2021W6 - WTF has happened in bitcoin this week?

Bitcoin is scarce digital money

Feb 13, 2021

TLDR: Bitcoin is hitting institutional FOMO

This could be the most bullish week of the year so far.
Last week we talked about Michael Saylor’s event, Bitcoin for corporations, where he explained to thousands of executives and share his playbook on “how to legally buy bitcoin for their balance sheet”. Even though it is still early to see the outcome of this meeting reflected on companies balance sheet, there was an incredible announcement.

Tesla buys $1.5 billion in bitcoin for their company’s treasury reserve

These words carry so much weight on them. It is not clear which was the aggregate price of their purchase, but it was definitively made days or even weeks before the announcement, in 2021. Only by bitcoin’s appreciation of this last week, Tesla’s investment in bitcoin, already increased by more than $300 million dollars. Sure, it is indeed a volatile asset, but companies are already considering bitcoin as a store of value with its incredible property of being digitally scarce. It is only a matter of time before we see more of these announcements on a weekly basis.

And this is how the week started:

1. Tesla buys $1.5 billion in bitcoin for their company’s treasury reserve. It is not specified what is the total and the aggregate price per bitcoin, but so far it is the highest investment made by a private company for its treasury. As a side note, even though they invested more than MicroStrategy ($1.145 billion), they probably were able to acquire around half the amount MicroStrategy’s bitcoin position.

2. Mayor Francis Suarez announced that his resolution was approved, and Miami will now offer employees to get paid a percentage of their salary in bitcoin, accept taxes paid in bitcoin, and bitcoin became an accepted currency for them to potentially invest part of the city’s treasury.

3. Twitter’s CFO was interviewed by Squawk Box after reporting the company’s earnings, he was naturally asked about bitcoin, answering they are considering how to possibly pay employees or vendors who want to get paid in bitcoin and whether they need to have some on their balance sheet. This was the follow up on their stock after the interview.

by BTC_Archive

4. Michael Saylor crushed again in a mainstream media interview, he explained how he had been explaining bitcoin’s value proposition to many CEOs, and he sees how more and more seem open to the idea. As he was questioned regarding its volatility, he answered with this amazing quote:
“I rather have a volatile appreciation of 200% a year, than a stable depreciation of the rate of 15-20% a year.”

Michael Saylor @michael_saylor

Tesla $TSLA has de-risked the acquisition of #bitcoin by public companies and accelerated the digital transformation of corporate balance sheets. Treasurers are now thinking about how to convert a non-performing asset into the best performing asset.

Power Lunch @PowerLunch

Tesla bets big on #bitcoin, buying $1.5B worth of the #crypto. @MicroStrategy CEO @michael_saylor on sharing his bitcoin playbook and how many companies could follow @elonmusk's lead. $TSLA $MSTR https://t.co/QoRn3AFIoK

5. Grayscale reported their actual AUM to be $36.8 billion. This is an increase of almost $10billion from the reported number 4 weeks ago, as we reported in WTFBitcoin[7].

6. Brian Kelly, Founder & CEO of BKCM, was interviewed in CNBC’s Fast Money, after Tesla had been the first company in the S&P500 to get bitcoin in their balance sheet. “If all companies of the S&P were to invest 10% of their balance sheet, that would mean an inflow of $160 billion”. Now let us imagine what would happen if we saw a surge of ~15% after $1.5 billion from Tesla.

7. Blue Ridge Bank, US based, will now allow customers to buy bitcoin through their ATMs.

8. Mastercard is planning to let merchants accept bitcoin payments. They have done so already with the help of third parties, but this time they plan to implement this using the bitcoin protocol.

9. BNY Mellon, American oldest bank will allow customers to hold, and transfer bitcoin on behalf of its asset management clients.

10. First North American Bitcoin ETF was approved in Canada by the Canadian Securities Regulator. This fund seeks to replicate the performance of the price of bitcoin, minus fees and expenses.

“This is not real bitcoin though, just an financial instrument, a way to get exposure to the price without having the personal responsibility to own the asset. Be responsible, buy and claim your bitcoins” - Bam

11. Bloomberg reported that Morgan Stanley may bet on Bitcoin in its $150 billion investment arm. It is important to remark that this falls only on a possibility, but just the fact of this bank considering it, it is enough to confirm the institutional fear of missing out (FOMO) on what can possibly be, a great opportunity.

FUNDAMENTALS

12. Rafael comes back with a great visualization of the inflows/outflows of bitcoin from exchanges. This is a 200-day moving average, and as we can see, the trend is still pointing towards removing bitcoin from exchanges. This trend could give the hint, that people are not done accumulating bitcoin, and we might see higher prices. If we compare it to the previous cycle, exchanges had more bitcoins being sent into them throughout the whole exponential phase (2017).

Another great chart he shared is the Market Cap to Thermocap Ratio. This metric is used to identify cycle tops, and it seems that it isn’t high enough as any other cycle top bitcoin has previously had.

The thermocap represents the cumulative sum of all coinbase transactions weighted by the US dollar value at the time.

“In other words, a proxy for overall miner revenue (heuristic: instant selling). You can hence also think of it as aggregate security spent (if miners operate close to marginal cost).” - Nic Carter

In bitcoin price terms, it is a bullish signal, and one could argue that we are continuing with the exponential appreciation.

As a summary note…

This week has been more than exciting. Bitcoin is basically being de-risked day by day as institutions and governments decide to join into this open monetary network. Sometimes we might stop for a moment and think, “When will it stop?”, “Is it too late to buy more or get a hold of some bitcoin?”. This fear can be natural but lets remember one thing. Bitcoin is the soundest money every created. It is being adopted at an institutional level, and it is just the beginning, Michael Saylor started the institutional trend, and now with Elon Musk following with Tesla’s purchase, it is hard to believe it stops here. We probably will see more companies from the S&P 500 announcing their purchase of bitcoin for their treasuries in the upcoming weeks & months.

Bitcoin is the only way someone can transfer millions or even billions of dollars of value, across the globe for a minimal fee, and within an hour. When more billionaires realize this, a gigantic transfer of wealth could shift from other type of assets (Real Estate, Bonds, Gold), into bitcoin.

Bitcoin represents a tiny fraction of a store of wealth for the ultra high net worth individuals. After all, it is an emerging asset, and it is finding its value in the free market. The sooner to join the monetary network, the more appreciation one could get exposure to. At the end of it all, our opinion is the following:

Bitcoin is artificially designed to pump forever.

You want to contribute to WTFBitcoin?
Feel free to donate.