Bitcoin Fundamentals Still Look Healthy

IN THIS PUBLICATION:

• Q2 was the worst quarterly performance for Bitcoin since Q4 2018 when it fell ~43%.
• The Bitcoin network hash rate has almost halved, and the amount of BTC held in exchanges has seen a material reduction in the last month.
• Long-term holders have been buying Bitcoin for the first time since October 2020.

Recent Developments

• Bitcoin will become legal tender in El Salvador in the first days of September. This will be a fantastic case study on how Bitcoin could potentially help a country so heavily reliant on remittances (worth around 20% of El Salvador GDP) become more efficient. FYI – Remittances are a $500 billion market, and crypto accounts for less than 1% of that.
• FTX, a crypto derivatives exchange, closed the largest private deal ever in the Crypto space, raising $900 million from blue-chip investors like Paradigm, Sequoia, Third Point, Paul Tudor Jones, Izzy Englander, and Alan Howard.
• Debt-focused GoldenTree, a NY asset manager with $45 billion under management, has been reported to be adding Bitcoin to diversify their holdings.
• PayPal could allow UK customers to buy/sell BTC on the app as soon as this month, following up on its strategy to bring Bitcoin to its customer base.
• Horizon Kinetics has 3 of the 10 best performing mutual funds under management, and we effectively know one of its flagship funds (Paradigm) has a 10% allocation to GBTC.
• Jack Dorsey emphasized how Bitcoin will be a big part of Twitter’s future in his Q2 earnings call. He sees Bitcoin as the best positioned digitally native currency and given their ambitious plans to grow the social media platform (dramatically under-monetized in our modest opinion), he believes there are potential synergies to accompany an integration of the two.
• TheBWord.org hosted a chat between Cathie Wood, Jack Dorsey, and Elon Musk (three of the most influential figures in the crypto space) that is well worth the watch.

Q2 Recap

We came into Q2 with one stat in mind: it’s historically been the best performing quarter in Bitcoin’s history, with positive returns in six out of the last eight quarters since 2014, and never registering a loss of more than 6%. So, what could possibly go wrong?