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Bitcoin Thesis

The original memecoin for store of value protection against debasement of fiat currency.

See nowcasting and predictions, who has a consistent, objective analysis protocol to arrive at their investment thesis?

The Core Thesis​

Bitcoin as the "clean trade" - uniquely positioned to benefit from macroeconomic trends:

  • Decoupling from traditional assets: Bitcoin correlations have detached from stocks, developing as an independent asset class
  • Fixed supply: A better alternative to inflationary fiat systems
  • Generational trade: "Short bonds, long Bitcoin"

Capital Flows and US Fiscal Situation​

Significant concerns about US fiscal and monetary sustainability highlight Bitcoin as a potential beneficiary:

  • Foreign capital repatriation: Foreign investors withdrawing capital from US assets
  • Record debt position: US has reached approximately -100% of GDP net international investment position
  • Growing deficits: Fiscal deficit at 7% of GDP, potentially increasing to 8%
  • Yield curve control: Managing debt burdens may eventually require yield curve control

Bitcoin Adoption Acceleration​

Corporate treasury adoption is accelerating globally:

  • Multiple "Bitcoin treasury companies" forming globally, including Nakamoto (a conglomerate of Bitcoin treasury companies)
  • Similar initiatives emerging in Brazil, Japan, and other regions
  • Traditional companies converting cash reserves to Bitcoin
  • Coinbase added to S&P 500 - symbolizing mainstream acceptance

Macro Analysts​

Arthur Hayes​

Arthur Hayes predicts Bitcoin will reach $250,000 by the end of 2025.

This prediction hinges on a fundamental shift in Federal Reserve policy that would increase dollar liquidity globally. The relationship between liquidity and Bitcoin price has a historical correlation coefficient of 0.94.

Prediction Summary​

  • Bitcoin Price Target: $250,000 by end of 2025
  • Primary Catalyst: Fed transitioning from Quantitative Tightening (QT) to Quantitative Easing (QE)
  • Timeline: Fed to ease monetary policy starting around April 2025
  • Key Mechanism: Increasing global liquidity driving investment into Bitcoin

The Core Relationship: Fed Policy to Bitcoin Price​

Fed Policy Change → Treasury Market Liquidity → Global Liquidity → Bitcoin Price

The Liquidity Pathway:

Reduced QT/Start of QE → More Money in Banking System → Higher Market Liquidity
    ↓
Lower Bond Yields → Investors Seek Higher Returns → Capital Flows to Risk Assets
    ↓
Bitcoin (Fixed Supply Asset) → Attracts Disproportionate Capital → Price Increases

SLR Exemption Mechanism​

SLR Exemption → Banks Can Hold Treasuries with Less Capital → Increased Buying Power
    ↓
More Treasury Buying → Lower Yields → Improved Market Functioning
    ↓
Enhanced Liquidity → Money Flows to Risk Assets → Bitcoin Benefits Most

The Supplementary Leverage Ratio (SLR) requires large banks to maintain capital against their total exposure. Exempting Treasuries would significantly increase banks' ability to purchase government bonds.

Global Central Bank Coordination​

Fed Eases Policy → ECB/BOJ Can Follow → China Can Reflate → Global Liquidity Surge
    ↓
Less Dollar Strength → Better Emerging Market Conditions → Broader Asset Rally
    ↓
Bitcoin as "Hardest Asset" → Captures Disproportionate Flows → Price Surges

Hayes states: "This change out of the US will allow the Europeans and the Chinese to print the money that they were going to print anyways. It just accelerates the timeline."

Tracking the Hayes Thesis​

Key Signals to Watch:

  1. Fed Signals: Further reduction in QT pace or complete cessation
  2. Treasury Market: Improving liquidity conditions, lower volatility
  3. Banking Regulation: Announcements on SLR modifications
  4. Global Central Banks: Policy coordination or similar easing signals
  5. Bitcoin Price Action: Breaking above previous all-time highs

Fed Policy Indicators:

  • Fed's balance sheet size (weekly H.4.1 release)
  • Treasury runoff pace
  • Powell's press conference comments on liquidity conditions

Treasury Market Liquidity:

  • Reverse Repo Facility usage
  • Treasury market volatility (MOVE index)
  • Timing of interbank payments

Mark Yusko​

Mark Yusko emphasizes the "ABCD" investment framework (AI, Blockchain, Chips, Data):

  • AI advancements: Models getting "much better at getting actual facts right"
  • Digitization acceleration: Technology disintermediating traditional institutions
  • Quantum computing: Strategic investments from sovereign wealth funds

Market Philosophy​

  • "Volatility is not your enemy" - simply a sign of disagreement about future outcomes
  • Amazon experienced 91% drawdown early in its history with average annual drawdown of 31%
  • "It's the old Darwin - adapt or die"

Forward Guidance​

Related:

Key insights:

  • DAX up 27% YTD in dollar terms - European equities strengthening
  • TLT down 9% in yen terms - US bonds underperforming for foreign investors
  • MicroStrategy up 37% by "arbing the boomer Ponzi scheme" - monetizing volatility with Bitcoin protection
  • AI productivity revolution: Capabilities increasing exponentially, potentially transforming economics within three years
  • Markets as political utility: No longer free markets but function with interventions when imbalances become extreme

Questions​

Profile | Questions

  • How consistent is each analyst's thesis?
  • What principles are expectations built upon?
  • How accurate historically?
  • What would invalidate the thesis?