BTC - My Investing Thesis, Lets talk about itsteemCreated with Sketch.

in bitcoin •  22 days ago 

Bitcoin matters for a whole host of reasons, but for this post I want to focus on one in particular

And that reason mostly makes up my entire investing thesis surrounding bitcoin.

You see, bitcoin has many desirable qualities that make it attractive as an investment, but the one I would like to focus on is that of schmuck insurance.

Yesterday I wrote a post about fiat currencies and about how the vast majority have either failed or lost tremendous value from when they were created.

That can be seen here btw:

Given that every fiat currency in the world has gone or is headed down this path, it makes sense to need to preserve your wealth.

That is exactly where bitcoin comes in.

Today for example, we just got another .25% rate cut by the FED.

This marks the 3rd rate cut in a row and likely means they are not very confident with where the economy is heading.

Not only that but when you look at the prediction markets, they are expecting a lot more rate cuts over the next couple years.

Combine this with the fact that the REPO purchases are going full bore along with treasury purchases and we basically have QE ramping up again (though shhh, they won't call it that).

When you combine decreasing interest rates with an expanding money supply, you most likely will get increasing asset prices.

First it will be stocks and real estate, which we are already seeing right now.

Then it will move over into precious metals and collectibles and things like bitcoin.

Gold may be investor's first choice when the think about preserving their wealth, but as time goes on and the world becomes more educated, they will realize that bitcoin is a better gold on just about every level.

Right now you have most of the world's millionaires and billionaires allocating a small percentage of their portfolio to things like gold as a hedge against inflation and falling fiat, but soon bitcoin will find its place in there too.

Right now, the gold market is an $8 trillion dollar market. I have even seen some estimates say it is closer to $9 trillion.

Bitcoin is a $160 billion dollar market currently.

If bitcoin were to just take 10% of the existing gold market, we would be looking at an $800 billion dollar market for bitcoin.

Which would mean prices would have to be 5x their current prices, or about $45k.

That is my base case for bitcoin, that it takes 10% of the gold market.

Now, what happens if it takes 25% or 50% of the gold market?

We are talking about $2 trillion and $4 trillion respectively, or 12.5x and 25x current prices.

Which would be $112.5k and $225k, respectively.

What if it replaces the whole darn thing?

We are looking at 50x the current price, or $450k.

Keep in mind that this is all talking about replacing gold, the longest and most widely held schmuck insurance out there, and my base case for investing in bitcoin.

Now for the home run investing thesis...

What happens when the FED eventually loses control over the inflation levels?

What happens when their 2% inflation target spirals out of control and flashes 25% or 100%?

Bitcoin then becomes even more than a portfolio hedge, it gets grouped into other assets as somewhat of a "must own" since no one wants to hold fiat/cash.

This is exactly what has been going on in Venezuela and Argentina and it has happened in many other countries at different times throughout history.

Now, imagine that same scenario playing out on a global scale as many countries are all doing the same monetary policies. The same QE experiments.

If that all starts to unravel together, bitcoin looks a heck of a lot better than just a store of value.

Fear and speculation, and all sorts of animal spirits will drive prices to extremely high levels. It's at this point when schmuck insurance really pays off.

A protection against all the schmuckery being levied against the people by central banks globally.

Those are some of my thoughts on why I like bitcoin as an investment both as a base case and as something with home run potential.

Stay informed my friends.

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The whole Gold 2.0 mantra is really starting to annoy me.
Bitcoin stands alone in its own class.

Never before in the entire history of humanity has an asset increased in value exponentially over such an extended period of time.

Gold is worth 8T today and it was worth 8T 100 years ago (accounting for inflation).

Bitcoin is not a store of value. It is a value generator via network effect. Gold will always be gold. Bitcoin gets upgraded every year.

Of course you already know my opinion on the matter.

It annoys me too, I don't see it as a comparable class people need to accept its something new. But normies and traditional money people cannot wrap their heads around it so they look for something they can compare it too.

I'm sure when the first car was launched people were saying its mechanical horse, lol

That I do. Though like I said, it's my base case investing thesis. :)

Millionaires and billionaires allocating 1-2% in bitcoin like they do gold seems fairly likely to me as we move forward. That will push prices significantly higher.

its the pension funds doing that which is going to change a lot more...

they just did a few weeks of btc vs gold on realvision, there is some really interesting stuff there from people that are a lot more in the know then we are

Yes, just a small allocation to bitcoin by the largest portfolios is really going to drive higher prices.

Well, there is only so much gold to go around and silver so as countries and large firms buy it up and sky the price people will look for alternatives. Unfortunately, an ounce of gold can only hold so much value whereas Bitcoin has near-infinite room for growth. With all this cheap money behind hoarded and can potentially be pumped into the network who really knows where this thing could go.

  ·  21 days ago (edited)

Well yes and no... As the price of gold increases so does the rate of new supply coming online, IE people tend to mine more gold when prices go up. Plus there is supposedly infinite amounts of gold in space... once that supply is realized I can't imagine it will be good for prices.

I am of the opinion that one should own both gold and crypto and that both have their uses.
Everyone keeps saying BTC will replace gold but It should be an asset on its own going after other markets

As a store of value, bitcoin will likely end up being a better one in the long run. Gold's supply is never capped. Bitcoin's is.

good info

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Thanks for information

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