About Face
The governmental about-face on Bitcoin and crypto currencies in general has been quite astounding. The Biden administration had been a roadblock to general acceptance of Bitcoin, but that began to turn in 2023 as the Treasury Dept eased their stance against Bitcoin ETFs (which eventually started trading in early 2024). The governmental concern about Bitcoin was always that is was an ‘alternative currency’ to the dollar and was therefore a threat to the economic domination of the U.S. dollar.
President-elect Trump, who was anti-crypto during his first term, apparently had an epiphany over the last four years and is now a crypto advocate. The result is that Bitcoin has probably been the most profitable of the various “Trump Trades”. Bitcoin was trading around $62K immediately before the election and was trading near $102K as of this writing, a 64% increase, give or take.
Bitcoin, which had been hovering in the $90’sK range, finally broke out above $100K based on comments from Fed Chair Powell. Powell, at a New York Times event, was quoted as saying:
“People use bitcoin as a speculative asset. It’s just like gold, only it’s virtual, it’s digital. People are not using it as a form of payment or as a store of value. It’s highly volatile. It’s not a competitor for the dollar, it’s really a competitor for gold.”
The doors now appear to be wide open for crypto adoption and the market is taking notice. Crypto aficionados point out that the market cap (value) of gold is about 10X the market cap of Bitcoin, leaving plenty of upside to the Bitcoin story. Although that is true, we would also add that gold, as long as it it held as a reserve at central banks, is, in effect, money, and a store of value. That distinction might not mean anything to markets right now, but it could in the future. By the same token, if Bitcoin becomes part of central bank reserves, then it is being used as a store of value in an official way and takes another step to become ‘money’. Let the competition begin!
Have a glittering week!
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The views expressed in this commentary are subject to change based on the market and other conditions. These documents may contain certain statements that may be deemed forward‐looking statements. Please note that any such statements are not guarantees of any future performance, and actual results or developments may differ materially from those projected. Any projections, market outlooks, or estimates are based upon certain assumptions and should not be construed as indicative of actual events that will occur.
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Bitcoin, Bitcoin ETFs, Digital Gold, Federal Reserve, Gold, Jerome PowellBy: Adam
