Imagine yourself in Tropicana stadium with 70,000 people wearing orange shirts…
Announcer (quiet disinterested voice): “Today’s opponent…nearly 150 worldwide fiat currencies. Their supply is infinite and backed by nothing but broken government promises. Their inflation is a silent tax on your wealth and time on this earth.”
The crowd:
The lights go dark. The Bitcoin logo appears…
Chicago BULLS 1996 NBA finals entry music starts playing
The crowd: SCREAMING, CHEERING.
Announcer (hyped to the max): “AND NOW…THE FACTS…ABOUT YOUR…BITCOIN!!”
Created by Satoshi Nakamoto…with a 21 million hard cap, censorship-resistant…BITCOIN!!!!
It’s portable, digital, and infinitely divisible…BITCOIN!!!
It’s highly decentralized, highly secure, and easily verifiable….BITCOIN!!!
It allows for self-custody, is programable, and requires Proof of Work to earn…BITCOIN!!!
It’s becoming the best money ever to exist and is the currency of an open monetary network, made by humans for a digital era built on transparency and truth, controlled by no one but available to all as freedom technology…BITCOIN!!!!!!
Enough with the bear market doldrums. It’s BULL market season!!!
As stated in many articles before, I wait for inspiration to write a newsletter, and I have been overcome with optimism and bull market vibes over the past month, so strap in cause bitcoin’s going to the moon!!!
Of course, I have no clue what bitcoin will do over the next 6-12 months, but I truly believe we are in the early stages of the next bitcoin bull market, and it’s time to get excited. In fact, the bull market started back in January, and I’m feeling more and more confident that the lows are in (15-16k), and we’re basing for the next explosive move up. Time will tell.
Regardless, I’m still buying daily…DCA and chill is the name of my game. If I love bitcoin today at 30k, I will love it even more if I get another opportunity to buy it at 15k should a selloff occur. That’s the mindset you need to have for an asset you are deeply convicted in.
So what has got me all amped up?? A lot. Two newsletters worth! But first, a shower thought I had to set the stage…
Bitcoin is the most sought after, important thing in the world for 99.999% of humans.
Hear me out.
Call me crazy, but oxygen and money are the two most important things in this world. You die without oxygen in minutes, but it’s abundant and free. You also die without food, water, clothes, and shelter (which are just forms of energy), but you need money for those things unless you are an indigenous native living off the land (and thus aren’t reading this newsletter).
This is Maslow’s hierarchy of needs…
…and if air is free and abundant, we’re all competing for the second most important thing to obtain those other critical needs– money. I believe bitcoin is becoming the world’s best money and therefore will be/should be the most sought after/important thing in the world. Am I crazy? Maybe. But…
“The people who are crazy enough to think they can change the world are the ones who do.” - Steve Jobs
Many of these topics below I’ve discussed in prior newsletters, but I’m collating them into two newsletters to summarize the bitcoin bull thesis I see playing out over the next few years. Let’s dive in.
Bitcoin ETFs
This is for sure the news of the month.
What many in the bitcoin space have been waiting for to speed up adoption. A US spot bitcoin ETF, not a Canadian one or a futures ETF. Many have applied and all have been rejected by the SEC, but now Blackrock enters the ring.
Blackrock is nearly undefeated with ETF filings…
and right behind them are countless other big dawgs. This is no joke, and it seems inevitable that one will be approved, which will open up the floodgates for all the others.
Why is it important? Many reasons. Currently, the only way to get access to bitcoin is to buy it on places like Coinbase/Robinhood/Binance which 99% of the world is uncomfortable doing. They are tech “shy” and scared. Some fraudulent exchanges like FTX also went bankrupt, exacerbating fears of the unknown.
Blackrock is Blackrock. They hold like 10 trillion in assets under management (AUM), by far the largest of anyone, and have been a trusted financial powerhouse for decades. Trust is everything. People trust Blackrock, and if Blackrock gets a bitcoin ETF, people will trust that and buy it.
Second, an ETF is not a trust like GBTC (the only other way to buy bitcoin on the stock market currently). It’s complicated, and I don’t understand all of it, but an ETF more closely tracks the underlying asset, technically/in theory you can redeem it for the actual asset itself, the fees are significantly lower, and it trades on the regular stock exchange, not the small/illiquid OTC (over-the-counter) market where penny stocks and GBTC trade. There are many other advantages, and I’m WAY oversimplifying this, but suffice it to say, it’s insanely bullish for bitcoin the asset.
Importantly, it also legitimizes bitcoin as an asset class. Freaking Larry Fink (CEO of Blackrock), responsible for trillions of people’s wealth, goes on TV and says bitcoin is real, it’s legitimate, it’s investable, you should consider it, it’s not going away, etc. etc.
That’s after he hated bitcoin for years.
THAT’S HUGE.
Before Larry’s reversal, it was Chris Palmer on Crypto Pulse telling you bitcoin was the next big thing, but who the hell is going to listen to me?
Well, a few of you have, and I appreciate it. We beat Larry Fink to Bitcoin. Absolutely legendary.
But Crypto Pulse doesn’t move the needle for global adoption as Fink himself said, “bitcoin is a global asset.”
A US spot bitcoin ETF opens up the capital markets around the world to bitcoin because America is the center of the financial universe. It makes it easier for people to buy it and easier for them to trust someone like Blackrock. Pension funds, insurance companies, financial advisors, etc. all will be more open to allocating a percentage of their portfolios to bitcoin when Blackrock says it’s “okay.” These institutions/people are extremely risk averse.
They only wade into the water when they get the all-clear signal. That is a spot US bitcoin ETF by Blackrock.
Importantly, as much as you may trust Blackrock, they are not infallible. The same verbiage will always apply: Not Your Keys Not Your Coins. Blackrock may find ways to get greedy and create paper bitcoin IOUs because that’s what humans do. They have shareholders to appease, and making money is the name of the game. All I’ll say is watch out. Bitcoin will humble you. It’s unlike any other asset on the planet, and given that it’s easily verifiable, self-custodial, operational 24/7/365, and instantaneously transactable on a digital network, if Blackrock holds a bunch of paper bitcoin IOU promise notes like FTX did…
The government can’t print more bitcoin to make them or you whole. That’s the beauty of it. There are 21 million bitcoin. That’s it. Make a bad decision, and you’re wrecked. Choose wisely…that’s capitalism at its finest and is a core pillar of American values. Embrace it, don’t fear it. Take responsibility for your actions.
You’d hope Blackrock is above any shenanigans and that the SEC will ensure it, but you never can be 100% certain. Self-custody will always be the ideal way to ensure your portion of the bitcoin pie, but it’s not for everyone…yet. I think we’ll get there in 10 years. I'm excited about things coming down the pipeline, but for now, an ETF will suffice.
At the end of the day, it’s big for bitcoin. I haven’t decided if I will partake yet and buy shares of the ETF if approved – I need more information first, but y’all be the first to know. There are likely reasons why (my 401k, HSA account, etc), and why not (self-custody concerns). Regardless, most bitcoin bull markets have a demand trigger that sends the price skyrocketing and causes FOMO. This will be that trigger if approved, and the timing is lining up with the upcoming halving in 2024. GBTC was the demand trigger in 2020, but that is peanuts compared to what’s coming with a US spot bitcoin ETF.
That’s trillion with a “t”…
AI and micropayments
A word of caution – after proofreading this section, some things I say may seem outlandish, grandiose, and far too futuristic. Improbable to many and conceptually hard to grasp. I’m not going to apologize or rewrite it.
I’m a dreamer, and this is what I see. It’s permanently on the web now as a prediction, so there’s no going back. I’ll either be a legend or eat crow. Fingers crossed!
I’ve been careful NOT to say bitcoin is the best money ever made by humans, FOR HUMANS on purpose. If I’m being honest, Bitcoin is the best money ever made by humans for BOTH humans AND MACHINES. New technologies disrupt incumbents and grow the market size of an asset class, and bitcoin’s utility with AI primarily (and gaming to a smaller extent) will do just that. I firmly believe this will be BIGGER than the bitcoin ETF filing over time because it drives immeasurable utility. It’s that big.
This past month there has been an explosion in developments related to bitcoin and AI that it’s almost impossible to keep up with it all.
I wrote about this a bit in the last newsletter and predicted it before any of this new information came to light.
It was so obvious, and now the foundation is being laid to support a machine-to-machine economy that none of us are ready for.
AI is going to change the world. It’s not a fad. Some of it is hype, and stock prices are currently overvalued, but most of the hype is legit. It’s going to disrupt nearly everything and everyone. The key to it that almost no one understands is bitcoin.
“The infinity of AI (what it can create for nearly free) is colliding with the absolute scarcity of bitcoin.” - someone
The unstoppable force meets an immovable object. Get your popcorn ready!
AI machines feed and learn off of data. They scrape data (yours, mine, everyone’s) from all over the internet to train their models and get smarter/faster. Without data, AI is useless. Humans are also not dumb and will want to be paid for the data AI is using to get smarter. Before bitcoin and the lightning network, there was no way to block/gate AI machines from scraping internet data and force payment for the data…but now there is
.
In that regard, if AI is the next big thing, which I believe it is, data is the ultimate prize, and bitcoin will be the currency AI machines use to pay for it.
AI models aren’t dumb. They need a currency that is digital, operational 24/7/365 like them, not under human control (which they don’t trust) but is based on math and code which is secure and verifiable, settles instantly (not weeks or months later like fiat), is divisible to fractions of a cent (micropayments), has negligible cost to transact with, is censorship resistant so nothing can prevent it from achieving its goal, and is absolutely scarce so that even other machines/AI can’t make more of it and it is highly desirable…even to the machines.
No other digital asset can compete with this, certainly not Ethereum. Fiat is a non-starter. It’s bitcoin only, and the moat is a million miles wide.
Some things I say sound a bit like Skynet…
and I’m not saying it will end up that way…but some AI advances, even today at this stage, are scary! I am nearly certain I won’t be alive if that day ever comes, but the technology is advancing very quickly, and these machines will become “aware” and smarter than humans within a decade or two. I pray for synergy, but who knows? Regardless, I intend to try and profit from the changes coming that I can’t control.
What I do feel confident about is that bitcoin will be at the center of it all, being sought after by both humans AND machines as the best money ever. Without money, humans suffer/die, as discussed before. Without money, AI will also die without data.
These new possibilities created by the Lightning network (built as a layer 2 network on top of the base layer bitcoin blockchain) integrating with HTTP code for the internet (THAT WAS MEANT FOR MICROPAYMENTS A LONG TIME AGO, BUT THE TECHNOLOGY WAS NOT ADVANCED ENOUGH YET TO ALLOW IT) was a divine match.
Bitcoin fits right into other foundational internet base layer protocols. Just like HTTP and SMTP and TCP/IP are foundational protocols that allow us to do everything on the internet we do today and are open protocols that allow for future advancements that couldn’t have been predicted decades ago (no one predicted Uber in the 1980s), the bitcoin protocol base layer will be the new way VALUE is transacted across the internet, both by humans and machines. It’s the missing piece that wasn’t in existence until 2009. It is the internet of money. It is also the money of the internet.
Unlike other internet base layer protocols, you can own a portion of the bitcoin base layer protocol of the internet. Imagine if every time someone logged on and used the Web or sent an email or video conferenced or did anything on the internet you got paid/benefited. Would you sign up for that in 1990? I would.
Obviously, that’s not possible with other internet protocols, but with bitcoin it is.
You’ll want a piece of the fixed bitcoin pie that is assimilated into the internet economy and is the de facto currency of the internet that all humans and machines use. Blackrock isn’t dumb. Fidelity isn’t dumb. They have insanely smart people seeing what’s coming. It’s a tsunami of capital, the likes of which we have never seen, all chasing one fixed supply thing – bitcoin. The total addressable market cap is unfathomable, even to me, and my predictions are likely way too small, but I’m just human after all, so it’s expected. We can’t grasp exponential things.
Just try to imagine all the AI systems in place now and in the future fighting to earn bitcoin as a payment to do the tasks asked of them. Even annoying things like spam emails, texts, and calls will require a micropayment that will radically change your daily life for the better. The possibilities are endless, and they will happen over the next 10-50 years. Buy some bitcoin, kick back, and enjoy the show.
As I’ve said all along, bitcoin just doesn’t sit there and do nothing as a store of value (which by itself is insanely valuable). It’s an amazing SOV, but it’s also integral to the evolving digital economy and is a robust open monetary network that everyone/every machine can use. Bitcoin’s doing something while you’re asleep. Don’t sleep on it.
Not only is Blackrock coming for your bitcoin, but so are the machines.
The halving
The halving is coming!!! The halving is coming!!!
There you go, that’s your warning. It’s coming in ~April 2024. I know that because the bitcoin protocol and monetary policy are set by math and code. I can’t tell you what the Fed Funds rate will be in April 2024, in contrast. I can make rational, low-time preference economic decisions if I know the monetary policy in the future. Fiat, controlled by J. Powell and company, makes that impossible. The choice is clear to me…bitcoin.
Bitcoin is currently very cyclical in nature, and that may change at some point in the future, but maybe not. The halving introduces a complex dynamic that I wrote about before involving human behavior (greed, FOMO) and bitcoin miner operational challenges that result in an explosive movement in the price upward after the halving. We still have a lot of halvings to go. You’re early.
I believe that the price of everything falls to the marginal cost of production, as many others have stated. Bitcoin is a commodity with a cost to produce, involving energy and hardware (among a few other things). Every four years, the cost to produce/win/earn a bitcoin by the miners doubles overnight at the halving. If it costs 15k to earn 1 bitcoin before the halving, it now costs 30k after the halving because the number of bitcoin earned in the block subsidy gets cut in half at the halving. This is NOT easy on bitcoin miners trying to make a profit for their shareholders (and also for non-publically traded companies).
Bitcoin miners distribute and sell bitcoin they earn to power their operations and keep the lights on. As a business (which bitcoin mining is), they aren’t going to sell bitcoin at a loss. Thus, the price moves higher as miners sell at their new higher price with some margin. It’s basic/pure capitalism. If it costs them more, they charge you more if you want what they’re selling.
As the price moves up around the halving timeline, people start getting interested in bitcoin again. Humans are entirely predictable. Price drives the narrative, and a flywheel effect kicks in, which leads to greed and FOMO. Since 70% of the supply is held by psychos like me who think the true fair price of bitcoin is way higher, and no matter how many people want it at that point, bitcoin miners can’t make more…the price skyrockets. Mania kicks in (Google searches for bitcoin spike) as a highly desirable scarce asset draws attention that everyone can own and buy easily with a few clicks on their phone. The bitcoin price gets waaaay over its skis and is well above the marginal cost of production, and some hardcore bitcoin hodlers take some profits and sell (we live in a fiat world still, and you have to eat!). Price eventually drops as buyers become wary of the high price and sellers take profits (including bitcoin miners). The cycle starts all over as bitcoin falls back to its marginal cost of production, which doubles every four years. No other commodity has that property. It’s number go up technology.
That’s how I think it goes. But every cycle there is a new wrench thrown in. Last cycle, the bitcoin FUTURES ETF, not spot ETF, caused a double top with the all-time high occurring in November 2021 despite on-chain data signaling the top in Q1 2021. Who knows what the wrench will be this time. I do think the timing of the likely approved spot ETF will impact things. We’ll see.
The most interesting thing about this coming halving is the current tightness of the available supply of bitcoin. Everyone expects similar cycle dynamics to play out as they have before and diminishing returns to be the base case. When everyone thinks the same thing will happen, it usually doesn’t.
I’m taking the opposite/contrarian view. I think the returns this cycle could be much higher. How much? No clue, but higher than in some previous cycles.
The reasoning behind my belief comes from on-chain data showing an inflection point in the available supply at the last halving.
Since 2009 there has always been a growing supply of bitcoin available for sale on exchanges. However, that all changed in 2020 at the halving and now supply is dropping.
Supply will get cut in half again in 2024 in conjunction with the massive boom in newly convicted bitcoin diehards like myself, who hold the supply tightly. On-chain data also shows that small-medium holders are absorbing 280% of the current daily supply!! 280%!! Of TODAY’S supply!!
What will that look like when Blackrock has an ETF and the daily supply is cut in half?
People’s eyes were opened to the insane fiscal irresponsibility of the US government and the Ponzi scheme that the US dollar and every other fiat currency is.
That wasn’t the case for me and many others during the prior cycle. Bitcoin is mainstream now, and the gig is up for fiat currencies. The internet democratized information and moves it at the speed of light. Just like the printing press helped separate church and state, the internet and bitcoin will help separate money and state.
This supply crunch could potentially set the stage for a mega bull run that catches many people off guard. I have no clue, but it’s fun to make predictions and be contrarian. Let’s see what happens. No matter what, the halving is an insanely bullish event, and it’s approaching in 9 months.
Tick tock next block.
My BTC price prediction: 150k-300k in 2025.
(obviously not financial advice)
Big range, but way higher than 69k (prior high) and the current price (30k). That’s all that really matters.
I’m either the guy on the left or right…
Regardless, stay humble and stack sats while you can.
Don’t let Blackrock (or AI) take it from you.
Part two in 1-2 weeks, stay tuned.
Thanks for reading. Please share if you like it (we need to orange pill more people!) and leave some comments!!
THIS is Crypto Pulse.