Bitcoin vs Traditional Assets

1} Bitcoin started almost 15 years back and has been running ever since. It's going up in value against everything and it gets interesting

Gold is so distributed that governments can't literally keep track of your gold. It is stacked in a house, put in a bank, worn as a jewelry, gifted in weddings. It's so valuable yet so omni present and there was a time when it was used as a preferred payment mechanism as well, it flows from the mines then to processing and finally finds it way to banks, institutions and retail.

Energy used to mine gold makes the metal precious along with other factors as well. All this is the physical realm, one that everyone understands. Governments can control this realm through law and order, institutions setup and necessary regulation.

Now comes this new invention in a digital world which is relatively new with new rules and ways of working.

Wanna guess what it is? The divergence starts with the physical presence transforming to a digital presence. While we are still figuring out this world, their is a payment system running in parallel via code and decentralized set of nodes.

No one knows who created it, so the basic foundation is anonymous, perfect recipe for something that can be disruptive: Digital, Anonymous and where Code is law

What if I told you the compounded returns over the last 10+ years have been massive!!

2} What makes it so special? Let's look at bitcoin from the angle of demand and supply which specifically makes it a very unique asset

How many people know how many bitcoin there's ever going to be? Its 21 million

How many people in here know how many bitcoin come into the market every day? Its 6.25 BTC every ~12 mins

And so if you know what supply is going to be, then you only have to understand what demand is doing. Is demand increasing or decreasing?

Bitcoin's survival, from a technology standpoint is in the decentralization, but the resilience of value ends up being in this idea that the fixed supply only has to have increasing demand over time in order for the price to continue to grow

And so when you see that, that's when it feels no different than real estate. Fixed supply of land, and land has been valued over thousands of years across generations. I think the biggest takeaway is, the idea that in traditional assets, you have to think about both sides of the coin.

And the reason why scarcity is so interesting is because it drives the price of any asset. This is a heuristic that becomes more important in the digital world. And the returns over the past 15 years show that, over 100% is massive from any standpoint, even if the returns diminish they massively outperform any other asset class

FEW GET THIS

The global cryptocurrency market cap today: $1.47 Trillion

Daily change: 0.86% | Yearly change: 66.64% 

Bitcoin (BTC) is the largest cryptocurrency with a market cap of $726 Billion.

Weekly change: 5.24% | YTD change: 124.04%

Another important metric is Bitcoin dominance which can be used as a rough indicator of the relative strength of Bitcoin versus other cryptocurrencies. A high Bitcoin dominance means that Bitcoin has a large market share and is potentially more influential in the overall cryptocurrency market and vice-versa.

Bitcoin dominance: Current Year: 51.39% | Last year (Nov 2022): 38.46%

The market sentiment has gone back to greed levels with Bitcoin touching $37k this week

Note: The data used is based on metrics like Volatility, Surveys, Bitcoin Dominance, Social and Google Trends. Source: Coinstats

Let's have a look at Ethereum supply changes post its merge to a PoS blockchain from PoW.

The significance of the chart - understand how the supply of Ethereum is decreasing post the merge, which means “deflationary economics” for the Blockchain

Supply change since merge POS -262,212 ETH

The graph highlights POS issuance since the merge. Impressive numbers, look super bullish for ETH long term given the supply of ETH is not growing as before

Michael Saylor’s Massive Bitcoin Bet Crosses $1B in Unrealized Profit Saylor’s business software company, MicroStrategy, held more than 158,000 bitcoins as of Friday.

Bitcoin Fund Holdings Hit All-Time High as Spot ETF Excitement Entices Crypto Investors Digital asset funds surpassed $1 billion in net inflows this year, with money overwhelmingly flowing into BTC-focused investments, CoinShares reported.

And now the funny part,

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DISCLAIMER: None of this is financial advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. Please be careful and do your own research