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Bitcoin one month after the halving

Also MicroStrategy total performance and the steepening of the US debt

Ecoinometrics

May 24

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Welcome to the Friday edition of the Ecoinometrics newsletter.

Every week we bring you the three most important charts on the topics of macroeconomics, Bitcoin and digital assets.

Today we'll cover:

Bitcoin one month after the halving.
MicroStrategy total performance.
The steepening of the US debt.

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:

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Bitcoin one month after the halving

We are one month into this new halving cycle so I feel compelled to check out how the price trajectory compares with the previous cycles.

On the chart below the current trajectory is the orange line at the bottom left corner. This is just one month out of four years so you gotta squint a little bit to see what’s going on. But take a look.

Bitcoin is doing ok. No crazy drop. No crazy jump.

That’s not surprising. Just in term of patterns, the real growth doesn’t start typically until six months in.

If the macro permits and BTC follows a trajectory within the historical range, one Bitcoin will be worth six figures in 2024. Let’s see how that plays out.

MicroStrategy total performance

You know the crazy thing about MicroStrategy?

From 2010 to 2020 (arguably a great decade for stocks) all MSTR did was basically underperform the NASDAQ. Then for some reason one day Michael Saylor decide is he tired of it. He pivots the company to be a Bitcoin holding company.

What happens?

From the time of their first purchase to now MicroStrategy is up 1 127% (twice as much as BTC by the way). Over the same period the NASDAQ is up 56%.

On the chart below MSTR is in red and the NASDAQ is in blue. Yes, the blue line is NASDAQ, not the horizontal axis. I know from up there with MSTR it is hard to tell the difference.

But I feel there is some lesson in there. Something like that: if you want to get more than mediocre results you need to make bold bets.

The steepening of the US debt

Looking from afar it seems that the US debt is on a parabolic trajectory.

But if you look at it more closely the move isn’t continuous. There are step changes. Some events discrete events steepen the trajectory of the US debt.

Those discrete events are the recessions.

Every time there is a recession the US government finds good reasons to spend more. You gotta stimulate. But the funny thing is that when the economy recovers the US debt doesn’t slow down.

It is getting steeper and steeper.

The US has never run larger deficit than now even though the US isn’t in an official period of recession.

That tells you all you need to know about the scale of debt monetization that’s building up for the coming years. Buying Bitcoin with a long term view on the debasement trade is a no brainer.

That’s it for today. I hope you enjoyed this. We’ll be back next week with more charts.

Cheers,

Nick

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