheson, author of the Crypto is Macro Now newsletter to discuss this and more.
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The views and opinions expressed here are solely my own and should in no way be interpreted as financial advice. Every investment and trading move involves risk. You should conduct your own research when making a decision. I am not a financial advisor. Nothing contained in this e-mail constitutes or shall be construed as an offering of financial instruments or as investment advice or recommendations of an investment strategy or whether or not to "Buy," "Sell," or "Hold" an investment.