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I think it’s worth stating that while I own a fairly trivial amount of BTC, I don’t consider myself a major bull. I am still in the process of researching Bitcoin and all of the numerous related areas that feed into comprehensively understanding it, and would suggest that those who have dismissed it from a cursory review might be open to the idea that there is much more going on both contextually and under the hood than it seems at first.

Many of the common criticisms that come up, including those that have surfaced in this thread, are ones that I myself have had in the past. For many of these, I think the criticism misses the mark. For others, I agree. And for others, I am not sure, thus my currently modest position sizing.

To the extent that I have wrestled with some of the criticisms levied above, here are a few thoughts of how I came to terms with them:

-It is important to understand the concept of a monetary premium if one hopes to take a reasonable stab at “valuing” BTC. To be clear, I am a true blue “value investor”, and I will be the first to tell you there is no literal intrinsic value in the sense of hard assets or cash flows. Still, there are a number of assets that exhibit a “monetary premium” well above industrial value, and there is enough consistently in doing so that I think it’s not totally irrational to apply such a model elsewhere. Gold is the best example – something like 75-90% of the price of gold is a monetary premium and only 10-25% is industrial value. Why did this happen and continue to persist for thousands of years? Because there are certain characteristics that make a money/asset “hard” and valuable, and to the extent a given asset serves as a more effective store of value than others, due to the characteristics listed a few posts above, capital has flowed to said assets and supported such a monetary premium.

We can debate where ultimately monetary premiums “make sense”, but there is a very long history of them, especially with gold, but arguably even on stocks (“the S&P is overvalued” [but WHY, perhaps because people are parking capital somewhere in scarce assets even if above intrinsic economic value, because parking it in debasing currencies and fixed income is riskier]), real estate, and bonds.

If one gets comfortable with these things existing and persisting, and if one gets comfortable that BTC has superior money characteristics, then it makes sense that some of that capital would flow to BTC. I haven’t looked at numbers in a few weeks, but at recent valuations, if BTC were to steal all of gold’s current market cap, it would be about $1,000,000/BTC. If they reached parity with each other, BTC would be about $500,000/BTC. If BTC absorbed some of gold and a small slice of real estate/fixed income/equities, it could go well above a million. All of the above are independent of monetary debasement and economic growth, which would surely also boost per coin return metrics if adoption stays static.

That is about the simplest explanation that makes sense to me – “If BTC is a superior money to gold, then it should trade closer to gold’s market cap over time, which is a lot higher than $100,000/BTC."

-If the above point is true and we are in the midst of an adoption process, we should acknowledge that process is going to result in significant price volatility given supply and demand dynamics of a nascent market and all of the pressure of large whales and various regulatory actions, and that the current price is not reflective of BTC’s characteristics itself, but rather its degree of (im)maturity. The same thing applies to something like a growing microcap vs. a megacap stock, or a microcap index vs. the S&P 500.

Gold’s history is somewhat instructive, because while it was in the process of demonetizing other monies, the process occurred much more slowly in a world that wasn’t hyper globalized with connectivity of all major capital markets in essentially real time.

So again, the price volatility is perhaps due to BTC sliding up its adoption curve, not BTC’s inherent characteristics, so judging its ability to be a store of value compared to say the S&P 500 under short time periods isn’t a fair comparison. I did say in my post above that it is a good store of value over the long-term, and if you look at BTC’s price action vs. the S&P 500 over a multi-year period since BTC’s inception ~15 years ago, I think you’ll find it massively outperforms the S&P 500, so again depending on how you slice the time period you can reach a different story.

However, this gets to the crux of my uncertainty, one could argue we just in (a historically unusually long) bubble for BTC and it will all reverse. Perhaps, yes.

But if you go to first principles and say 1) BTC is the ultimate scarce asset that will absorb monetary debasement + economic growth and 2) BTC is currently only trading at at 5-50% of its terminal capital share and thus will grow beyond even the inflation + growth as it absorbs the monetary premium from other asset classers like gold/silver/collectibles/stocks/real estate/bonds, then I don’t think it’s unreasonable to think it will meaningfully outperform the S&P 500 over long periods of time and will serve as a superior store of value.

-Like @Chris said, BTC has several characteristics that make it much more like gold than art (and others), and if you go through those characteristics (durable, divisible, verifiable, fungible, scarce, portable) and compare how BTC ranks to other common asset classes it is conceivable how it could be the apex hard asset.

-To @jacob’s point about USD checking 5 of 5, we may be using the word store of value differently, but USD has massively eroded in value over its lifetime relative to say gold. Holding USD is a losing strategy where you lose meaningful purchase power. USD in particular is an apex currency, which is noteworthy, because when you compare USD to currencies in places like Argentina or many African countries, you can see where BTC can really shine relative to a fiat-based currency, and why for many individuals living in such countries have a stable store of value to park capital becomes an attractive proposition.

I think this is one of the key issues that those of us who live in fairly stable countries struggle with regarding BTC – we don’t see many of the problems with massive inflation, and especially for those of us in the FIRE space, many of us have serious assets in the form of real estate of stocks, so we are fairly immune to the effects of any high inflation periods (e.g. 2020).

But note, to be protected against this inflation we actually have to be invested fairly intelligently and not make big mistakes. It would be preferable to have a currency/asset that would just hold value without having to be a savvy investor. I know numerous people IRL that are very risk averse and have just held lots of cash over the last 10-15 years, and have lost massive purchasing power of their USD holdings. Having a stable currency/store of value would mitigate this.

-I’m not sure I totally understand your point about the USD having intrinsic value, @sky. Yeah, there are a lot of financial instruments that have promises to be paid in USD, but that doesn’t mean USD itself has intrinsic value, it’s just a record keeping method. Say the money supply doubles this year, and now mortgage debt is half of M2. Farfetched (maybe not so much, looking back to 2020), but illustrates the point. The USD is not backed by gold, hard assets, or cash flow.

The US government’s ability to serve its debt is also a different beast than the USD itself – the government has a self-announced ownership interest in all for-profit enterprise, and has “proof of war” in that it can seize other assets. So it’s worth not conflating USD as having intrinsic value with the USA having value.

Mind expanding a bit on that to help me better understand?

-Still, as noted above, I agree with you that it is “speculative value”, in that I refer to an ongoing and persistent monetary premium in the way gold has. That is my big hangup – I am having a hard time determining whether it will continue to move along this pathway.

If so, BTC at $100K is very cheap. If not, there is a long way to go down!

Regarding public interest, I have increasingly come to believe it is more likely to be stable or grow, given various political trends and monetary policies across the world. Again though, I am not certain.

-I have come to disagree with the idea that BTC does not have a monopoly, or at least more loosely a huge edge over other crypto. This is beyond the scope of this post, but BTC is vastly different than many other cryptocurrencies, along the basic divisions of fixed supply (many cryptos do not have finite supply, even ETH), proof of work vs. proof of stake (a huge difference in decentralization and thus security), but critically even for those cryptos with the same finite supply and proof of work model, the enormous hashrate of the bitcoin network which keeps going up. There is no other proof of work cryptocurrency with remotely similar hash rate, and this is what ultimately secures the network and makes it the apex crypto asset.

As was the case with gold vs. silver, previous metals vs. sea shells, and so on, there really isn’t room for a lot of different stores of value, so if you are comparing BTC even to an identical protocol (simplistically, let's say Bitcoin Cash) with less than 1% of the hash rate and developer power and resources being thrown into maintaining and evolving the network, the choice of where to park capital is a no-brainer.

This idea, more broadly, is something I have come to appreciate about BTC – the entire protocol and ecosystem is set up to operate decentralized and without having to trust any specific actor. The incentives of agents in the system support the system itself, and BTC’s massive lead makes the risk of another crypto asset catching up low. I believe this was much less true in the past, but given how the bitcoin network has evolved and overcomes various challenges relative to other cryptos, the gap is substantial now.

-I agree that BTC is not as opaque as some think, but this isn’t a bad thing for an asset seeking to be the ultimate store of value. Why does it need to be perfectly opaque?

To a degree, it offsets the notion that BTC is simply a cesspool used for criminal activity…this just isn’t as easy as it sounds for the reason you said, something I’ve seen discussed by legal enforcement experts – tracing BTC movement is doable as part of a broader enforcement effort for professionals with access to the sorts of tools and information they operate with.

-The idea that BTC is in some sort of competition with USD to me is a bit of distraction. Goes back to currency vs. store of value. I don’t see a world where USD or some other functional currency is gone and BTC dominates as that feasible, but one where USD is how one transacts (in the USA) and BTC is how one stores value (globally). And maybe, maybe, maybe way in future it’s just BTC. Seems like a huge stretch to me, though.

BTC does not need to be a/the dominant currency to be an apex store of value.

-The ledger is public in the sense you can see what keys have how many satoshis, but you don’t know who has which keys barring some unusual situation or a lot more information than publicly-available. So it’s not really true anyone can see your net worth at any point in time.

Still, to the broader point on privacy, if you transact with someone without various more sophisticated techniques there is a record and it can be traced around. I do see this as a downside as functioning as a currency, but less so for store of value where you aren’t transacting with entities who can/want to trace. I think this is solvable, though.

-If you lose a wallet, it’s true it’s gone…but that’s true of other bearer instruments, too. I agree the management of self-custody is a meaningfully more complicated and involved process (probably to be mitigated with middlemen as time goes on, like owning a BTC ETF, $FBTC for example). This kept me away from self-custody cold storage for a bit, but I did want to try it and see what it’s like. It is hard to tease out exactly where this tech lands in the future, as again if we are fairly early in the game, it’s possible everything gets much easier, in the same way that swiping your credit card at the grocery store seems super simple but actually there is a ton of activity running behind the scenes.

I don’t know for sure, but I agree that direct self-custody is a meaningful barrier at present. There are definitely downsides to a decentralized approach.

-It’s true the bitcoin ecosystem requires a lot of hardware and power. This is a pretty involved topic but at a high level, I’d say 1) it’s not as if the current system doesn’t require a lot of hardware and power, so it’s difficult (for me) to do a direct comparison of incremental differences and 2) if BTC allows more financial sovereignty and improves the financial ecosystem by virtue of not having people own depreciating currencies with the distortions of money supply expansion, there are incremental benefits that might somewhat or fully justify said incremental costs.

In other words, to me it’s hard to find the true cost of the current system to compare to the cost of bitcoin system, and I believe that if BTC was mature and stabilized there would be meaningful benefits to all humans (but especially those living in unstable, hyperinflationary countries), so the net cost/benefit is not clear. I’m not arguing it’s for sure positive, but I am skeptical it’s as bad as many say.

-I’m not sure exactly what @delay meant regarding hardware and server farms most of which are in China, but by hashrate the US is #1 by a significant margin (used to be different though with China being #1). Guessing you are referring to the ASICs production? Definitely want to see more dispersed production of these longer-term.

-Like implied by @Chris’ prior post, bitcoin itself is not a static protocol incapable of evolving and adapting. Various layer 2 solutions and features can be built on the base bitcoin layer that can address issues and add functionality, analogous to how the base internet protocol provided a platform for Amazon, Uber, and whatever else to be built. I agree with Chris that these features are likely to migrate to bitcoin over time, rather than having an unwieldy number of systems. Why would anyone really want to be part of such a weaker, more centralized, less secure network?

This point (of bitcoin evolving) is one that I didn’t appreciate for a while. Taking a static view of bitcoin as it stands today is going to miss how it might be in 5 or 10 years. Failing to see its ability to evolve prevents one from seeing that certain issues today are addressable.


I still have a lot to learn and I’m sure I miss the mark in some of the above comments, but I think there is a lot more to unpack with bitcoin than commonly argued.

I first looked at it in 2017 and passed for various reasons (mostly because I didn't have the mental tools to understand it and instead just tried to throw into a traditional "value" investment framework), but after BTC ETFs were legalized and pushed by financial behemoths, governments have moved (not fully there yet) to institute bitcoin strategic reserves, and several corporations have instituted bitcoin treasuries, I simply cannot deny bitcoin is becoming more mainstream. As I said above, I am not a bitcoin maximalist, but still I think there are legitimate arguments for why it could be a good store of value, and to the extent more and more entities decide to buy and hold it, I think the likelihood of it "sticking" go up. This might sound like fuzzy language, but again the more accurate way I think about it is that BTC absorbs other assets' monetary premium, which I do not see as unreasonable at all considering its characteristics relative to other options.

I see it as quite possible it still zeros, but less so after the events of 2024. Time will tell, but in the mid $90,000s, I decided it warranted a small allocation - the probabilities needed for it to make sense at this price level seemed excessively negative, i.e. the expected value was well above purchase price.

Very different from my bread and butter value investing, but I simply have not found any legitimately compelling counterarguments from any sources and it makes sense to me to take a modest position on an expected value basis. I am very open to being wrong here and welcome all criticism and longer-form bearish takes.

I see Bitcoin as a reasonable speculative investment. Certainly better than the roulette wheel, possibly better than NVDA. I have a position in a bitcoin etf and have considered a larger investment in bitcoin. Decades ago I owned a fraction and lost my numbers due to a hard drive crash. That was not the fault of bitcoin, it was my stupidity in not backing up my hash numbers. I am not opposed to speculative investments.

As a currency, I strongly support a currency that cannot be debased by a government or national bank. I like being able to transfer money easily, and travel across borders without the need for currency exchange.

The things that make a good speculative investment make for a bad currency. Price stability is important, people need a reference for the value of things. I don't like having my purchasing power go down because someone somewhere took profits on their investment.

So my question remains, what is the intrinsic value of Bitcoin? What is the value based on? How do I assess whether it is undervalued or overvalued? How do I assess its true value compared to today's market price? Is the value of Bitcoin secured by real property, commodities or buillion?

I am not asking this because I think Bitcoin is a bad investment. I am asking because I am trying to understand in economic terms why the currency is so unstable.

@sky

I very much agree with your wording that it is a reasonable speculative investment/speculation. That’s precisely how I see it. It is not an “investment” in the Ben Graham sense of things, given there is not an intrinsic value backed by assets/cash flows.

Still, I think there is a large range of speculative activities, some of which may have positive expected values. To your point of comparing to roulette.

However, it seems perhaps the big difference in how we view it is that I see BTC primarily as a store of value, not a currency. Its primary use case is as a store of value right now, and as the ecosystem develops and perhaps the price stabilizes, it can be more. I don’t see the price volatility as a big issue, because of how I frame it.

So to repeat myself, to your question, I do not believe there is any intrinsic value in BTC. If you want to take a stab of trying to come up with what levels it may trade at, you could frame it as a store of value whose market cap is based on a monetary premium that captures some % of global capital. As I said above, maybe you say that BTC steals half of gold’s market cap, and that is the end point, maybe all of gold, maybe double gold, whatever you think. That is the method of how I assess what it might be worth today compared to today’s market price. I did the math in my prior post for that very simplistic outcome, but I actually sat down and set a more numerous range of outcomes and probabilities for different % of global capital might park in BTC. And I gave a large % outcome to $0/BTC. You can play around with the numbers and see what makes sense for you. That is how I would approach it.

Regarding why BTC's price is so unstable, I answered that above –

Dave wrote: ↑

Fri Feb 14, 2025 12:46 am

...
-If the above point is true and we are in the midst of an adoption process, we should acknowledge that process is going to result in significant price volatility given supply and demand dynamics of a nascent market and all of the pressure of large whales and various regulatory actions, and that the current price is not reflective of BTC’s characteristics itself, but rather its degree of (im)maturity. The same thing applies to something like a growing microcap vs. a megacap stock, or a microcap index vs. the S&P 500.

Gold’s history is somewhat instructive, because while it was in the process of demonetizing other monies, the process occurred much more slowly in a world that wasn’t hyper globalized with connectivity of all major capital markets in essentially real time.

So again, the price volatility is perhaps due to BTC sliding up its adoption curve, not BTC’s inherent characteristics...

Expanding a sub-point there, small public companies in the same industry almost always trade at lower multiples and with higher volatility than larger companies. Sometimes some of this is explained by risk differences, but not all of it - some of it is just because the asset has not become fully institutionalized and demand for the asset has not "matured" to terminal state, and therefore the same amount of capital buying or selling results in larger % changes than a stock with a larger market cap. This leads to more erratic volatility and the stocks bounce around much more on good and bad fundamental news, on the news of a new investor taking or selling a position, and so on.

The exact same thing is happening with BTC.

sky wrote: ↑

Fri Feb 14, 2025 9:41 am

So my question remains, what is the intrinsic value of Bitcoin? What is the value based on? How do I assess whether it is undervalued or overvalued? How do I assess its true value compared to today's market price? Is the value of Bitcoin secured by real property, commodities or buillion?

To name a few intrinsic values of bitcoin, it is scarce (21 million total), it is decentralized (no central authority or single point of failure) and it allows peer-to-peer transactions (no intermediaries). In terms of over/undervalued, use a metric similar to how you pick stocks? The fact that it is not backed by real property or anything else could be seen as a strength or a weakness. Choose your poison.

sky wrote: ↑

Thu Feb 13, 2025 1:33 pm

What is the intrinsic value of bitcoin? I just don't see it.

The value of Bitcoin is in the network. A winner takes all result is possible. The bigger one crypto gets, the greater the difficulty of using anything else. Given the ease of spinning up a new coin these days, the underlying technology is unlikely to be the differentiator.

Whether the competitive moat of the Bitcoin brand is impervious, remains to be seen. I'm curious enough to pay careful attention, but not confident enough to make a meaningful investment. Speculation and trading are different beasts, from my perspective. I don't have the energy for that.

With a technology on the scale of hundreds of millions of users, disruption remains entirely feasible. Especially if an entity with billions of users, decides it is time. That's the power of a large network. On the other side - 100 million bitcoin users growing to 1 billion could happen shockingly fast. The right bit of viral news is all it takes.

In that regard,

When it comes to the currency of a national (or global) economy, scarcity is a bug, not a feature. Ideally the size of the currency should match the size of the economy. If it's consistently lagging, monetary deflation obtains. If it's consistently ahead, monetary inflation obtains. This in turn affects economic behavior. This was the main problem with gold.

I don't know enough about the technology to know if the supply can be expanded. Note that expansion is not the same as chopping up coins into microcoins.

Governments have a huge advantage in rolling their own crypto because they have the power to assert that "This note is legal tender for all debts public and private". The ability to tax has historically been how currency has come into existence. The king decrees that taxes must be paid in X form. That X form now has a fundamental demand in the economy and the rest follows from there. It would make a huge difference if one could pay taxes in bitcoins or in shitcoins for that matter. However, what is the likelihood of the state giving up monetary control like that? So far only El Salvador has done so. From the perspective of the state, decentralization is a bug, not a feature.

Total noob checking in! Is anyone worried that quantum computing or advances in AI could break the Bitcoin encryption? I suppose if it could do that it could hack every traditional system too. But Bitcoiners seems to especially pride themselves on the security aspects of the currency.

There is an interesting article in this month's Harper's entitled "At the Summit: The Last Days of Davos" which might speak to the fluctuating contexts/fields in which crypto's value may flicker.

The theme of the meeting was "Rebuilding Trust." The lack of a grammatical subject served, if anything, to obscure the "unprecedented" challenges facing leaders of all stripes. Whose trust? In what?...

...Within globalized capitalism's ongoing crisis of declining profit rates, however, new arrivals quickly hit a logical bump in the road: How to make money to change the world, through changing the world, when nothing seems to yield a reliable buck anymore? Their answer seemed to be: Go found a company whose only purpose is to claim to know how to change the world, conjure up an unnecessary crypto subcomponent, host a series of panels at Davos, and hope investors as clueless and desperate for solutions as you are turn up to throw money at it.

As with web1/2, web3 can be forked onto quantum hardened branches. Web3 can conjure whatever rules imaginable to stimulate an economy of abundance/scarcity, deflation/inflation, or time/data sensitivity (i.e. economic engineering). So long as the network can understand and agree to rule executions (e.g. prediction market settlements, external factor tracking, etc).

AI is native to blockchain, and I imagine in the not too distant future if things go smoothly enough that humans will make up a small sliver of the blockchain pie. Automata off exploring the space of possible rule sets grounding down the ladder of abstraction in ways that we will find difficult to interpret.

Smashter wrote: ↑

Sat Feb 15, 2025 10:26 am

Total noob checking in! Is anyone worried that quantum computing or advances in AI could break the Bitcoin encryption? I suppose if it could do that it could hack every traditional system too. But Bitcoiners seems to especially pride themselves on the security aspects of the currency.

The textbook "Mathematics of Quantum Computing" derives a quantum algorithm that does break the Bitcoin signature. However, it's the quantum chips that are the bottleneck here. Engineering good enough chips to do this may happen in as little as five years (unlikely but possible) or as long as never (also possible). There's a lot of unknowns in the field but the algorithm to break bitcoin already exists.

jacob wrote: ↑

Sat Feb 15, 2025 9:58 am

I don't know enough about the technology to know if the supply can be expanded. Note that expansion is not the same as chopping up coins into microcoins.

The terminal supply of bitcoin is capped at 21M, following a pre-determined rate of supply expansion with the final coin to be mined in the year ~2140.

It would theoretically be possible for this to be changed, but the likelihood of the network agreeing to this is effectively zero as this is a fundamental feature of bitcoin to all owners of BTC. Doing so would be a hard fork and unless some extreme, unforeseeable event necessitated a supply expansion, would simply result in the forked coin being sold off and the capital migrating back to BTC (see Bitcoin Cash).

@Smashter

Daylen said it best, but to simplify his explanation, basically the protocol/code/hardware can be adjusted ("forked") to manage upcoming threats.

Step back and think about incentives - this a $2T asset class, of course there is a significant team of technical experts (e.g. Bitcoin Core, but more) tweaking and improving the system, and monitoring for looming threats. The more the price goes up, the more large players have incentive to watch for such things.

This feeds back into my earlier post about bitcoin not being a completely static protocol and setup. It's ability to evolve and deal with things is essential to seeing its potential.

7Wannabe5 wrote: ↑

Sat Feb 15, 2025 10:54 am

Hah, there are definitely a lot of those vibes from the crypto space. Arcade money conjured from thin area with a huge pre-mine and pumped in dumped to enrich the latest grifter. End stage capitalism aura. We saw it this weekend with Argentina's President Milei getting entangled in what seems to be the latest pump and dump scheme of some shitcoin.

It took me a long while to see how bitcoin was fundamentally different from most other cryptos (supply cap, no pre-mine, proof of work, massive hash rate lead, etc.)

I think one can reasonably debate whether the bitcoin network adds value to the world justifying its costs, or if its a solution seeking a problem. But, in my view, conflating bitcoin with various shitcoin schemes or corporates using buzzwords and other meaningless language to drive up their valuation is a misunderstanding.

Dave wrote: ↑

Sun Feb 16, 2025 11:08 am

Arcade money conjured from thin area with a huge pre-mine and pumped in dumped to enrich the latest grifter. End stage capitalism aura. We saw it this weekend with Argentina's President Milei getting entangled in what seems to be the latest pump and dump scheme of some shitcoin.

Shitcoins are the new NFTs. They allow for testing at a slightly higher level in preparation for the tokenization of everything.

Ego wrote: ↑

Tue Aug 29, 2023 8:14 am

It has been an open secret in crypto that the monkey jpg NFT craze is a proof-of-concept test phase where the bugs are worked out using silly but valuable underlying assets on Ethereum.

Ego wrote: ↑

Sun Feb 16, 2025 11:12 pm

Shitcoins are the new NFTs. They allow for testing at a slightly higher level in preparation for the tokenization of everything.

Yeah, I know what you mean. I understand there is a component of trying out concepts and seeing what works in a real market environment, but there are a number of cases that even charitably can't be called that. They are just pump and dumps where insiders walk away with a serious stash of cash and bagholders are zeroed.

I am not losing sleep over these situations - no one is making anyone go out and buy into them, and no one can really think these are serious investment situations. I just think these situations do a disservice to more legitimate crypto projects by smearing the whole space with a bad look.

Dave wrote: ↑

Mon Feb 17, 2025 9:22 pm

Yeah, I know what you mean. I understand there is a component of trying out concepts and seeing what works in a real market environment, but there are a number of cases that even charitably can't be called that. They are just pump and dumps where insiders walk away with a serious stash of cash and bagholders are zeroed.

This stage is not so much about trying out new concepts as it is about testing security at the expense of those willing to expose themselves to being zeroed. If you think about it... it is the perfect way to test security.

I moved this over here because it fits better....

jacob wrote: ↑

Mon Feb 24, 2025 12:11 pm

The 2009 recession was bad because everybody lives in a home and pays rent or mortgage. Dotcom was only bad for investors and the specific industries because the internet wasn't critical to consumerism and industry yet---that bubble was only wrong because it was 10 years early! Similarly, BTC can lose billions in market cap w/o affecting the economy because very few actually hold/use it. The great depression was really bad because everybody uses money (gold) and goods connected to imports (tariffs).

I am no longer counting on the firewall between BTC and the rest of the economy. There are several ways it is leeching into the broader market. I was not particularly concerned by things like MicroStrategy or crypto ETFs, as they were individual bets that could fail without much damage to the overall market. Recent executive orders and proposals have got my attention and caused me some concern.

For one, after the recent executive order banks can now custody bitcoin and use it like they do cash.
viewtopic.php?p=297677#p297677

But my bigger concern is the BitBonds proposal. Bitbonds present what appears to be a simple solution to the problems treasury experiences in a world of rapidly rising interest rates. Integrating BTC into US treasuries may prove very tempting for the savings it will produce. It is especially tempting for someone with a short-term mindset and a desire to cause systemic chaos. The people necessary to make it happen are in place. What would all that volatility do to the backbone of the economy? What would it do to dollar dominance?

So wild to see it grow so much, I remember when it first came out, and all the early posts on 4chan and digg. I was making great ROI on stocks, and didn't trust it, since it was mainly used for drugs and other dark web payments. I still don't invest in it beyond a portion of my Roth in MSTY now.

I don't doubt that it will go past $250k per bitcoin in the next five years.

The Strategic Bitcoin Reserve sounded crazy when it was first proposed. Well, it is now here. When the strategic bitcoin reserve was announced, it was surprising to some that they were requiring the acquisitions to be revenue neutral.

An even crazier idea of Bitbonds (US Treasuries blended with Bitcoin) is now being floated. Bitbonds allow the US government to aquire bitcoin in a revenue neutral way. The crypto industry was one of the largest doners in the last election cycle and they succeeded in installing pro-bitcoin people in regulatory positions as well as electing pro-bitcoin politicians. Sixty percent of house members are pro-bitcoin. The Bitcoin Policy Institute along is responsible for much of these changes. Here is the institute's latest proposal in a short ten minute video.

https://www.youtube.com/watch?v=rx5ZLBI0QrM

Note that they have already begun blending commercial real estate loans with bitcoin to sell to pension funds. This is the kind of stuff that brought about the 2008 financial crisis.

Even with this news, BTC is -16% this month. I know it's after quite a rally, but still I'd expect some uptick.

BTC is mainly traded as high beta risk-on asset rather than a risk-off asset. As such, when the markets drop, crypto drops even more, and vice versa.

For what it's worth, I sold my small BTC position.

I did not change my opinion about its attractiveness (I still believe its expected value is meaningfully higher than present trading price), but I sold due to experiencing cognitive dissonance ("it's not backed by anything"). I like sticking to to simple situations with clear asset/cash flow value exceeding the present price.

Naturally, $1M a coin here we come .