Thinking bitcoin will not go exponentially higher is betting a $44 billion empire will fail.
For the last eight months of this crypto nuclear winter, I’ve watched this dance of the red candles on the chart and just grimly smiled.
Instead of continuing to build the $USD value of my portfolio, I’ve realized that’s not the important number. The portfolio value in bitcoin (BTC) is the key and that is still strong — this is a long war, be patient.
This was reinforced a month ago reading about Mr. Sprecher, the owner of the New York Stock Exchange (NYSE).
He went from buying his first exchange for $1 or $1,000 — he says he doesn’t remember which. He used his house as collateral, and built that into a $44 billion empire.
I’ve read the article five times.
A lot of people talk about winning, but few get in the arena. He’s not building Bakkt because he needs more money, he’s building it because he likes the challenge — the thrill of the win.
It’s a feeling that once you’ve experienced it, almost makes the rest of life means less without it. I get it.
Fortune article on NYSE Owner — bitcoin exchange startup
I then circled November 1st on the calendar, which is when the Bakkt exchange goes live with futures contract being physically backed with BTC.
The Fortune article was a call to arms, telling the other institutions they have three months to get into position.
Once Bakkt is live, betting BTC won’t go exponentially higher is betting a $44 billion empire that owns the NYSE and has been a silent partner with Coinbase since 2015, is going to fail at launching a crypto exchange aimed at institutional clients.
Doubt it.
Think about Bakkt having been a silent partner with Coinbase since 2015.
I thought I was brave the first time I hit send on a $10,000 buy order and vaporized money from my bank account into the matrix to buy bitcoin.
But nope, turns out I wasn’t that cool, cause here’s Mr. Sprecher, just quietly in the back of Coinbase xeroxing their entire operation and building Bakkt a year ahead of me in 2015. Just absolute respect for that move.
There are patterns to everything. Ian Fleming said it first – twice is a coincidence, three times is enemy action.
I started looking for other data points, to see if they lined up and if a pattern would start to form.
I didn’t have to wait long.
Three days later on August 6th, Business Insider reported Goldman Sachs was looking at offering a custody solution for investors.
I immediately searched for other institutions looking to offer custody solutions and saw an article I had missed.
On July 31st, Bloomberg had written the 129 year old bank, Northern Trust, was testing proof of concept for crypto custody.
I find it hard to overstate the importance of Northern Trust coming into this asset class.
Northern Trust is a private wealth bank who has never, in 129 years, had even a whiff of impropriety. Their average private wealth client is worth $900 million. They serve 25% of the Forbes 400 wealthiest families in America.
Think about that, have $900 million in your accounts at Northern Trust? Half the clients there have more money than you.
And now they are announcing a bitcoin custody solution.
There’s just no hiding what that means. Institutions are coming, and they’re bringing trillions with them. Get set.
Northern Trust Private Investment statistics
Probably the most talked about ETF proposal in the space is the CBOE ETF. Not really going to say much about this other than the link below is a great breakdown of the proposal. It goes into detail on what makes the CBOE’s proposal vastly superior to the other offerings to date which the SEC has not approved.
On September 8th, Coinbase announced it was joining the crypto ETF arms race and seeking help from BlackRock.
To be fair, BlackRock in the past has said they have no interest in crypto, but we’re talking about a $6 trillion dollar asset manager. They aren’t going to tell anyone what they’re doing before it’s done.
For an example of scale, the entire gross domestic product produced by Germany, the powerhouse of the European Union, is 3.467 trillion (2016).
BlackRock manages almost twice that at $6.3 trillion.
On September 9th, Citigroup, one of the big four banks in the U.S. (JPMorgan, Wells Fargo, Bank of America, and Citigroup) announced it had developed an instrument it was calling a DAR (Digital Asset Receipt).
The DAR would work similar to the American Depositary Receipt (ADR) most institutions currently offer for investing in foreign markets.
Citigroup is currently one of the largest issuers of ADR’s in the world. They have a long established track record at this practice, issuing ADR’s since 1928.
As one of the big four banks in the U.S., Citigroup holds over 8% of total U.S. deposits by itself ($893 billion out of $10.7 trillion).
So essentially Citigroup is going to use a similar strategy for offering bitcoin and other digital assets to their customers in a product which will look and feel very similar to an ADR — which customers are already familiar with and has been used for the last 90 years.
Business Insider — Citigroup Digital Asset Receipts
On September 13th, Mike Novogratz called the bottom of this bear market. He took a screenshot of his Bloomberg terminal and showed the BGCI chart on twitter…don’t read the comments on his post unless you want to lose faith in humanity…People who have no idea the BGCI is proprietary to a Bloomberg terminal, which has a yearly subscription cost of $24,000 were throwing shade at Mr. Novogratz for no other reason than they were just emotionally bearish.
Most people don’t realize that Mr. Novogratz was one of the original backers of his friend from Princeton, Dan Morehead.
Mr. Morehead launched Pantera Capital in 2013, making the call to buy bitcoin at $103.
The Pantera Bitcoin Fund is up over 10,000% now.
Point being, these are data driven, very successful gentlemen who have built fortunes. So when someone of Mr. Novogratz’s stature is taking a screenshot of his Bloomberg terminal and publicly calling a bottom, that’s another data point lining up with the pattern.
Mike Novogratz calling the bottom on the 13th
Also on September 13th, Mr. Tom Lee, from Fundstrat, was speaking at the ETC Summit 2018.
I found their livestream on Youtube and watched Tom Lee’s presentation three times. It begins at 5:05:38.
Tom Lee’s callsign should be SteelRain — always on station with no emotion and accurate data on rapid fire.
He drew some very interesting comparisons against other recessions, showing the important metric was the 100% retracement of the last parabolic move up, not the timeframe it takes to retrace.
The fact that Mr. Lee and Mr. Novogratz were essentially saying the same thing, on the same day, half a world apart. Whoa, we’re danger close now.
So if you’re like me, been in the market for a couple years, great. The best thing I can think to do now is nothing. Keep getting some gains in the gym, and get out and live life. There’s a lot more to it than candles on a chart, and this is a long war.
If you bought BTC at $18k last winter, stay calm. Yeah you’ve been hurt, but you aren’t going to bleed out. November is around the corner. Be proud that you’ve waited out a longer bear market than the Baby Boomers did in 2008. You’re a veteran now.
And if you don’t own crypto yet, but see the value in it, and are waiting for a cheaper point to get in…may your wifi connection be fast, and your exchange not go offline.
You’re going to be in a crowded knife fight with everyone and their mother at $5,000 and below. Look at the PBV (Price by Volume) chart.
Just something to consider. None of this is financial advice.
I’m betting a $44 billion empire doesn’t lose. See you in 2019 — Radigan