Bitcoin Observations
This is NOT investment advice.
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Dollar Fade?
BofA says everyone is already all in, yet we opined in a prior note that perhaps the greenback just completed a sparkling 5 wave bullish move. Now what? This reminds us somewhat of the bond market front running massive easing . . . . . . only to do JPow's job for him and help lower rates in a front running rally of epic proportions. Then yields started rising aggressively WHEN the Fed cut.
DXY now faces perhaps initially more bark than bite from tariffs and a chart rolling over in the short and intermediate term perhaps. The biggest issue is still the following: emerging markets loaded to the gills with USD denominated debt get smoked when the dollar rises. The Fed is like the bookie that wants the client to stay alive and keep betting (even though the bookie knows the guy will never pay off everything). Fed can't kill other economies. Makes life tougher in the end.
Tornado Ran Through Here
A U.S. Circuit Court of Appeals ruled that the Treasury acted beyond its reach when sanctioning the Tornado mixer. Regardless of whether one agrees with services like Tornado, to me this is useful information from the standpoint of freedom and the heavy hand of the Federal Government. More signal suggesting the climate is much more favorable now.
MARA and Coinbase
Both self-serving yes, but personally I don't care. We see the MARA CEO out pushing a plan to get all 50 states to adopt a reserve in America, and the CEO of Coinbase is at the WEF pushing Bitcoin and crypto. Both are directly and indirectly talking their own book, but to me I focus on yet again more evidence of the regulatory and political climate and risk level improving. Members of the private sector capable of facilitating the so called Strategic Bitcoin Reserves out there talking it up and meeting with the new administration. We can put 2 and 2 together and see where this is going.
Luxor Annual Review
Luxor put out a very nice recap of 2024 in the mining business with tons of charts and data, so if inclined you may want to take a look. The snapshot below highlights the challenges of mining overall the last couple of years. One wonders if/how/when hash price and transaction fees might join the party. Time will tell.
Should one buy more machines, or avoid that and just buy forward hash? Should one sell their machines (and endure the transaction costs) or simply sell their forward hash? These markets can be used for beyond hedging and as a way of self-financing, so I will be very closely monitoring these for their market depth, clarity, and the level of tightness and depth in the pricing and trading. A bit immature now and opaque, but I expect these to develop extensively over time. This is the new derivatives trading pit for oil.
SAB 121 Repeal
Industry participants are anticipating a potential repeal of the troublesome obstacles firms face when trying to work with Bitcoin and the custody issue in particular. This is a very big deal, similar to the FASB issue. When FASB flipped, now all of a sudden the CFO responds to emails asking about adding BTC to the balance sheet. When the Fed lowers ST rates the CFO will respond to those emails even faster.
SAB 121 is an albatross preventing TradFi and NewFi from moving forward full speed. Bullish if progress made here.
Added Machines
Added a handful more to go along with forward hash. No financing. All cash acquisition.
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