Gather all ye faithful. Bitcoin: a portrait of perspective.
Gather round all ye faithful. Thine time has cometh. The night is nigh to fall, to the rise of an orange-drenched horizon ready to flood the floors of Wall Street and TradFi.
So grab your bull by the balls, and prepare yourself for more degeneration than you’ve ever witnessed.
Now let’s start with the customary blah blah: This is not financial advice. I am not qualified to give you financial advice, and frankly to be honest neither are most of your politicians and agencies. So…… ok. Here we go:
I Get Asked This a Lot
Am I bullish? No. I’m MINATAURISH.
After years of the “agencies that shall not be named” running us through a myriad of mazes of madness… we’re here:
Here’s the only fact you need to know:
A BITCOIN ETF IS COMING.
It DOESN’T matter if it’s this week (and I think this week is highly likely — not financial advice, just a vice for adding advice)… what matters is that you have to be living in ignorance to not believe it’s coming.
Like the clicking of fingers in a bejeweled wish-fulfilling cosmic gauntlet… or Dorothy’s ruby red heels… our moment has come manifest.
Hold onto your tinfoin hats. We’re going for a ride.
The following are my views, stitched together into a 30k view. Take is as you will. It’s where my mind is at, and that’s good enough for me. Again: this is mostly hypothesis based on facts we have gathered.
Let’s gets started with: What has driven the incredible runs of previous cycles in crypto. Why is this one different… or is it?
The pure fact is that before the last 4 year cycle, the right-translated incredible gains were driven internally, from within the crypto economy.
It was pretty much the same OGs moving cash around. It could be said that the 2014 cycle had a lot to do with the Ethereum and ICOs. That definitely attracted some new retail money, but mostly it was people and frens that were swimming in crypto-whale infested waters.
The next cycle had a HUGE differentiator: For the first time, we got a taste of what it could look like if money came in from outside the crypto economy/ system.
- The world’s wealthiest man, Elon Musk and his company Tesla put Bitcoin on its balance sheet. 1.5 billion dollars of sweet BTC was added to Tesla’s balance sheet. WOW. It became clear, that companies may want to hold this incredible asset on their balance sheet. (https://www.cnbc.com/2021/02/08/tesla-buys-1point5-billion-in-bitcoin.html)
- Tesla then announced that they would accept Bitcoin as payment for Teslas!
- Then a publicly listed company Microstrategy, bought over 21,000 Bitcoins as a way to fight inflation in June 2020. They didn’t stop there. They JUST KEPT BUYING MORE. https://www.theblock.co/linked/74534/microstrategy-becomes-first-listed-company-to-buy-bitcoin
- The cherry on the top? In 2020, El Salvador announced their plans to make Bitcoin legal tender… and in 2021, it actually happened with their president Nayib Bukele accumulating Bitcoin on the country’s books. This meant that EVERY business in El Salvador would have to accept BTC as payment for products and services by law. https://www.npr.org/2021/09/07/1034838909/bitcoin-el-salvador-legal-tender-official-currency-cryptocurrency
These three events (supported by other more minor ones) shook the firmament of TradFi. Governments across the globe got a huge wakeup call: Crypto was here, and here to stay. This was the tip of the spear. The thin edge of the wedge that would bust open the doors of global finance.
It was the first time that we got to see the sliver of possibilities of what could happen when crypto would achieve mainstream adoption.
2024 heralds the next leap in crypto’s evolution… before the last cycle… it was just natural steps in a set direction.
For true global adoption to happen in TradFi, there’s catch:
Sovereign wealth funds, pension funds and money managers can’t touch these assets.
Well why is that a big deal?
Because everything you have seen to date is funny monopoly money trading hands. To paraphrase the words of Kevin O’Leary: “You think a Trillion Dollars is a lot of money? It’s a nothing-burger when soveriegn wealth funds can invest in Bitcoin.”
What’s “Real Money”, Precious?
A sovereign wealth fund (SWF) is a state-owned investment pool composed of money generated by the government, often derived from surplus reserves.
Here are some of the biggest:
As of the last update in April 2023, here are the top 10 sovereign wealth funds by size, along with their approximate values:
- Norway Government Pension Fund Global (Norway) — Approximately $1.3 trillion
- China Investment Corporation (China) — Around $1.2 trillion
- Abu Dhabi Investment Authority (United Arab Emirates) — Estimated at $829 billion
- Kuwait Investment Authority (Kuwait) — About $692 billion
- Saudi National Bank’s Public Investment Fund (Saudi Arabia) — Roughly $620 billion
- Government of Singapore Investment Corporation (GIC) (Singapore) — Close to $545 billion
- Temasek Holdings (Singapore) — Approximately $403 billion
- National Council for Social Security Fund (China) — Around $348 billion
- Qatar Investment Authority (Qatar) — Estimated at $300 billion
- Hong Kong Monetary Authority Investment Portfolio (Hong Kong) — About $243 billion
Pension Funds? Here are some to chew on:
- Government Pension Investment Fund (GPIF), Japan: The GPIF of Japan is typically the largest pension fund in the world, with assets exceeding $1.5 trillion. It manages the reserve funds of the Japanese Public Pension system.
- Government Pension Fund (Norway): Also known as the Norwegian Oil Fund, it’s one of the world’s largest funds with assets around $1.3 trillion. It’s a sovereign wealth fund into which the surplus wealth produced by Norwegian petroleum income is deposited.
- National Pension Service (South Korea): South Korea’s National Pension Service is one of the biggest in the world, with assets in the range of $700 billion. It’s a public pension fund that covers all Korean citizens.
- Federal Retirement Thrift Investment Board (United States): This fund manages the Thrift Savings Plan, a retirement savings and investment plan for federal employees and members of the uniformed services, with assets around $600 billion.
- ABP (Stichting Pensioenfonds ABP, Netherlands): ABP is one of the largest pension funds in terms of assets, managing approximately $500 billion, primarily for government and education sector employees in the Netherlands.
- California Public Employees’ Retirement System (CalPERS, United States): The largest public pension fund in the U.S. with assets around $400 billion, it provides retirement and health benefits to public employees in California.
- Canadian Pension Plan Investment Board (Canada): This fund manages the Canadian Pension Plan, a social insurance program, with assets over $400 billion.
- National Social Security Fund (China): A significant pension fund in China with assets estimated to be over $300 billion.
- Central Provident Fund (CPF, Singapore): Singapore’s comprehensive social security savings plan with assets exceeding $300 billion.
- Employees Provident Fund (EPF, Malaysia): One of the largest in terms of members and assets, managing over $200 billion, primarily for private sector workers in Malaysia.
Money managers?
As of April 2023, the total amount of wealth managed by money managers globally, also known as assets under management (AUM) in the asset management industry, was estimated to be around $100 trillion.
What you need to know:
NONE OF THESE 3 (Never mind the banks and others) can recommend a crypto asset to their clients or invest in one because they are not regulated assets. If a money manager recommends Bitcoin to a client, they will lose their lisence and probably go to jail. It’s ILLEGAL.
A Bitcoin spot ETF gives all of these the ability to invest into Bitcoin. Comprendé? We just haven’t seen REAL money in crypto yet.
Every money manager around the world can recommend Bitcoin once the approval happens. Let the good times roll.
OK. So have we seen this before and what the heck is a Spot ETF anyways?
A Spot ETF, or Exchange Traded Fund, is a type of investment fund that tracks the performance of a specific asset or group of assets and is traded on stock exchanges, much like individual stocks. The “spot” in Spot ETF typically refers to the immediate delivery price of an asset. This term is often used in the context of commodities or currencies, where the spot price is the price at which the asset can be bought or sold for immediate delivery.
In the case of a Spot ETF, the fund might be designed to track the spot price of an underlying asset. For example, a Spot Gold ETF would aim to track the current market price of gold. This allows investors to gain exposure to the price movements of the asset without the need to physically own or store it. Spot ETFs can be found for a variety of assets, including precious metals, oil, currencies, and even cryptocurrencies in some cases.
It’s important to note that Spot ETFs differ from futures-based ETFs, which are based on the prices of futures contracts rather than the spot price of the asset. Futures contracts are agreements to buy or sell an asset at a predetermined price at a specific time in the future, which can lead to different price dynamics compared to the spot market. (Thanks ChatGPT).
So where did we see this before?
The first spot gold ETF, SPDR Gold Shares, was listed on the New York Stock Exchange in November 2004. Following this listing, gold prices experienced a significant increase. In November 2004, gold was trading at around $430 per ounce. By the end of 2007, its price had doubled, and by the end of 2011, the price of gold had surged more than 300% to reach $1,800 per ounce. This dramatic rise in gold prices was attributed to the introduction of the ETF, which provided investors with a new way to gain exposure to the commodity without having to buy physical gold directly. (source: https://beincrypto.com/gold-price-pumped-etf-bitcoin-follow/)
The key difference? Gold had been around for a VERY long time as part of the system. Bitcoin is barely getting started by comparison.
Ok. Stop. I can only get so erect. No, don’t stop.
Oh, I won’t stop. I’m just getting started.
The total market cap for gold is around $10Tn.
The retail market cap for gold is around $2Tn.
Bitcoin market cap is around $0.883TN today.
Speaking recently with some of my OG private equity pals (mostly post 60 years old) their view is that once Bitcoin breaks above the $2Tn market cap for retail gold, and retests that level, establishing it as a floor… that’s when the game is on. They will see Bitcoin as a real contender to gold, and that’s when insane levels of money flood in. From there, it’s a heartbeat to $5TN MC.
SUPERCYCLE: The inevitable cherry on the top
There is a famous saying: “Doing the right thing at the wrong time, is still doing the wrong thing”.
In 2021 the now disgraced Zhu of 3AC, postulated and promoted the likelihood of a “supercycle” in crypto. He was eluding to the huge changes listed above, and their knock-on effects extending the traditional 4 year market cycle.
He wasn’t totally wrong theoretically, but his timing and premises were cooked. For a supercycle to happen, the only thing that will kick this asset class into a deviation overdrive up the parabola, is the introduction of the spot ETFs. You need enough money coming from outside the system. The Spot Bitcoin ETF is the start of that.
Hot on it’s heels we can already see the Ethereum spot ETF applications. They key difference however is that $BTC never had an ICO (Initial Coin Offering) like Ethereum did. This could skew the results somewhat, but not for long. At best this could be a delay tactic… because the Bitcoin spot ETF also unveils a blueprint for what the SEC will look for in order to approve a spot ETF. As it is, the fact they allowed a futures ETF already is laughable… and shows that they will play the game to their timelines not ours.
Nonetheless… once the ETH spot ETF hits, I expect a $LINK, $AVAX, $SOL and $XRP to follow in hot pursuit (not to mention at least Chainlink also moving for a IPO. Potentially 2 others as well.)
These events could completely set off a supercycle, skewing this cycle into a parabolic deviation out of the set “channel” charts you’ve seen shared everywhere. (I think Peter Brandt was right about the parabolic rise of Bitcoin, but his timing was wrong.)
When this supercycle hits, all bets are off the table. The presence of TradFi, degens and China will show you a market the likes you have never seen.
(wait. Did i say CHYNA??)
China, my china.
I predict that within the next 6 months (likely earlier) China will unban Bitcoin.
Here’s my degenerate thinking:
China, as a country, has a history of banning things so that they can get an asset they can see coming as a global norm, under government control. This time is no different.
Banning something a few times to prep the market and shake things up allows an entity like this to instill psychological, deep programmed fear. It also allows them to create dips in markets to accumulate that asset.
But, as it always follows, the “big ban” really hits eventually. It landed in September 2021, and we saw BTC miner flee in short order, while videos were shared across social of arrests, and confiscation and destruction of expensive mining equipment.
Yet… today this is what’s happening:
As of Sept 2023, 21% of the Bitcoin hashpower still comes from China. https://buybitcoinworldwide.com/mining/by-country/
21%!!!! Banned? Yeah, right.
But that’s not all.
👉 CHINA HAS SINCE RULED THAT BITCOIN IS PRIVATE PROPERTY (https://beincrypto.com/chinas-crypto-rules-legal-recognition-property/)
Ok. So let me get this right… in China:
- You can’t own or mine $BTC
- “Someone” is still mining and represents 21% of the network hashpower
- It’s legally private property
Color me “skeptical”. In fact, I’m calling outright bullshit. What I see happening is that they want the government to be a major power and owner in the network and asset, with a “legally sourced” Bitcoin, soon to be released.
Retail: But muh Bitcoins = crypto.
When the ETFs hit the trading floor, retail will do what they have always done: APE.
They won’t care about the restrictions that money managers have, or that ALL the new BIG MONEY will flow into Bitcoin and Bitcoin alone (till other spot ETFs are approved).
All they will hear is: Wall Street, Government Funds and Pension Funds are buying “Crypto”. Of course this will be fueled further by existing crypto holders selling their $BTC profits to buy more $ETH and other alts.
The great crypto gold rush will be upon us and initially, fool’s gold will trade at a premium to gold as the frothiness of fomo fills the air.
A parting thought:
It doesn’t matter if the BTC spot ETFs are coming this month or not. The fact is: THEY’RE COMING. In fact, some would argue… they are already here and that Blackrock, Citadel, JPM and their kin have been accumulating for some time. I believe this wholeheartedly to be true.
There will be a massive supply shock.
The season to follow will be filled with “spray and pray” and “I’m a genius” moment. Don’t let this get a hold of you. Pick some winners. Resist over-trading.
If you want some fantastic analysis I strongly recommend following the Twitter account of our portfolio company: https://twitter.com/Altcoinist_com led by the co-founder of Bitcoin.com and a stellar team including one of the core ETH code contributors.
I also strongly recommend subscribing to BitcoinLive (I have no referal links/ fees) who have some of the best traders in the world teaching you how to assess charts. I also wholeheartedly recommend joining Bankless DAO subscribing to their amazing platform.
If you’re looking to get into premium early venture capital crypto deals alongside our venture capital fund’s investment please sign up for Excelsior www.xlsior.com
Try not to look at charts every day. Research and set clear goals/ levels.
We’ve been waiting a long time. Our times is now.
Who is EnigmaFund?
Enigma is the GP and founder at www.enigmafund.com, a Web3-focused venture capital fund and advisory.
At EnigmaFund we are passionate in empowering exceptional founders solving ponderable puzzles. As such, 70% of our fund is allocated to companies we advise and accelerate. The remaining 30% is opportunistic with a mandate to enter into direct, secondary, and OTC of vesting tokens.
Enigmafund also recently launched Excelsior (https://www.xlsior.com), which enables highly qualified angel investors to invest alongside EnigmaFund’s dealflow. In the past 2 weeks since launching we have raised almost $500k for Ready Games, Croquet and Aether Games.
He also serves on the advisory boards of Movement Labs, ATOR, Entangle Protocol, Aether Games, Ready Games, ANote, Sphere, and others, focused on strategy, tokenization, storytelling, creative direction, GTM, fundraising, AI, crowdsourcing, and various other areas.
Enigma brings over 20 years of experience and 3 exits as a builder, entrepreneur, and investor to the teams he supports, both in the form of advice, as well as alongside the founders executing on critical high-impact strategies, pivots, or turnarounds.
He has a special focus on crowdsourcing, crowdfunding and decentralization since 2006, where he was involved in leading some of the world’s most successful startups in the sector, helping to shape the industry.
