NEW MONEY is a recap of the week in ₿itcoin. Everything you need to know, right to the point. New Money, is published by Adam Pokornicky of DAIM Digital, a Registered Investment Advisor for ₿itcoin and Digital Assets. Twitter: @callmethebear
Happy MDW from Venice Beach! Between the good weather, quarantine fatigue and the natural celebratory atmosphere of a holiday weekend, it’s beginning to resemble Mardi Gras around here. Traffic has picked up, the beaches are packed and restaurants have fully embraced the liquor/booze takeaway service, making it feel like Bourbon Street at the beach. I don’t know what to think with people acting like this invisible pathogen was miraculously cured, but I’m gonna stick to the plan and not let my guard down by continuing to protect myself when I leave our place. I hope everyone enjoys their weekend and stays safe (and NO that is not me)!
Small bit of housekeeping here. I’ve been getting a decent amount of feedback and constructive criticism on the New Money newsletter. TL;DR: people seem to really enjoy the content and the effort I’m putting into it but it’s too damn long. To everyone that has offered feedback, I appreciate you and hear you all loud and clear. Less is more. If you’d like to offer feedback or provide suggestions of specific topics to cover, please drop me a note in the suggestion box.
Bitcoin Pizza Day
Bitcoin pizza day was May 22nd. It’s a pretty big event for Bitcoiners, bc 10yrs ago on that day, Laszlo Hanyecz, a Bitcoin developer, infamously made the first real world trade using Bitcoin, purchasing 2 Papa Johns pizzas for 10,000 Bitcoin (totaling $30 at the time). Those Bitcoin are now worth $92,000,000! The lesson learned: Buy Bitcoin, HODL Bitcoin.
Day Trading Has Replaced Sports Betting
CoronaVirus has had a direct impact on our day to day entertainment. In addition to binge watching TV, bread-baking, Tik Tok videos and zoom calls with friends, the lack of sports, casinos and the gambling that accompanies has led to a full on retail investor trading orgy in buying and selling small lots of stocks and options. Day trading among individual investors has taken off with the number of accounts, trading activity, and options speculation never been higher among the sitting-in-their-underwear-not-showering-bored-at-home-crowd. Read more here and here.
“It’s the combination of no sports — so you can’t bet on that — and you can’t go outside. There’s a lot of people sitting in front of their computers who ordinarily can’t be day trading. For a gambler, investing has a ton of similarities.” - David Portnoy, Barstool Sports
According to software and data aggregation company Envestnet Yodlee, securities trading was among the most common uses for the government stimulus checks in nearly every income bracket. The frenzied trading of stocks and options by small retail accounts is a sign of speculative excess and has been a major driver of stock markets’ 30% retracement from their March lows. With the NBA and MLB preparing to start playing again and the NFL set to follow in the fall, will the retail mania in stocks fueled by new day traders stick around when there are sports to bet on again?
Imagine if all these FOMO retail traders were buying BITCOIN early (yes, buying Bitcoin under $10k is still very very early in its expected adoption curve) rather than equities late?!?! I often find myself in mind blowing conversations with experienced professional investors and younger traders/investors who like to flex their smarts cause they work at hedge funds and who only know a world with Central Banks printing money and manipulating asset prices, giving me the bull case for stocks while trading at P/E ratios of 23 or more while the economy is absolute shatters, but won’t touch Bitcoin. Like really? Not even a 1% position? It’s just another reminder of really how early we still are in terms of understanding, adoption and collective mainstream consciousness when it comes to Bitcoin.
Bitcoin: 32% YTD, +89% from the lows
SPX: -9% YTD, +33% from the lows
Gold: 14% YTD, +18% from the lows
At DAiM (Digital Asset Investment Management), we expect BITCOIN to outperform all major US stock indices and Gold and between today and the end of 2020. It begs, the question, what will it take for you to #GetOffZero?????
Should you be interested in starting small and getting exposure, we highly recommend you refer to New Money Issue #5: The Modern Portfolio - The Case for Allocating to Bitcoin . The data shows that having ZERO exposure to Bitcoin is the least optimal allocation using Modern Portfolio Theory and why it’s becoming a financial risk to not own some amount of Bitcoin even if you hate it or don’t understand it.
The Bitcoin Tipping Point
Two week ago, in New Money Issue #7: The Bitcoin Tipping Point, I made the argument that legendary investor Paul Tudor Jones investing in Bitcoin would create a tipping point for Bitcoin to crossover into mainstream finance as an acceptable investment and new asset (class). Well, welcome to the Big Leagues folks, as Goldman Sachs is certainly paying attention, making Bitcoin a key discussion point of their Global Investment Strategy Outlook. Giddy up.
TWIB (This Week in Bitcoin)
Someone moved a block of bitcoins this week, first mined in February 2009
CashApp is now allowing recurring buys of bitcoin (plus display in satoshis!)
A US lawmaker has proposed a legislative groundwork for a new national blockchain approach
Iran is exploring a national mining strategy (this is a big deal and goes to the idea of nation states adopting Bitcoin)
A new pan-Asian stablecoin has been proposed in China
The latest in US crypto exchange competition is the just launched FTX.US
Is a Chinese province trying to ban bitcoin mining?
Genesis trading acquires a crypto custodian in a bid to become crypto’s first primer broker
Libra names a former director of FinCEN as its general counsel
Miners are now generating a little over $8M a day, compared to more than $12M prior to the halving - The BlockCrypto
JPMorgan Says Central Bank Digital FX a Danger to U.S. Power - Bloomberg
BlockFi, a New York-based crypto lending platform said an attacker got hold of users' data by compromising an employee's phone through a SIM swap attack.
What I Am Reading:
The Last Word on Bitcoin’s Energy Consumption - Nic Carter looks at the claim that Bitcoin consumes too much energy
Reminder: KYC laws do more harm than good - Marty Bent looks at the BlockFi hack and discuss KYC/AML does more harm than good and SMS 2FA should be avoided at all costs.
Nearly $5 billion in Tethers were issued since January. Why? - Amy Castor investigates the claim from one researcher who believes the Bitcoin ecosystem system is running dangerously low on real dollars.
The Three Sides of Risk - Morgan Housel, discusses how the tail-end consequences – the low-probability, high-impact events – are all that matter
What’s a Tracking Pixel and Can Strangers Really Spy on Me Through Email - Verge Everything you need to know about the invisible e-mail tool that tracks you
The Crypto Price-Innovation Cycle - Chris Dixon, a16z partner Chris Dixon writes that “A key feature of crypto cycles is that each one plants seeds which later grow and drive the next cycle”
Bitcoin’s Third Halving: A Thesis for Institutional Investment- Messari Crypto publishes this terrific 26 page report makes a compelling case for Bitcoin across multiple vectors, highlighting the asymmetric opportunity (63.5X upside) if Bitcoin can attain the same market cap ($10.8 trillion) as gold has today.
Best Podcasts of the Week:
In this episode, NLW looks at what makes the Satoshi mythology powerful:
Genuine technical innovation and problem solving that had stymied some brilliant minds for decades
Incredible instincts around narrative and human psychology, as reflected in the “Chancellor on the Brink” message embedded in the Genesis Block and the ceremony around the halving
The incredible contrariness of a creator withdrawing in a world where entrepreneurs are lionized like no one else in society
In this episode, NLW talks with Lyn Aldred about why we’re at the end of a strong dollar cycle and Why the Fed is terrified of the global dollar shortage
Why the Federal Reserve is terrified of the global dollar shortage
The difference in creditor vs. debtor nations
The concept of the Triffin dilemma
Why Japan has been able to print money without seeing rampant inflation
Why we have inflationary and deflationary forces competing to influence the U.S. economy
Why debt is going to matter more than ever
What alternatives to the USD system might be
China's Crypto Is All About Tracing — and Power
“Strictly speaking, though, the anonymity of cash will no longer exist. Authorities can look under the hood of pseudonymous transactions for unwanted activity, an outcome far removed from the vision that drove libertarians (and money launderers) to cryptocurrencies in the first place”, read the full article here.
More to read here in “Why China’s Cryptocurrency Matters More Than Bitcoin” and
JFK (Jesus Fcking Christ)
Reminder that Krugman said this in 1998: “By 2005 or so, it will become clear that the Internet’s impact on the economy has been no greater than the fax machine’s”.
Adam Tooze @adam_toozeDramatic charts from @ChrisGiles_ on surge in UK gov debts. But puzzled why he thinks this detracts from “nation’s wealth”. Obviously, COVID-driven collapse in GDP subtracts from monetary income. But gov debt shows up as asset in balance sheet. H/t @GeneralTheorist https://t.co/5pqEzyqE1P
To be clear Keynesian Economics is a mental disorder and makes people stupid. Paul Krugman is nothing more than a big government stooge who plays an economist on TV and the internet to convince you government borrowing from your children to pay his salary is good for you. Federal Reserve debt is nothing more than money we are stealing from Future Generations who can not vote today. It’s become the world’s biggest party with an open bar and the bartenders and in house drug dealers making you fcked up and stupid.
In this were the case, why wouldn’t I just take out a $2M loan that I know I can’t pay back because it’s OK, my kids will pay it off. No, Nope, Sorry No thanks, thats not how it works.
$20 Trillion in Global Monetary/Fiscal Stimulus
$20 Trillion: NBD
Next Week in New Money:
Understanding Bitcoin’s current price and total value compared to Amazon, Apple, Gold, Global Money, Jeff Bezos Wealth, and other things
Recent Issues of New Money:
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