Grayscale’s Bitcoin Report Highlights The Imploding Economic Backdrop & Paul Tudor Jones’ Bullish Analysis
Grayscale does as much as anyone to make it easy to buy Bitcoin (through GBTC). They also do a lot to educate people about Bitcoin, including TV commercials:
And they write thoughtful research on Bitcoin. Yesterday, Grayscale released a 20 page report titled “Valuing Bitcoin.” While the report included the typical Bitcoin graphs (e.g. Stock-ToFlow, Daily Active Addresses), that many find helpful, I thought the most impactful charts were the four below:
Since going off the gold standard in 1971, real wages have barely budged.
Since QE1 started in 2008, the massive increase in money has not lead to more economic activity as intended. Instead, it’s just lead to a decrease in the velocity of money. And that’s before the MASSIVE unprecedented QE we’re experiencing today:
With that macro economic backdrop, the best graph in the report, IMHO is the one below in which famed investor Paul Tudor Jones outlines his store of value scoring for various assets:
For anyone really interested in Bitcoin, it’s worthwhile to read Tudor’s entire May 2020 investor newsletter which included the paragraph below reprinted in the Grayscale report:
What was surprising to me was not that Bitcoin came in last, but that it scored as high as it did. Bitcoin had an overall score nearly 60% of that of financial assets but has a market cap that is 1/1200th of that. It scores 66% of gold as a store of value, but has a market cap that is 1/60th of gold’s outstanding value. Something appears wrong here and my guess is it is the price of Bitcoin
In my mind, that’s always been the story with Bitcoin. It’s a store of value that’s getting stronger every day, which will continuously drive PTJ to increase his trust score above, until Bitcoin is clearly a better store of value than gold. Given that, it should one day be worth MORE than gold in aggregate. There’s certainly a lot that can go wrong with that thesis, but it represents the type of asymmetric bet (i.e. you can losa 100%, but the upside is %6,000 if it reached gold’s value), that is rarely found in investing. And that’s why I’m HODLing Bitcoin
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