Welcome to the first post of Analysed our detailed analysis of what is happening in the world of Bitcoin and beyond.
Analysed: 3-9 May 2020
As we close the curtain on the pre-Halving week, a lot has happened around the world and in markets – from legendary hedge fund managers throwing their weight behind Bitcoin to national governments proposing nuclear-powered Bitcoin-mining.
On the homefront, Australia is slowly easing out of COVID-19 restrictions via a 3-stage plan with state-level variations.
Bitcoin Market Summary
This week has continued an 8-week bull-run for Bitcoin, with the asset up +10% on weeks open as of me writing. Bitcoin broke through the symbolic $10,000 USD ($15,300 AUD) mark for the first time since February, continuing a rather impressive climb from March 12 lows below $5,000 USD ($7,650 AUD).
What’s happened in markets
A dominant narrative seems to have emerged amongst traditional market watchers – “You can’t beat the Fed”. This comes on the back of continuous stock market growth in the US despite usually reliable indicators including unemployment figures and quarterly profits failing to deter a weekly green arrow of +3.50% on the S&P 500 as of Friday close. The Fed now have upwards of $6.7 trillion USD ($10.25 trillion AUD) in assets on their balance sheet, with the promise of unlimited QE still looming overhead. In colloquial terms, money printer go brrrr while 14.7% of the US population sit unemployed and in awe of the perpetual printing machine.
If you’re curious how much that $1200 USD stimulus would now be worth if you bought Bitcoin, have a look at @BitcoinStimulus – as of writing you would be up $600 with quantitative hardening under three days away.
Australia is emerging from COVID-19 lockdown and easing back into “business as usual”, but now burdened with massive stimulus-inflicted debt and the backdrop of an imploding global market. The ASX 200 nonetheless managed a weekly gain of +2.77% as of Friday close.
This week’s Cryptocurrency Ponzi scheme to implode was Gleec Coin (GLEEC), dropping -18.6% in 7 days. These are amateur numbers until you realise GLEEC has now dropped -93.6% in a month after reaching highs of $12.48 USD in March.
Don’t buy cryptocurrency.
1. Paul Tudor Jones bullish on Bitcoin
Perhaps the most bullish story of the week emerged when Bloomberg reported that Paul Tudor Jones, manager of Tudor Investment Corporation, would be making a return to Bitcoin.
Tudor Jones identified a looming “The Great Monetary Inflation” brought on by with $3.9 trillion USD ($6 trillion AUD) already printed since February – more than 6% of global economic output.
On his choice of Bitcoin as the means to combat this Tudor Jones drew parallels to gold in the 70s, stating that he wanted to have “the fastest horse in the race”.
Tudor Investment Corporation will aim to secure “low single digit” positions in Bitcoin via the Tudor BVI Global Fund. This is not Tudor Jones’ first dance with Bitcoin – he previously dabbled in the currency in 2017, selling off positions with nearly a twofold return.
Amongst other reasons, Tudor Jones ascribed his re-investment to a number of factors – notably the currency’s purchasing power, trustworthiness, liquidity and portability. Tudor Jones called on investors to wind back the clock to the era of Friedman and M2 money supply.
Arthur Hayes of the world’s second largest cryptocurrency exchange BitMEX tweeted an expectation that many beta fund managers would follow suit. If correct, it may be that this halving is driven by institutional investors rather than standard retail investors.
2. Ukraine looking to use excess nuclear energy to mine Bitcoin
Ukraine’s acting energy minister Ohla Buslavets this week made news after sending correspondence to state-owned nuclear power plant operator Energoatom to investigate the viability of excess energy being repurposed for crypto-mining.
Ukraine’s energy ministry highlighted this further on May 6th, making a Facebook post detailing the excess energy production caused by Coronavirus lockdowns across the nation. Ukrainian nuclear plants have previously been used for this application by rogue employees, as well as illegal private Bitcoin mines being set-up in state-owned railway facilities.
This mirrors recent breakthroughs in the US in which Shale Gas producers have turned to Bitcoin in the face of plummeting energy values. Some are even asserting that energy companies may come to dominate the Bitcoin mining landscape in years to come.
Peter McCormack ft. Robert Breedlove on open letter to Ray Dalio
This week’s podcast highlight emerged when Peter McCormack (@PeterMcCormack) of What Bitcoin Did had Robert Breedlove (@Breedlove22) on as a guest. The podcast had originally been slated as a discussion on Robert’s insightful essay on Bitcoin and the number zero – however, recent comments by Wall Street titan Ray Dalio and Breedlove’s ensuing open response letter led to a last minute shift. A discussion of Dalio’s principles in context of Bitcoin as well as a look into the current standing of gold as a money serve as highlights, with exploration of power as a corrupting force also shining through.
The Pomp Podcast ft. Aleks Svetski
On a similar note, Amber’s own Aleks Svetski (@AleksSvetski) joined The Pomp Podcast to discuss the Halving, the importance of quantitative hardening in the face of unlimited quantitative easing and his own, self-admittedly more brutal assessment of Ray Dalio’s latest chapter. A great listen and entertaining accompanying read, Anthony and Aleks cut down to some of the crucial drivers going forward.
Other interesting developments
Beyond the headlines examined above, there has not been a lack of activity throughout the community.
Perhaps the world’s most notorious goldbug, Peter Schiff (@PeterSchiff) continues to make curtain calls on Bitcoin that the market seems to be deaf to. Some are hyperbolically speculating whether he is a market counter-signal or just bears a grudge due to him having lost his Bitcoin wallet earlier this year.
Raoul Pal followed on from his explosive April research piece “The Unfolding” culminating in some incredible comments on the potential future of Bitcoin. Pal comments that Bitcoin has “one of the best set ups in any asset class I’ve ever witnessed…technical, fundamental, flow of funds and plumbing”, before mentioning that he expects intense volatility in the near future. Continuing, Pal shared 3 charts detailing potential ATHs for the next perceived bull run: $40k USD, $1m USD and $400k USD. Pal remains concerned about cash flow, particularly in the Eurodollar market and is expecting a deflationary period to emerge.
Former MMA fighter Ben Askren (@Benaskren) appears to have caught a newcoiner in former UFC lightweight champion Eddie Alvarez (@Ealvarezfight) with Alvarez commenting that “I still have no clue what it’s all about but I’m in … you might have to coach me”.
We’re under 3 days away from what one might say is the New Years Eve of Bitcoin – The Halving. Every four, the amount of Bitcoin per block mined is halved in order to create a consistently hardening asset. This is the third occurance of the event, with supply rates being cut from 12.5 Bitcoins a block, to 6.25. This effective paradigm shift will put Bitcoin’s Stock-To-Flow ratio on par with gold (56 vs 58.3) and open up a whole new era or phase for the currency.
PlanB (@100trillionUSD) is at the forefront of Stock-To-Flow modelling and recently updated his outlook in his latest publication, so give it a read if you want to learn more.
With institutional investors like Paul Tudor Jones entering the markets again, Fed printers promising to run hot once more, COVID-19 continuing to wreak havoc and the Halving upon us, next week is shaping up to be just as much a rollercoaster as this one.
Stack Sats and take care,
Jamie Grohman for Analysed.