Never liked bitcoin and admit I lost out on tremendous gains even at the price bitcoin is trading at. My thought was why hold virtual gold when you can hold the real thing so I bought gold instead of bitcoin.
You are one of the few who writes about "hard money" but is not deeply ensconced in "one camp vs. the other", which is to say "precious metals" vs. "bitcoin".
As someone who is a deep believer in bitcoin's long term value proposition, but who also sees the potential for strong growth in "value" of precious metals as denominated in fiat currencies, I have often argued with family and friends that bitcoin's lack of "intrinsic value / utility" is a feature not a bug when considering its viability as a replacement of the dollar as the global reserve currency. After all, if it's the "monetary premium" on gold and not its utility value that makes up the bulk of its price in fiat, then wouldn't an asset whose price is essentially 100% "monetary premium" be superior "as money" than one that has alternative use cases?
However, if we can all agree that the price in fiat of any hard asset is at least somewhat suppressed by the issuance of "paper versions" of it, then I think it's fair to say that the price can continue to be be suppressed until the music stops in the game of musical chairs that such a system implies. Your recent articles regarding the silver explosion are an illustration of what can cause the music to stop, namely that "you cannot produce solar panels with silver IOUs."
This way of thinking about it got me to questioning my own thoughts on bitcoin and the "pure monetary premium" value proposition I described above. If the marginal buyers are content to hold IOUs, and the derivatives are so wide, complex, and dispersed that nobody can quantify the full quantity of bitcoin that is supposed to be backing them, then what good is the 21million "hard cap" on the real commodity, the bitcoin itself. In other words, my mind started asking the question, "What could cause the equivalent squeeze on the actual commodity as is presently happening with silver if bitcoin doesn't have any utility other than as collateral and everyone accepts the ETFs and other securities as collateral?"
The only answer I came up with was an expansion of truly multi-sig collateralized derivatives, such as those offered by some institutions today, primarily bitcoin overcollateralized lenders. But even some of those centralized institutions pool their bitcoin and don't offer the transparency and rigidity of a 1:1 bitcoin address to derivative contract. I'd be curious, Roberto, what your thoughts are on this. Are there other "use cases" I'm not thinking of, where the rigidity of the system ensures that the real bitcoin is there and thus could cause the house of cards to collapse as it seems to be doing in the silver market?
Thanks for you insightful Substack articles. I'd love to see your "long form" thoughts on this topic.
Great article Roberto. I also think tax loss harvesting at the end of this year factored into the most recent price action, possibly making things look worse than reality.
Examine the links between tether usdt and tbills. De-fi has become Ce-fi (centralized finance)
Also look at the ETF’s launched by bitwise for commonality and what their market thesis it. Hint there next ETF to launch is a currency debasement fund.
You get a like and restack as ususal (because your thoughts always need considering), but medium to long term, I'm not worried about BTC. Why? Because I have Grug brain:
Excellent analysis. Really appreciate this
Never liked bitcoin and admit I lost out on tremendous gains even at the price bitcoin is trading at. My thought was why hold virtual gold when you can hold the real thing so I bought gold instead of bitcoin.
Think Gold also has the same, if not more, Wall Street influence
You are one of the few who writes about "hard money" but is not deeply ensconced in "one camp vs. the other", which is to say "precious metals" vs. "bitcoin".
As someone who is a deep believer in bitcoin's long term value proposition, but who also sees the potential for strong growth in "value" of precious metals as denominated in fiat currencies, I have often argued with family and friends that bitcoin's lack of "intrinsic value / utility" is a feature not a bug when considering its viability as a replacement of the dollar as the global reserve currency. After all, if it's the "monetary premium" on gold and not its utility value that makes up the bulk of its price in fiat, then wouldn't an asset whose price is essentially 100% "monetary premium" be superior "as money" than one that has alternative use cases?
However, if we can all agree that the price in fiat of any hard asset is at least somewhat suppressed by the issuance of "paper versions" of it, then I think it's fair to say that the price can continue to be be suppressed until the music stops in the game of musical chairs that such a system implies. Your recent articles regarding the silver explosion are an illustration of what can cause the music to stop, namely that "you cannot produce solar panels with silver IOUs."
This way of thinking about it got me to questioning my own thoughts on bitcoin and the "pure monetary premium" value proposition I described above. If the marginal buyers are content to hold IOUs, and the derivatives are so wide, complex, and dispersed that nobody can quantify the full quantity of bitcoin that is supposed to be backing them, then what good is the 21million "hard cap" on the real commodity, the bitcoin itself. In other words, my mind started asking the question, "What could cause the equivalent squeeze on the actual commodity as is presently happening with silver if bitcoin doesn't have any utility other than as collateral and everyone accepts the ETFs and other securities as collateral?"
The only answer I came up with was an expansion of truly multi-sig collateralized derivatives, such as those offered by some institutions today, primarily bitcoin overcollateralized lenders. But even some of those centralized institutions pool their bitcoin and don't offer the transparency and rigidity of a 1:1 bitcoin address to derivative contract. I'd be curious, Roberto, what your thoughts are on this. Are there other "use cases" I'm not thinking of, where the rigidity of the system ensures that the real bitcoin is there and thus could cause the house of cards to collapse as it seems to be doing in the silver market?
Thanks for you insightful Substack articles. I'd love to see your "long form" thoughts on this topic.
The true digital gold is XAUt
Great article Roberto. I also think tax loss harvesting at the end of this year factored into the most recent price action, possibly making things look worse than reality.
Examine the links between tether usdt and tbills. De-fi has become Ce-fi (centralized finance)
Also look at the ETF’s launched by bitwise for commonality and what their market thesis it. Hint there next ETF to launch is a currency debasement fund.
You get a like and restack as ususal (because your thoughts always need considering), but medium to long term, I'm not worried about BTC. Why? Because I have Grug brain:
https://x.com/SecScottBessent/status/1984378179809599619
BTC has been seen as "useful" by the insurgent elite. I look forward to them fattening our bags.
A beach ball, submerged.