As it stands today, bitcoin represents roughly few basis points of all assets, and roughly 10 basis points of total tradeable assets. Bitcoin is still a niche thing.
In the next decade $230 trilion dollar worth investment will need to find new investment. Assuming a small percent of this will huge base will flow to bitcoin we can see double or even triple digit rate of return per year.
It's a hedge against bad governance like gold, but it is harder (Bitcoin is the hardest asset in the world and the stock-to-flow ratio will be infinite), with much bigger upside because it's in an early life stage. (You can go to zero, but the upside is indefinite, it has a huge asymmetry, a powerful investment concept).
Let's see what is happening these days in the world, seperate the signal from noise and see clearly.
Most important trends today, in the beginning of the new decade:
Monetary/Economic:
- Central banks policy: Decreasing interest rates and rapidly increasing monetary base. (Throughout the history we can positive correlation in the price of gold and monetary base, that will be true for bitcoin as well.)
- Fiscal dominance in the Western world's policy. (Goverments will spend a lot of money, debt will increase)
- Questionable future of dollar as a reserve currency as US share of world GDP declines. (This is a longer term (15-20 years+) trend, we are nowhere close to the end of dollars reserve currency status, but it's imortant to consider as well.)
- Huge inflation of financial assets (Bond, equity prices are already record high, future yields are somewhat limited, which is great for bitcoin)
- Disinflation in CPI terms and slowing velocity of money. (Bad for economic growth)
- Deflation of wages (We can expect more aid and "stimulus checks" )
- Debt-liquidity spiral, solvency issues of corporations. (There are a lot of indebted, zombie companies in the US and the rest of the world, policy makers won't let them go bankrupt, because the dominoes would start falling, so that's another factor with points to more expected liquidity)
Political/Social
- US - China superpower competition and deglobalization. (It could be more difficult in the future to move financial assets in a bipolar or trippolar world, bitcoin helps, also US will print a lot to maintain it's military superiority in the Indo-Pacific)
- Technology, monopolies and it's job/small business destroying effect (Again we wil see more paychecks straight to people's pockets and small buisnesses)
- Wealth Unequality (For a lot of people it will be a peaceful revolution against the system)
- Political populism, Social unrest is on the table - Bitcoin is great hedge against it: someone could hold a knife to your throat and they still couldn't take your net worth in minutes. Also governments can't confiscate bitcoin, it's totally decentralized, they would have to kill the internet to stop it)
- Ageing society in the western world and the incoming pension fund crisis. (The average public pension plan is assuming a 7.22% annualized return going forward. I seriously doubt this target will be met. Older people will increasingly look for store of value options.)
All in all i think in the year of 2020 every trend helpful for bitcoin. Lots of politicians/CEO/coproration and institutions buying it up, and they have a huge sway on policy makers, The smart money/macro investors are buying it up right now which is also a good indicator that buying bitcoin is a great opportunity and it also has a huge network effect so other cryptos will have an impossible task go dethrone it.
This is a rare event in history, we are in crossroads and in the middle of it, there is only one thing: bitcoin. I've never seen an investment opportunity like this, i have to agree with Raoul Pal, he said "bitcoin is the world's most pristine asset", don't miss this once in a lifetime opportunity.
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