How To Best Use Your Stimulus Check
Fun fact: If Americans used their first $1,200 they received on April 15th to buy bitcoin it would be worth $10,160.43 at the time of writing. Now, I totally understand that it is not rational to think everyone should buy bitcoin with their stimulus checks because a lot of folks actually need this coming $1,400 to put food on the table and take care of themselves and their families. But, a good portion of the people set to receive this next round of helicopter money may not actually need it as much as other and will look for an avenue to put it to work.
What a week. A piece of digital art sold for a whopping $69.3 million at Christie’s Thursday morning, a record price paid for an NFT. Everyone from Mark Cuban, Lindsay Lohan, and even Taco Bell is hopping on the NFT train. While the majority of the crypto market is distracted on the hype cycle, the smart money is focused on Bitcoin.
The institutional adoption narrative certainly took hold this week accompanied by a little $1.9 trillion kicker from the Fed pushed Bitcoin up close to new all time highs.
Aker, a publicly traded company in Norway moved 100% of its treasury into Bitcoin and launched a new company called Seetee that is dedicated to investing in companies building out Bitcoin applications. Check out their shareholder letter here.
Next, in my opinion one is of the most bullish pieces of Bitcoin news I’ve read in like… 3 weeks, ha. NYDIG, a leading technology and financial services firm that holds billions in Bitcoin for their institutional clients announced that they raised $200M. It’s not about the size of the raise but who they raised from: Morgan Stanley, New York Life, MassMutual and others participated to join NYDIG in building out “Bitcoin-related strategic investments spanning investment management, insurance banking, clean energy, and philanthropy.” In addition, the CEO of New York Life — the largest mutual life insurer in the US with more than $700 billion in AUM — joined the board of NYDIG.
Don’t worry, it’s probably nothing.
What we saw at the desk
As you can imagine, it was another busy week for us. It seems that $10m+ per week is the new norm and we’re extremely grateful to our clients who have spread the word and helped us grow.
This week was once again, nearly all about Bitcoin. Not surprisingly, the buy-to-sell ratio was upwards of 90/10 as new entrants wet their beak and existing clients added to their positions. The sell side consisted of OGs (early adopters) who were taking some chips off the table to make purchases or for taxes, and traders who tried to pick off the top of the market.
How Corporations Are Thinking About Bitcoin
Although we’ve been growing quickly and have done significant volume for a firm in Canada, we’re a relatively small outfit in this space, globally. Why do I say this? Well, if WE are helping companies move their cash reserves into Bitcoin, imagine what the NYDIG’s or Coinbase’s of the world are seeing.
The setting: There’s a macroeconomic wind blowing. We’re in an inflationary monetary environment and we can expect that to continue for probably the next decade. Credit is flowing freely, interest rates are very low, and there’s no indication of any hikes in the near future. It’s challenging for any central bank to control the money supply without running the risk of throwing their country into financial turmoil.
Bitcoin is stronger, faster, and smarter money. The market says that capital flows from weak assets to strong assets — this is true for any asset. Corporate treasuries like currencies because their risks are easier to calculate versus other assets like equities, real estate, bonds, etc.. Generally, weaker currencies are going to see capital flow out of them into stronger currencies. Very weak currencies will see capital outflows until the currency eventually collapses. Everyone who is paying attention has noticed capital flowing to Bitcoin at an increasing rate over the past decade.
What does a CEO strive to do?
- Create and preserve shareholder value
- Grow revenues and operating income
- Grow their assets and investment income
These are all objectives of any corporate strategy and they are all closely tied together.
In this macro environment your company is working harder to earn a currency growing weaker and then having to invest the proceeds of that work into assets growing riskier. Or, you’re under extreme pressure to do stock buybacks, and pay dividends — both examples of surrendering your company’s assets. When the cost of capital goes up, the solution should be to invest your capital into strong assets that grow faster than the rate of monetary expansion. Bitcoin is the best performing asset over the past decade, is completely transparent, and is still very early in its lifecycle.
These simple corporate strategies come down to the same idea: Find a way to convert the cash in your treasury into the strongest monetary asset. If you can do that your purchasing power, revenues, operating and investment income, and shareholder value will appreciate.
So far, the companies that have been brave enough to take the prudent step to convert some (or all) of their cash in treasury to bitcoin have been rewarded handsomely. Microstrategy who is all in on Bitcoin is up over 300% since they first announced their position. Jack Dorsey’s Square stock has appreciated on both of their announcements. Since Tesla disclosed their $1.5 billion position on February 8th they’ve made almost 30% more than they did from car sales in 2020. These are just a few big name examples. The point is, this is certainly a trend and there is absolutely no time to waste for companies pondering the move. It is not if but when every company with a treasury owns Bitcoin. If you are holding large sums of cash in your company’s treasury and you’re in the US, or even worse, Canada or most other countries, you are falling far behind the cost of capital.
My co-founder and I decided early on that we’d take 50% of our trading revenue in BTC to build our company’s position. To date, we’ve generated 12.8 BTC and we’re looking forward to stacking Sats well into the future.
In case you missed it…
- NYDIG Raises $200M from Morgan Stanley, New York Life, MassMutual https://www.coindesk.com/soros-morgan-stanley-join-200m-investment-in-bitcoin-firm-nydig
- CEO of New York Life Joins NYDIC Board https://finance.yahoo.com/news/nydig-announces-appointment-york-life-130000233.html
- Norwegian energy giant Aker put 100% of its cash reserves in Bitcoin https://www.coindesk.com/norway-listed-aker-to-put-100-bitcoin-in-treasury-reserves-of-new-investment-unit
- Lyn Alden Deep Dive on Bitcoin’s Network Effect https://www.lynalden.com/bitcoins-network-effect/
- Beeple’s NFT Sells for $69.3 million at Christie’s https://www.forbes.com/sites/abrambrown/2021/03/11/beeple-art-sells-for-693-million-becoming-most-expensive-nft-ever/?sh=150320a12448
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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.