Welcome to this week’s edition of the Myth of Money, a weekly newsletter on all things money, economics and technology read by 10,000+ investors, curated by Tatiana Koffman.
Disclaimer: The following is not intended as investment advice. Do your own research.
Happy Monday Everyone,
Last week, the markets showed immense volatility after BTC reaching an all time high of $69,000 and then dipped into the $56,000 range.
The biggest question on everyone’s mind right now is if we are heading toward another ‘bear period.’ I call it a ‘period’ because I believe that any bear market at this time will be short-lived. Our monetary policy is conducive to a super-cycle, with free capital printed by central banks which is being either given away or lent out at nearly 0% rates.
Sure, there was talk of raising rates and tapering. But COVID is back. Austria went into lockdown today as Europe erupted into protests. We are seeing an eerie repeat of last year, while European Central Bank Chair Lagarde confirmed that any interest rate hike before 2023 is extremely unlikely.
All this is to say - do not panic. We are going to make it through this period of volatility.
During times like this, remember the following.
(1) Bitcoin is volatile because it is an evolving asset.
(2) Bitcoin is an UNDERVALUED asset.
I frequently tell people that Bitcoin is the only undervalued crypto asset. Of course, there are new crypto assets with incredible technology behind them that are still underpriced. But the vast majority of crypto assets do not deserve the valuation they currently command. As we have seen in 2018, many of these assets will disappear and those that do stay, will see their valuations shrink.
Bitcoin, on the other hand, is different. Bitcoin is now a REGULATED asset. It is regulated as property in western economies within the capital gains tax regime. The narrative of Bitcoin a scarce and immutable asset is so strong, that countries, publicly traded companies and funds, are all buying it up.
When you look at asset on the way to become the new global store of value, what is that worth?
Current Market Caps:
Bitcoin: $1 Trillion
Apple Inc: $2.7 Trillion
Gold: $11.7 Trillion
All Circulating Money: $36.8 Trillion
You get the picture. Bitcoin is still early. And volatility aside, you are too.
Here’s a great video by Michael Saylor explaining the magnitude of Bitcoin.
(3) If you like models, and predictions, follow Plan B.
This guy has stock to flow models, floor models and on-chain models. And apparently we are in for a treat before the end of the year. I’m cautiously optimistic.
PlanB @100trillionUSDBitcoin is below $34K, triggered by Elon Musk's energy FUD and China's mining crack down. There is also a more fundamental reason that we see weakness in June, and possibly July. My worst case scenario for 2021 (price/on-chain based): Aug>47K, Sep>43K, Oct>63K, Nov>98K, Dec>135K https://t.co/hDONOVgxH1
Top Stories 🗞
El Salvador plans to build the world's first "Bitcoin City", funded initially by bitcoin-backed bonds, President Nayib Bukele said on Saturday, doubling down on his bet to harness the crypto currency to fuel investment in the Central American country. Speaking at an event closing a week-long promotion of bitcoin in El Salvador, Bukele said the city planned in the eastern region of La Union would get geothermal power from a volcano and not levy any taxes except for value added tax (VAT)."Invest here and make all the money you want," Bukele said in English, dressed all in white and wearing a reversed baseball cap, in the beach resort of Mizata. "This is a fully ecological city that works and is energized by a volcano."
The Taproot update means greater transaction privacy and efficiency – and crucially, it will unlock the potential for smart contracts, which can be used to eliminate middlemen from transactions. Taproot matters, because it opens a breadth of opportunity for entrepreneurs interested in expanding bitcoin’s utility. A big part of bitcoin’s makeover has to do with digital signatures, which are like the fingerprint an individual leaves on every transaction.Right now, the cryptocurrency uses something called the “Elliptic Curve Digital Signature Algorithm,” which creates a signature from the private key that controls a bitcoin wallet, and ensures that bitcoin can only be spent by the rightful owner.Taproot will add something known as Schnorr signatures, which essentially makes multi-signature transactions unreadable.
Barbados announced on Tuesday that it will be the first sovereign nation to host its embassy on the metaverse. The Caribbean nation’s cabinet decided to adapt its diplomatic affairs to the burgeoning new virtual platform in August. Barbados has entered into a relationship with Decentraland, a blockchain metaverse platform, in order to build the new project. The island nation issued a press release over the weekend, which states: “Barbados’ Metaverse Embassy will be at the centre of activities to advance the growth of stronger bilateral relationships with governments globally.”
Anthony Scaramucci says bitcoin will go up at an "exponential" rate and will eventually eclipse gold as an inflation hedge
SkyBridge Capital's Anthony Scaramucci said in a recent interview that he believes bitcoin will eventually overtake gold, both in terms of the size of the overall market, in addition to bullion's role as an inflation hedge."The Mooch" pointed to the ease with which anyone can move and store bitcoin, relative to gold, which is costly to hold as inventory and to move physically from one place to another. Scaramucci is one of a number of high profile crypto-friendly investors that believes bitcoin will outpace gold, along with the likes of MicroStrategy CEO Michael Saylor and Cathie Wood, the chief executive of disruptive technology investment house Ark Invest.
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Thank you for reading this week’s edition of the Myth of Money.🚀
Until next week,