Big Volcano Energy Gives BTC A Lift
Let me start off by apologizing for missing last week’s recap — I was in Miami for the Bitcoin 2021 conference which consisted of late nights and early mornings.
Not much to talk about last week anyway other than that we got a nice boost up to $39k as speculators “bought the news” (in the past, Bitcoin has seen large price increases after large conferences) ahead of the biggest Bitcoin conference in history. While 12,000 of us “plebs” were hearing from the brightest minds in the space, and partying it up, Twitter and other media outlets painted a cult-like atmosphere which I think turned a lot of investors off and we saw BTC fall back to the mid-$30s by the end of the weekend. Fair enough.
The conference was definitely fun and hats off to the organizers who did a fantastic job — other than the first morning where George and I stood in a 12,000 person line for 3 hours in direct sunlight waiting to get in. Here are some highlights:
- The fact that 12,000 people paid over $600 USD ($2100 at the door) for a GA ticket and with the Whale tickets going for $21,000 at the door is extremely bullish.
- Jack Dorsey, CEO of Twitter and Square is totally focused on Bitcoin and said “I don’t think there is anything more important in my lifetime to work on”
- The exhibit where sponsors had their booths set up to show off their companies was absolutely humming. That to me was a major takeaway. There were a ton of awesome Bitcoin focused companies and there were thousands of people packed into the exhibit at all times.
- The average attendee looked completely “normal” which I felt showed the depth of adoption.
- The President of El Salvador made a surprise video appearance announcing that he would be proposing a bill to make Bitcoin a legal tender.
- There were sumo wrestlers
What we saw at the desk (this week)
Definitely a shaky start to the week where we saw another FUD induced sell-off drive the price of BTC down to $31k. This was clearly a scary time for clients as we had probably the biggest day of selling we’ve ever had. This wasn’t a “okay, I’ve had enough with this” sell-off (from our desk’s perspective). It was totally a “I’m probably going to regret this but let’s sell everything to see how this shakes out and hopefully I’ll be able to get in at a lower price” sell-off.
- No, the FBI did not hack Bitcoin.
- Obviously, the IMF is going to talk negatively about El Salvador making Bitcoin legal tender.
I don’t even want to talk about the first point because if you sold because you thought the FBI hacked Bitcoin then I just can’t help you. For those that spent a couple of minutes looking into it they might’ve come away on the buy side because it displayed why using Bitcoin for nefarious purposes is very dumb.
When the IMF has time to talk about a relatively nascent country with a population of 6.5 million it means they’re scared. Again, this is bullish if you can look past the headlines.
The first domino has fallen
My colleague George and I were feeling pretty exhausted by the end of the conference last weekend but we absolutely had to stay for what was to be the biggest announcement in Bitcoin’s history.” So, at 4pm on Saturday we gathered to watch Jack Mallers of Strike give a heartfelt presentation of the great work he’s done in El Salvador and the impact it has had on the country. As the presentation went on ladened with tears and profanity, George and I agreed that if the announcement was a 7+ on a scale of 1–10 (10 being Jack Mallers announcing that he is Satoshi Nakamoto) we would go to the after party that night.
Near the end of his presentation, Jack turned to the screen behind him where the President of El Salvador appeared:
The conference erupted as President Nayib Bukele announced that he will be passing a bill to make Bitcoin legal tender in El Salvador. George and I looked at each other and said “that’s a 6.” Let’s just say, we were well rested on Sunday.
We totally missed it. That was a hard 9.2 — we should’ve got a booth and bottles at LIV that night. Oh well.
On Tuesday night, 20,000+ people tuned in from all over the world to hear from the President of El Salvador on Twitter Spaces. The epic dialogue went into the wee hours of Wednesday where the President had to leave to find out if the law had passed… and it did. It passed and it was a super majority. Bitcoin is legal tender in El Salvador.
What followed the announcement from El Salvador was a flurry of politicians and leaders from across various Latin American countries calling for the same type of action with the same motivation — to reduce the reliance on the dollar, slow inflation, increase financial inclusion and bring in more entrepreneurs.
Paraguay, Panama, Brazil, Mexico, Argentina, and Nicaragua signalled support right away.
25% of El Salvador’s GDP comes from remittances. That is insane. On average, intermediaries like Western Union take 20% on each of those payments. So, if you’ve made it to America and you’re working a minimum wage job to send $100 back home to your family in El Salvador, they are only getting $80. Also, chances are that they don’t live right beside Western Union meaning they have to spend time and money getting there just to pick up the funds.
Over and above the remittances part of this story is that most people in El Salvador do not have a bank account or access to the financial system and subsequently do not have the ability to save. With Bitcoin and a smartphone that has immediately changed.
Through Jack Maller’s Strike app (which is onboarding over 20k users in El Salvador per day and is the #1 app in the app store as of this week) people can send money back home without any intermediary, instantly via the Lightning Network. Just by bypassing Western Union, El Salvador can add 5% to its GDP.
El Salvador also announced that it will give permanent residency immediately to anyone who has over 3 BTC. This is clearly attractive to folks around the world fearing loose monetary policy and high taxes since there are no capital gains associated with a legal tender. If I was looking at beach front real estate — even out of curiosity — that means many others are as well.
This news has rocked the world. Even India who has always been hostile towards Bitcoin has softened its position and is likely to consider Bitcoin as an asset class in India soon.
Everything else in my portfolio suddenly seems totally unimportant.
In case you missed it…
- Microstrategy sees $1.6bn in interest for their Bitcoin offering https://cryptonews.com/news/microstrategy-sees-usd-1-6b-interest-in-their-bitcoin-offer-10618.htm
- $40tn State Street getting into crypto https://www.ft.com/content/52b1b8a9-2322-496c-ac16-a847c658d186
- Interactive Brokers will offer crypto trading by the end of summer https://www.cnbc.com/2021/06/09/interactive-brokers-will-offer-crypto-trading-by-the-end-of-the-summer.html
- India may classify Bitcoin as an asset class https://www.newindianexpress.com/business/2021/jun/10/after-el-salvador-india-may-move-to-classify-bitcoin-as-an-asset-class-2314097.html
- Countries signalling for Bitcoin adoption https://www.thestreet.com/crypto/bitcoin/politicians-from-these-countries-have-called-for-bitcoin-adoption
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Satstreet serves private Canadian clients including some of the largest Bitcoin mining operations, institutions, and high net worth individuals. Satstreet has raised initial funding from Round13 Capital and several prominent investors.