“I Might Pump But I Don’t Dump”
Another incredibly rocky week in the land of crypto. Coming into the week things certainly felt bearish. From my perspective, it felt as though market participants were borderline exhausted from fending off the FUD. The feeling quickly turned into reality as we saw the price of Bitcoin fall below $30k and remain there for an excruciatingly long time — what? One day is like 1 month (nowadays) in crypto years!
Thankfully, we had a trick up our sleeves as what ended up being probably one of the best (virtual) Bitcoin conferences was set for Wednesday. For the hodlers it was pure hopium waiting for Cathie Wood, Elon Musk, and Jack Dorsey to take the stage. While we were waiting, the price of Bitcoin started to improve in anticipation of a positive outcome. Truthfully, as dumb as it seems (from a low time preference POV) I had a knot in my stomach thinking about what Elon might say… I’ll touch on this in a bit.
What we saw at the desk & more…
Running a brokerage is literally a hedge on my portfolio. It’s kind of sad in a way but volatility is definitely our friend — even on the downside. I don’t want to use the phrase “panic selling” but we had clients “take some chips off the table” on Monday and Tuesday as the technicals were looking bleak to put it nicely. At the same time, we had clients with cash on the sidelines move in below $30k. So, it was a pretty good week for us.
Thankfully, there are massive differences between previous “crashes” I’ve experienced and this recent move down. For every cycle that Bitcoin endures, investors understand that Bitcoin goes through these cycles. They can either try to trade it (time it) or decide to buy and hold (smart move) through the cycles because there’s enough of a historical pattern to be confident that it will bounce back and make new highs.
Bitcoin has never faced adversity like it has this cycle — not even close. It’s actually pretty mental when you think of it. One of the most powerful nations in the world that had the majority of “control” over the network literally banned it. Shut it down completely. If Bitcoin was a starfish it lost an extremity or two, kind of lived normally and within a couple of weeks it was back to normal like some alien life form.
“Bitcoin is going to zero” is no longer a thing.
Let’s have the talk — the ₿ word
Agh… can’t lie when I saw the name of the conference I kind of felt like jumping out of my skin… similar to Elon after he saw the tweet from Jack Dorsey.
Honestly though… the conference was pretty sick (like, in a good way). I’d say that it gave the Microstrategy Bitcoin for Corporations conference a run for it’s money (although nothing can top the Michael Saylor/Ross Stevens intro).
So, back to my bags feeling heavy over the knot in my stomach thinking about what Elon might say…
Cathie Woods started the discussion off and Elon’s body language was not good.
Jon and I had multiple screens going between working, watching the discussion and watching how the price reacted at the same time.
Just so you all know, it definitely bothers me that I’m sitting here late on a Thursday dissecting Elon’s body language, whatever.
The conversation was actually really good (positive). It’s not like you’re going to learn much other than what a couple of billionaires and Cathie Wood, have to think about Bitcoin but it went over about as well as I hoped it might.
- Tesla, SpaceX, and Musk himself all own bitcoin. Musk also owns “some” ETH, and DOGE with a significant majority in BTC.
- He has never sold any of his BTC — in Musk’s words, “If the price of bitcoin goes down, I will lose money … I might pump, but I don’t dump … I would like to see bitcoin succeed”
- Tesla will accept BTC payments again in the near future. He says that at or above 50% clean mining (with a trend to increase that number), Tesla will resume accepting BTC.
- He said we are in need of a monetary system that is not fraught with “errors” (for example, fraud, theft, government interference in currencies, etc.). As Elon aptly puts it, “money is fundamentally an information system and it makes sense to support a solution that improves the “quality of information in which we conduct the economy, and BTC is a candidate for that”.
- There is no secure monetary system for countries and economies across the globe who desperately need one — bitcoin solves this.
- From a corporate point of view, to conduct business globally, you currently need to deal with each country’s financial systems individually (country by country) — making it inefficient, costly, and slow. BTC enables access to the global economy instantly.
- Dorsey said, “BTC can put to use all of the ‘wasted energy’ that is currently doing nothing. Being able to convert that energy into a secure and sound money system for the planet is a worthy tradeoff in his estimation.”
- Dorsey supported, and was open to, Elon’s idea of Twitter accepting BTC as a form of payment from advertisers.
- When asked about what he thinks bitcoin will ultimately accomplish, he answered, “my hope is that it creates world peace, or helps create world peace”.
Cathie Wood: Bitcoin and ESG (Environmental Social Governance)
- Wood pointed out the massive movement in the institutional world to embrace ESG
- Environmental: Bitcoin will outperform the traditional gold and financial sector in terms of environmental friendliness. In many ways it is already outperforming in this regard, and it will only get better.
- Social: Many institutions currently think of ESG as focused on diversity and equity (pay equity, etc.). However, BTC goes much deeper than that, allowing access to payment technology globally without friction (remittance for example). There are many countries in the world that are incredibly dependent on remittance for their GDP (Tonga 37%, El Salvador 24%, Nepal 24%, and the global remittance economy is over $700 billion). Therefore, by saving people the current fees of 10–30% on the $100 (for example) they are sending back to their families, that 10–30% can now land in the hands of the people it was intended for — thus making this is an example of social responsibility
- BTC will enable economic empowerment for over 4.3 billion people globally who are currently living under authoritarian powers with no access to stable banking, living in double or triple digit inflationary currencies, and experiencing crippled purchasing power. BTC solves this, thus providing another worthy example of its beneficial social impact.
- Governance: The transparency of the bitcoin ecosystem, with its open ledger technology, contrasts starkly with the opaqueness and presence of hidden toll takers of the traditional financial world.
Key takeaway: Elon confirmed that SpaceX has BTC on it’s balance sheet.
Here’s a link to to watch the full program: https://www.thebword.org/c/track-2-Bitcoin-As-A-Tool-For-Economic-Empowerment
If you want to dig a little deeper, I suggest watching the experts on the other tracks discuss topics like demystifying Bitcoin, supporting the developer ecosystem, securing the network, regulations, and preserving the Bitcoin ethos here: https://www.thebword.org/c/the-b-word
In case you missed it…
- FTX Raises $900m at $18bn valuation https://www.reuters.com/technology/crypto-firm-ftx-trading-raises-900-mln-18-bln-valuation-2021-07-20/
- JPMorgan is first big bank to give retail clients access to crypto funds https://businesshala.com/jpmorgan-just-became-the-first-big-bank-to-give-retail-wealth-clients-access-to-cryptocurrency-funds/
- Goldman Sachs reports nearly half of it’s family office clients want crypto https://www.theblockcrypto.com/linked/112178/goldman-sachs-reports-nearly-half-of-its-wealthy-family-office-clients-want-to-get-into-crypto
- Crypto miner Core Scientific going public via SPAC https://www.cnbc.com/2021/07/21/cryptomining-operator-core-scientific-going-public-via-spac.html
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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.