Bitcoin is getting stronger (within crypto)Also the scale of MicroStrategy holdings and the Federal Reserve trying its best
Welcome to the Friday edition of the Ecoinometrics newsletter. Every week we bring you the three best charts on the topics of macroeconomics, Bitcoin and digital assets. Today we'll cover:
Each topic comes with a small explanation and one big chart. So let’s dive in. In case you missed it, here are the other topics we covered this week: If you aren’t subscribed yet, hit the subscribe button, to receive this email every week directly in your inbox: Bitcoin is getting stronger within cryptoDuring the last two crypto bull markets we observed two phases:
From the bear market until now Bitcoin has seen its dominance go from 38% all the way to now 53% pretty much in a straight line. One way of looking at this (if you are optimistic) is to say that we are still only in the first phase of this bull market. And there are plenty of gains to be had both in Bitcoin and in the larger crypto market. As of now the combined market cap of all crypto assets is something like $2.3 trillion. That’s about the same as the market cap of NVIDIA. So there is certainly a lot of room for growth.
The scale of MicroStrategy Bitcoin holdingsMicroStrategy owns 1% of the Bitcoin supply, about 214 000 BTC. That’s a lot. For scale, only two ETFs have more Bitcoins than MSTR:
And those are ETFs, which means they don’t own the coins the same way MicroStrategy does. When it comes to public companies with a Bitcoin treasury there is no one even close to MSTR. The longer everyone else hesitate to run the MicroStrategy playbook the harder it is going to be to catch up. First mover advantage. At this point you’d need to be Apple or Berkshire Hathaway, both with $160 billion cash on hand, to really compete.
The Federal Reserve is doing its best effort with QTI’m always critising the Federal Reserve for the sub optimal decisions they make. But you have to give it to them that with this QT sequence they are really trying hard. First they did the fastest rate hike cycle ever. And on top of that they have managed to cut $1.5 trillion from the Fed balance sheet. That’s $1.5 trillion out of the $5 trillion COVID expansion. When you look at it on the chart you can see that’s much more aggressive than anything that happened after the Great Recession. And yet… even with that the balance sheet of the Federal Reserve is up $6.3 trillion since 2008. Said differently we would have to stay on this pace of QT for 8 more years to completely reset the clock to 2008. Mark my words, that’s not going to happen. We are more likely to see QT quickly reversed when the US moves fully into a regime of fiscal dominance.
That’s it for today. I hope you enjoyed this. We’ll be back next week with more charts. Cheers, Nick P.S. We spend the entire week, countless hours really, doing research, exploring data, surveying emerging trends, looking at charts and making infographics. Our objective? Deliver to you the most important insights in macroeconomics, Bitcoin and digital assets. Armed with those insights you can make better investment decisions. Are you a serious investor? Do you want to get the big picture to get on the big trades? Then click on the button below. Invite your friends and earn rewardsIf you enjoy Ecoinometrics, share it with your friends and earn rewards when they subscribe.
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Friday, May 17, 2024
Bitcoin is getting stronger (within crypto)
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