Macro Dragon: Bullish on Bitcoin? All About $20,000... Yet We Ain't Seen Nothing Yet...
Global Macro Strategist, Saxo Bank Group
Summary: Macro Dragon = Cross-Asset Daily Views that could cover anything from tactical positioning, to long-term thematic investments, key events & inflection points in the markets, all with the objective of consistent wealth creation overtime.
Macro Dragon: Bullish on Bitcoin?
All About $20,000...Yet We Ain't Seen Nothing Yet...
Top of Mind…
- Happy Macro & Cross-Asset Weds – the limitless upside wk continues, along with all the gratitude, luck, health, abundance & prosperity that comes with it
- We touched on a few Dragons already this wk including: Limitless Upside (sometime you just know its going to be an exceptional wk, in each & every way possible) & Bull Market Bro (you just have to beat the living daylights out of your conviction calls now & then…)
- First off, no we still don’t have Bitcoin or Ethereum futures (that’s a function of our PBs) nor spot. Yet we’ve had the ETN trackers for yrs BITCOIN_XBTE:xome & ETHEREUM_XBTE:xome with underlying in EUR or SEK (yay for the USD bears, as that is the KVP Skew… big time… Remember DollarYen to move way sub 100 call & in the 85 to 95 range by E-2021, which is miles from these c. 104-106 lvls)
- For those not in the know, KVP has been talking about Bitcoin (referred in context to also crypto as a whole) since 2014, it was in our 2017 OP when from c. $700 lvls we outrageously postulated that it would do 3x in 2017 (ended up +14x) with the high (depending on which exchange you were referring to) being at c. the $20K lvl
- Post that we embarked on a crypto nuclear winter where Bitcoin fell by well over ¾ (yes three quarters) & a lot of other crypto tokens went up completely in smoke & yes. And yes, KVP also got the continued ascent wrong, as he was calling for a move from $20K to $100K in two years a being “prudent”…
- It’s always easy to say the high was clear in hindsight, yet KVP can recall folks telling him the highs were in… all the way from $1,000 to $20,000…
- This year on the Dragon we nailed the breakouts higher first at $9,600 Macro Dragon: Tactical Risk-Off Paths & Bitcoin +13% with a solid close above $10,000 & then at the next crucial $14,000… in addition to some other updates… including PTJ Macro Dragon: Checking-in on Bitcoin... Legendary Trader Paul Tudor Jones, is in Love, with Bitcoin & Gold...
- & also looks like The Druck - a.k.a. the undisputed best in the biz from a public records standpoint, KVP still thinks the best Global Macro trader, be it gal or guy called Calypso or Dexter, rides the bodacious waves of global macro out of Hawaii or Jamaica - is finally on board: A Legendary Hedge Fund Billionaire Just Flipped To Bitcoin—Calling It ‘Better’ Than Gold
- There is the Message & there is the Messenger. And generally in the business of consistently compounding wealth, its like the RoW…
- …Messenger > Message…
- Even though it really should be the other way around – but hey the authority bias & lack of independent thinking (let alone acting against the crowd) is embedded deeply into our DNA, from a self-preservation basis. And therein lies the opportunity
- There also lies the explanation to many things – it is not about fake news or true news, its about who’s mouth its coming out of… ok, back to crypto…
- A close bud is a successful real money guy that has outperformed for over a decade, in addition to more importantly, just being a stellar all-around individual that KVP rates highly. So real money guy, generously gifted KVP a signed copy from “The Leviathan” himself, Soros – from the acclaimed Alchemy of Finance. Now, KVP will be the last to admit he can follow “The Leviathan’s” thoughts & principles. Yet there is a concept that bears attention when it comes to Bitcoin & the cryptoverse… & that’s right, REFLEXIVITY!
- To paraphrase Soros & borrow from Taleb, reflexivity is combination of an exponential exploding bubble in an asset price (up or dwn), that reinforces the price-action (FOMO, TINA, footballs yards of graveyards of those that ran counter to the prevailing dominant trend [short sellers, value folk], etc) & one can argue gets to a point of being anti-fragile… the more insane & crazy people think the price action is… the more it is attacked & vilified… the more unexplainable it is… the further up it goes… so here we are borrowing the antifragile concept as a “state’ in time-dilation of an asset’s price moves
- Bitcoin is above $18,000 as this Macro Dragon gets teed up this late Asia Weds… as we flagged before, breaking $14,000… was all about $20,000… anything in-between was/should be a walk across the park
- Now here is the crazy thing that folks don’t appreciate. Bitcoin is up c. +154% YTD… that’s nothing… the move & appreciation is to be respected… but the point is… its been linear & steady so far this year (outside of Mar sell-off that took all assets classes except USD & vol). Its not been Parabolic… for context Tesla is +400% before the S&P 500 inclusion news from earlier this wk, Zoom at one point was +600% (still at +490% YTD)
- The gamma (think of this as acceleration on convexity [think of that as direction]) on Bitcoin above a successful break of $20,000 is going to be insanely huge. And its going to be positive, as is the convexity. Cannot express how rare it is, to be so certain about the move in an asset being a function of “when” not “if”, on top of how rare that is, to have a super charged positive asymmetrical skew on that potential move
- Basically once we successfully break above $20,000, at two weekly closes above that & remember crypto closes on Sun, then we will move from this +$200 to $500 daily sessions, to +$2K to +$5K daily session.
- So instead of $20,000 to $20,200 to $20,800…
- ….its will be $20,000 to $23,000 to $26,000 to $30,000…
- Whether we break through $20,000 on the first or eight attempt is a mute point. The point is, the risk is massively to the upside, with the downside being the last key critical resistance level that was broken of $14,000… which should now act as support. Remember the Ultimate Macro Sin – its not taking a loss, its missing a multi-generational opportunity
- Also the true supply of Bitcoin will be well south of 21m, as there are literally millions of private keys that have & will forever be lost. On top of that, we are getting more & more institutions coming in & hovering up big chunks of the available float, limiting the actual true available amount for buying ‘proper’ size (+$100m): Here Are the Top Public Companies That Have Adopted Bitcoin as a Reserve Asset
- Oh & if you think Bitcoin has moved a lot, you should check out some of the other crypto tokens & in particular the DeFi space… The hype in price that was there in the run-up to the end of 2017 & early 2018 is just not there today, yet more meaningful, the institutional & governmental adoption of blockchain, crypto & bitcoin grows in leaps & bounds on a daily basis (from paying for coffee, to hard goods, to real estate to taxes)
- Bitcoin has a market value of c. $330bn, vs. the current value of $12 trillion of Gold, that’s almost a 40x multiple. Again Bitcoin does not have to get to 50% of gold value, just getting to 10% of gold’s value would get us to $1.2 trillion a c. +4x move from these c. $18,000 lvls or c. $80,000. And you know the Dragon’s view of Gold, Silver & the Precious Metals… massive upside as per 6 May 2020 - Macro Dragon: Dissecting Gold part II of III... The Bull
- Yes, $20,000 is the next key level to break… yet in the early stages of the Bitcoin-Blockchain & Digital Asset Revolution… this is still early days…
Dragon’s Heavy Rotation…
- In case you missed it previously – been super well received, thx for feedback, sharing & support on this project folks - the first in a string of exclusive Dragon Interviews series with exceptional professionals with skin-in-the-game, across different strategies, asset-classes & backgrounds.
- We kicked off with Singapore Based, AVM Global Opportunity, run by the talented & always exceptional Ashvin Murthy. Who in KVP’s view is world class in his approach, process & even more importantly trade construction & money management. Point being, if the process is pristine & consistent, the returns will take care of themselves overtime.
- The timing of the interview is uncanny as it was at the cusp of the last US presidential elections that AVM was launched. It’s worth noting since the interview, the fund has also been nominated for the Singapore’s Best Hedge Fund of 2020, given its consecutive five straight positive months at the start of this volatile year.
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