The secret love of the “silent billionaires”

SODERMALM, STOCKHOLM – I told you this’d be coming yesterday…

I’ve been banging on about bitcoin for a fair while now, but I want to know your thoughts on the matter.

I was wondering how specific I should be with this poll, but have settled on the following simple question to start with. Just click on your answer below and then come back to this email:

Do you think bitcoin has any value?

I’m asking such a blunt question before we get on to any nuances (“How much value?” for example) as there are plenty of folks out there who believe bitcoin is a scam/fraud/Ponzi/stain on humanity, and I just want to know the general vibe of the readership.

I’m very interested to know your opinion, so please cast your vote. Or feel free to be more specific, and drop me a line here: [email protected].

At the time of writing, bitcoin is gazing at the $18k level – on many exchanges, it’s already reached it. As Nic Carter, a high profile bitcoiner, opined yesterday on Twitter “show me on the chart where the tulips recovered three years later and rallied to a new [all-time high] please”.

While bitcoin’s all-time high in price is still $20k, when it hit that level in 2017 the amount of bitcoin in circulation was smaller. This is because bitcoin miners are rewarded with freshly minted BTC for securing the network, and three years later there is now a bigger pool of BTC in circulation. Around the time BTC hit $20k, about 16.75 million BTC had been mined. Three years later, that figure is now 18.5 million.

As a result, the total market capitalisation of bitcoin (BTC price x number of BTC in circulation) was lower in 2017 than it is today. So in terms of market cap, we’re now standing at an all-time high – almost $337 billion. And bitcoin’s outperformance is beginning to turn heads…

Here’s a snippet of what Charlie Morris told his subscribers over at The Fleet Street Letter Wealth Builder about the recent action:

… what is happening is important, and those that roll their eyes, might want to pay attention. Bitcoin is on the move and has broken away from the pack. I have used the JP Morgan factor indices to show the different types of asset behaviour in 2020. I haven’t shown this for a while, but it brings it all home. This week I will update you on bitcoin and show how it fits into the Money Map.

Gold is up there with the momentum/growth/tech trade, which is impressive. Tech (green) is stalling as it seems to be running out of drivers, as I have written much about before. Quality (blue) remains in the doghouse, as rates will struggle to fall from here. The value (red) trade is on the move. Bitcoin (black) has powered ahead.

Asset performance in 2020

Source: Bloomberg – gold (gold), bitcoin (black), quality/low volatility (blue),
top-ranked momentum/winners/growth (green), bottom-ranked
momentum/losers/value (red) rebased to $100 2020 YTD

The billionaire ₿uyers?

I had a chat with Sam Volkering the other day about who it is that’s driving this rally – for as I mentioned on Monday, it really doesn’t look like this price action is being driven by the everyman seeking an expensive thrill. It was during a little podcast we do outside of work called Booze, Booms & Busts where we drink some beers we haven’t tried before, discuss recent market events, and just shoot the breeze in general.

The culprit we reckon is responsible for the BTC rally are the deceptively named “family offices”. These are effectively private hedge funds set up to manage the fortune of one or only a few individuals. They’re not open to the public; they’re not interested in hoovering up as much capital as possible so they can cream management fees off the top.

Sam calls them the “silent billionaires” – these guys don’t advertise, nor do they brag about their investment performance. You’re not going to see them appearing in the financial press or the news to discuss their strategy.

All they’re interested in is protecting and growing the capital of their patron. And they’re not so restricted in the assets they can buy and the trades they can take, like mainstream financial institutions. They don’t need to care about PR, and they’ve a reputation for being willing to take an unconventional approach to the markets if there’s treasure to be found in doing so.

Could it be these shadowy servants of capital who have taken a fancy to BTC? Sam’s spoken to a few such outfits who have confirmed they have an interest in bitcoin – and I suspect the phenomenon is broader than it might appear.

Until tomorrow,

Boaz Shoshan
Editor, Capital & Conflict

Category: Uncategorised

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