Bitcoin and Everything Else

Bitcoin is increasingly dominating the crypto industry in terms of both attention and capital being directed to the asset. Bitcoin has continually hit new all-time highs as it relates to the total crypto industry and the macroeconomic news surrounding Bitcoin only continues to drive positive sentiment forward.

In the last 18 months we have seen in no particular order and by no means an exhaustive list:

• Bitcoin ETFs go live and have the best ETF one-year performance of all time

• A Bitcoin pro-president and many members of the cabinet enter office

• Strategy ($MSTR ( ▲ 2.15% ) ) and numerous other companies such as Semler Scientific ($SMLR ( ▲ 0.68% ) ), Metaplanet ($MTPLF ( ▼ 3.53% ) ), Twenty One Capital, and Nakamoto) continue Bitcoin treasury operations

• The United States announced a Bitcoin Strategic Reserve

On a macro scale, everything seems to be going in the favor of Bitcoin. Bitcoin is in the news, not other crypto tokens. Prices reflect this.

Year to date Bitcoin is up over 15% and over the last year Bitcoin is up 63%.

Comparatively, the second largest crypto by market cap, Ethereum is down ~21% year to date and down nearly 26% over the past year.

Crypto baby Solana is down nearly 17% year to date and is only up 4.2% over the past year.

In an industry where so many investors aim to hold assets that outpace Bitcoin, following this strategy over the past handful of years most likely saw your assets dramatically underperform the standard that Bitcoin set.

I have found in my own life that people I interact with have changed their ideology from chasing altcoins to adopting more of a “Bitcoin only” approach. Statistics show that unless you were lucky with trading an alt or meme coin, buying and holding Bitcoin was the right thing to do for your portfolio.

I also believe the narrative has shifted from “looking to outperform Bitcoin” to “Let me just hold Bitcoin and relax” for two reasons. The first is how badly altcoins and meme coins have drawn down in price compared to Bitcoin. Traditionally in the crypto space, there has been the all-mighty and levitating “alt season” that has seen overnight gains routinely surpass 100%. Since the 2021 bear market ended, there has been no such status of this occurrence in the market. The weeks and months of the 2021 alt season have failed to reemerge and I believe many investors are tired of watching their other crypto tokens, many seemingly worthless with no inherent value, continue to bleed away to $0.

The second reason is I believe institutional and nation-state acceptance and adoption of Bitcoin, and grouping Bitcoin separately from the rest of crypto, has become a line in the sand for how the asset should and will continue to be treated. Bitcoin is already the apex asset of the digital world (I argue, of the world) and when corporations and nation-states lead, retail follows.

I believe the days of venture capital firms dumping millions of dollars into a blockchain company because they “have faster transactions” are over and VC funds and other large players have become smarter and more in tune with the fact that unless your crypto company is providing real value, you are not getting capital for buzz words like blockchain anymore.

This newsletter is Bitcoin only but I recognize that many people invest in other crypto assets and with this recognition, I aim to provide further perspective. If most of your portfolio has been allocated to altcoins over the past 18 to 24 months, I can imagine the pain you have felt as your assets have not only failed to appreciate but also dramatically underperformed Bitcoin. If you are still holding out for an alt-season, I applaud you but I will emphasize the fact that no altcoin is guaranteed to go back to an all-time high nor is it guaranteed to survive and thrive into the next cycle. People believe that Solana and ETH (and others) will stick around but there is nothing near certainty that would predict either of these assets go to an all-time high again. If you look at the top 10 crypto charts from 2017, 2021, and today, you will see there have been numerous changes in the list with Bitcoin remaining at number 1 the entire time.

Crypto companies are in survival mode and are opting to do anything to make their “innovations” and “utility” stand out. Cardano ($ADA) founder Charles Hoskinson suggested recently that they will swap $100M of ADA for Bitcoin to build a Bitcoin treasury. Think about this for a second. This is a blatant admission that their crypto token has no inherent value and is no competition for Bitcoin. Charles is trying to save a failing product by swapping it for the apex asset of the world.

I have already provided the year-to-date and 1-year returns for Bitcoin, ETH, and Solana. Now let’s look at how much higher they all need to go to reach a new all-time high. Bitcoin at a current price of ~108k only needs to return ~3.6% to break its all-time high of $111,970. ETH at a price of ~$2,641 needs to return ~85.2% to break an all-time high of $4891.70 reached in November of 2021. Solana at a price of ~157 needs to return ~86.5% to reach an all-time high of ~$294 last reached in January of this year.
Which event do you think is most likely?

I will hedge my bet with the ~3.6% Bitcoin needs to climb.

On this topic, the idea that ETH could return to an all-time high and Bitcoin would only touch 120-125k is insanity. Yes, this thought was expressed to me. That means ETH would return close to 90% yet Bitcoin would only return ~11% to ~15%. If that is your perspective, I implore you to look at the math and recalculate the odds you are playing with.

Bitcoin is currently and will remain on top. It is only going to become more and more obvious for those paying attention.

Don’t get caught holding a sinking ship in the crypto casino.

Stack SATs.

The views and opinions expressed here are for entertainment purposes only and should, in no way, be interpreted as financial or investment advice. Always conduct your own research when making an investment or trading decision, as each such move involves risk. I am not a financial advisor and do not claim to be qualified to convey information or advice that a registered financial advisor would convey to clients as guidance. Nothing contained in this e-mail/article constitutes, or shall be construed as, an offering of financial instruments, investment advice, or recommendations of an investment strategy. If you are seeking financial advice, find a professional who is right for you.