MAJR News 096

PSA: Bitcoin adoption is a global IQ test.

Jun 14, 2021

@moodman

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Key moments from the G7 Summit's first day in Cornwall ...

MAJR NEWS BRIEF

As G7 leaders from developed countries (Canada, France, Germany, Italy, Japan, the United Kingdom and the United States) meet in the UK to discuss climate change, government debt and new global corporate tax reform, leaders from developing countries are paving their own path. A path toward freedom, open markets and algorithmic monetary policy.

Bitcoin adoption has reached an inflection point and it’s important to pay attention.

Last week marked a milestone as El Salvador’s congress reached a super majority vote confirming bitcoin as legal tender for the country. This may not seem like a big deal since El Salvador is a small country with only $6 billion in GDP, but they’re the first domino to fall and the beginning of the greatest race of our time.

The international race to acquire bitcoin.

In this morning’s brief, I’ll cover the countries following suit who’ve already signaled support for bitcoin adoption or are likely candidates.

I’ll conclude by sharpening up the opportunity for investors as individuals can now front run institutional and central bank adoption of bitcoin.

Which country is next?

There’s no crypto crystal ball for which country will be next and there’s no certainty that bitcoin as legal tender will be in the cards. What happened in El Salvador was an extreme example. They weren’t dependent on the printing press for managing their own currency and President Bukele had a majority rule in congress. Therefore, it’s unlikely to see countries like Brazil, Argentina and Japan adopt legal tender laws, however adoption can be accelerated by positive regulation like Japan declaring digital assets as legal property or India declaring bitcoin as an asset class. Any country that sees high inflows of remittance payments has an incentive to adopt digital rails to capture as much value as possible.

Why Does the Bitcoin (BTC) Community Put Laser Eyes on ...

Paraguay - Congressman Carlitos Rejala of Paraguay called for the nation to advance along with its new generation and added a photo with laser eyes on Twitter. Congress is introducing two bills that would make the country more blockchain friendly to attract crypto businesses and a second bill to consider making bitcoin legal tender.

Panama - Congressman Gabriel Silva said on Twitter that Panama cannot be left behind and that he plans to propose similar action. "This is important. And Panama cannot be left behind. If we want to be a true technology and entrepreneurship hub, we have to support cryptocurrencies We will be preparing a proposal to present at the Assembly. If you are interested in building it, you can contact me," said Silva. They’re planning to introduce a bill to better support cryptocurrencies.

Brazil - Federal Deputies, Fabio Ostermann and Gilson Marques have signaled support for bitcoin with laser eye photos and comments saying “Tax is Theft.” Brazil bitcoin trading platform, Mercado Bitcoin has seen crypto trading sky rocket in 2021 with over $5 billion in Q1. Brazil has been fighting inflation for a long time, which creates a massive incentive for a renewed push towards bitcoin.

Mexico - Bitso, one of Central America’s largest crypto exchanges has 2 million users and processed over $1.2 billion in remittances in 2020. Senator Indira Kempis and congressman Eduardo Murat Hinojosa have stated that they will propose legal framework to support cryptocurrencies and have posted a picture with laser eyes.

Ecuador - The Vice Minister of Economic Inclusion Julio Eduardo Clavijo Acosta has come out in favor of bitcoin.

Columbia - Cryptocurrency adoption has grown considerably and advisor to the President, Jehudi Castro Sierra quoted Jack Dorsey stating, “Bitcoin changes absolutely everything. What I’m drawn to most about it is the ethos, what it represents. The conditions that created it are so rare and so special and so precious and I don’t think there’s anything more important in my lifetime to work on.” Columbian remittances see about $600 million per month and have more bitcoin ATMs than any other region.

Nigeria - The central bank has warned against cryptocurrency trading saying it’s prohibited. However, 2020 Statista survey concluded that 32% of respondents use cryptocurrency, which is proportionally more than any other country in the world. Countries in Africa have seen the highest growth in bitcoin P2P trading volume with a 50% YOY increase.

Tanzania - President Samia Suluhu Hassan asked the Central Bank of Tanzania to begin work on a CBDC in a speech offered at the inauguration of the Central Bank of Swahili building in Mwanza.

Slovenia - Central European nation with a population of ~2 million people have committed themselves to the adoption of crypto, especially bitcoin. Last June, authorities launched the Bitcoin City project where companies like BTC Company, Consensys and Blockchain Alliance Europe are working closely with the government to build out the digital ecosystem.

Ukraine - Ukraine’s government-owned and Europe’s largest nuclear power plant, Zaporizhzhia received $700 million investment and will focus on mining bitcoin.

I could go on because bitcoin and cryptocurrency adoption is happening all over the planet. The point is that the toothpaste is out of the tube.

This is a global IQ test and failing is not an option.

Let me sharpen up some numbers for the folks who are still cloudy on the massive investment opportunity that’s about to take place.

First, bitcoin is currently sitting ~$40k, about $25k off it’s highs. Bitcoin is not expensive. Actually, bitcoin is on sale. You don’t have to buy an entire bitcoin, you can buy parts of a bitcoin. Its market cap is sitting ~$752 billion about $430 billion off its highs.

Bitcoin’s market cap is relatively small when compared to other markets and asset classes. The narrative is no longer “tulip bubbles,” but rather, bitcoin used as a store of value. Jerome Powell and Janet Yellen have both called it a store of value and recently legendary investor, Ray Dalio said,

“I’d rather own bitcoin than own a bond.”

So we have government and institutional investment leadership signaling that bitcoin is a store of value. Instead of trying to time the market, let’s just acknowledge that bitcoin adoption is underway and estimate a conservative store of value premium to apply to other assets classes vs holding cash.

Global real estate market = $280 trillion
Global bond market = $120 trillion
Global stock market = $90 trillion
Global M1 money supply = $35 trillion
Global gold market = $10 trillion

The above estimates total $535 trillion.

As governments and central banks destroy fiat currency’s role as a store of value, investors turn to these markets to protect their wealth.

Let’s assume 3 conservative premiums that investors may place on each of these markets and then use that premium to calculate the possible flows into bitcoin over the next 5 years. Then let’s calculate the new bitcoin price by dividing by the number of bitcoin in circulation (~18.7 million - not inclusive of lost coins).

1% premium = $5.35 trillion = $6.1 trillion BTC market cap = $326k per bitcoin

5% premium = $26.75 trillion = $27.5 trillion BTC market cap = $1.47m per bitcoin

10% premium = $53.5 trillion = $54.25 trillion BTC market cap = $2.9m per bitcoin

There’s only 21 million bitcoin.

The above is back of the napkin math using rough data, but it illustrates the real opportunity for investors / anyone with a phone presented from bitcoin’s adoption.

Money is literally falling from the sky. It doesn’t take a genius to get some skin in the game.

Like I said, this is a global IQ test. Don’t fail.

Matt Verklin

@mverklin

IN OTHER NEWS:

Bitcoin attempting to break out of $30k-$40k range. Sees resistance at $42k and RSI (Relative Strength Index) is signaling overbought on the 4 hour charts.
MicroStrategy completes their $500 million bond sale and gets ready to buy more bitcoin.
Tanzania President, Samia Suluhu Hassan urges central bank to prepare for crypto adoption. Tanzania is one of the latest developing countries to signal support for cryptocurrency post El Salvador’s move to make bitcoin legal tender.
Musk tweets renewed support for accepting bitcoin as means of payment for Tesla once miners reach environmental standards of 50% renewable energy.
Bitcoin’s software upgrade, Taproot gets locked in as 90% miner threshold is reached in favor of the upgrade. Taproot opens up new possibilities for privacy, multisignature wallets and security, as well as scaling.
Block.one settles their lawsuit with SEC with a slap on the wrist $27.5 million fine related to the company’s recording-setting $4 billion token sale in 2018.
Netherlands Finance Ministers says rather ban crypto, we should regulate it.
NFT Production Company Raises $4 Million Led by Mark Cuban, Ashton Kutcher. The company creates gamified and narrative driven digital collectibles. CEO says, “There’s endless possibilities with blockchain tech.”
The SEC leaves out cryptocurrency regulation from their agenda. It does mention how regulation could protect cryptocurrency investors. The agency is more focused on booming SPAC industry and the gamification of trading platforms like Robinhood.
Nvidia to focus on cryptocurrency Metaverse. The Metaverse is a core investment theme for MAJR and is the cross between augmented and virtual reality and blockchain.

Americans have hoarded over $15 trillion in cash deposits since the pandemic.
Federal Reserve balance sheet tops $8 trillion for the first time. Fed assets have doubled since March 2020 when they started buying post pandemic. We could see between $9 - $10 trillion by 2022.
Federal Reserve forward guidance is anything but guidance. Newspapers, economists and central banks are guessing for when monetary authorities will announce when they’ll start tapering bond buying program. Most economists think announcement will be later September through later 2021. And, rates will be raised by a quarter point in late 2023 and half a point in 2024.
Legendary Trader Paul Tudor Jones says “things are bat shit crazy right now.” Jones was referring to markets and Federal Reserve actions and complacency around inflation. On CNBC, he said inflation risk isn’t transitory and if he were a pension fund investment manager he’d have on as many inflation trades on as possible. He see bitcoin as a core portfolio diversifier. Expect a “taper tantrum” if the Fed reverse course and raises rates. Yields will rise and stocks will correct.
Economists see Brazil inflation hitting new all time highs as the country’s central banks is expected to raise rates for the 3rd time by 75 basis points to 4.25%.
US inflation is the highest it’s been in 13 years. Prices have surged over 5% in May. This could largely be do to base effects from this time last year when the economy was in lockdown and prices plummeted. Big ticket items like cars have seen the highest price increases, however raw materials and food manufactures have seen an increase in prices as well.

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FACTS

The number of fiat currencies to survive throughout history.

0 fiat currencies have survived.

Every fiat currency since the Roman Empire has ended in devaluation and eventual collapse.

Bitcoin 2021 and El Salvador | MAJR Market Update #001 | Week of 6.6.21

THIS IS NOT FINANCIAL ADVICE. IT’S IMPORTANT TO DO YOUR OWN RESEARCH. INVESTING IN CRYPTOCURRENCY OR ANYTHING FOR THAT MATTER COMES WITH RISK. THE INFORMATION PRESENTED IN THIS NEWSLETTER IS FOR INFORMATION AND ENTERTAINMENT PURPOSES ONLY.

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