50/50
market vibes
December 9 …)
“Without gambling I wouldn’t exist.” Hunter S. Thompson
In the news this weekend
Schisms are everywhere in a fractured world. Korea’s North/South kerfuffle deepens, stocks slide. Macron’s government is wobbly. Nigel Farage is rising. In America Obama exhorted his followers to “[fight]“those who would deny democratic “rules” by weaponizing the justice system to punish their political opponents which is an incredible example of psychological-projection. Trump went to Paris to the reopening of Notre Dame and met with Prince William in London. He was well received.
In the markets this morning… We’re going look at schisms in Bitcoin, stocks, oil, and gold.
Bitcoin is the popular delusion and madness of our time. It resembles a complicated game of Bingo in which the players earn one dimensional rewards for each completed Bingo card. These rewards are not convertible, fungible or tangible and its original thesis, opacity and privacy has been reinvented into a badge of investment prowess.
Bitcoin’s volatility makes pricing goods for trade impossible. Two AI searches cited the purchase of a Big Mac in El Salvador in 2021 as its marquee transaction (seriously), and some gift cards from crypto platforms as its major deployment. You can’t buy anything with the gift cards other than more bitcoin. That’s a fact. However, some stores will accept bitcoin for purchases on a post conversion to dollars basis.
Bitcoin produces nothing but it does compete for trillions of liquidity. The higher it goes, the more trillions that bleed out of other assets like stocks and bonds, either in collateral or leveraged hypothecation or swaps or options. The same diversion of liquidity to crypto ETFs and physical bitcoin has been the primary reason governments were and are opposed to gold competing with currency and credit for the last 50 years. Bitcoin? No problem.
The real bitcoin schism is between the millions of investors urged to buy it (who have no clue where it comes from, where it is kept, how to use it (you can’t) or how it is transacted on platforms that periodically blow up) and the immensely wealthy handful founders and mid trend adopters like banks and politicians.
The most common estimate of individual investors owning at least 1 “physical” bitcoin is 600,000. Posts on X indicate spot Bitcoin ETFs collectively hold about 1,104,534 BTC cob Dec 6, with a total AUM of ca $111 billion. At 1 bitcoin per ETF investor that would tally to 1 million new investors. So my guess is +/-500k new specs. It is worth asking where will the money come from to rally it from here? It goes without saying liquidity has never been stress tested.
IBIT ETF share creation cob Dec 6. The trend is definitely accelerating.
Moving along ...The stock market, oil and gold are no less conflicted. So let’s take them one at a time.
