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Trader Notes: The Kids Are Alright

Thoughts from the classroom and the trading desk.

Nik Bhatia

Jun 20

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Dear Readers,

Two days and approximately 9.5 hours into my first-ever USC Summer camp, I successfully triggered that light bulb moment in the high schoolers. With mempool.space slowly ticking in the background, I gently introduced bitcoin concepts to capture their attention, but my first course of action was to teach them money. Not just rudimentary “store of value, medium of exchange, unit of account” basics, but I’m talking a Nick Szabo, vampire bat, tally stick, monetary hierarchy, t-charts, and the periodic table of elements what-is-money discussion built up over four sessions and ten hours. And sure enough, upon the realization that bank lending is the source of money growth (I asked the students why there are only $2 trillion in US paper currency yet $17 trillion in US bank deposits), the moment arrived. A sharp young Taiwanese student raised his hand and asked, “If banks can just create money…”—I inappropriately interrupted him but I couldn’t help it, looked over at TBL analyst Demian Schatt, smiled wide, and said “wait for it.”

The student continued, unfazed. He repeated, “If banks can just create money from thin air, doesn’t that devalue the dollar?”

I’ve never quite fist pumped like that from the front of the classroom because the exchange felt like a culmination of nearly a decade of explaining bitcoin and money to others. The kids, I can assure you, are alright. And with some more bitcoin education, they’ll be more than just alright. I proudly told them, “That is why we are all here together. And that is why bitcoin is here too.”

Today, I prepared 10 charts across bitcoin and global macro to reset our orientation on rates, the economy, bitcoin, and how I’m thinking about the investment landscape and its power players, such as the Fed and the executive branch. Here are some rapid-fire trader notes, including our big picture thoughts on bitcoin’s current bull market structure.

Is bitcoin’s next parabolic move starting? Global liquidity and business cycle indicators suggest it may be. Read the latest report from Unchained and TechDev, analyzing how global M2 liquidity and the copper/gold ratio—two historically reliable macro indicators—are aligning once again to signal that a new bitcoin bull market may soon begin.

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Trader notes

Price is truth, but where does the price come from? Simply, price is where demand meets supply. It’s also where supply meets demand. We can never know why the demand arrives—we can speculate, theorize, survey, and even have firm beliefs, but neither you nor I can tell you how much gold’s $3,400 price is individually driven by the demand for beauty, history, space exploration, or a deep hatred for the Creature of Jekyll Island.

Accordingly, we can only observe bitcoin’s price as a function of where the holders meet the newcomers, or where the traders meet the accumulators. Since the advent of regulated bitcoin spot ETFs in the United States, price is simply telling us that demand is outstripping supply. Bitcoin does not go up in a straight line—in fact, we flagged a few candlesticks in early June that signaled a bit of a pause in the rally, but we are seeing a steadiness to the orange coin that we’ve never witnessed before. Yes, the historical realized volatility chart looks magnificent on that front, but when bitcoin fails to go into leveraged overheating, something has fundamentally changed. Seeing short-term holder realized price and the 200-day both approach $100,000 tells us this simply about demand and supply:

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