Highlights

  • CZ pleads guilty, Binance charged with 4.3B
  • Bitcoin hits 40k (although without natural demand)

Positions

60% Cash, 40% Crypto

Topic 1: Bitcoin Risks

  • Satoshi selling (he didn’t sell for 15 years, but this doesn’t mean he won’t sell in years 16, 17, and 18, making Bitcoin the largest rug pull in history - the reasons could be ideological, such as better tech, security risks, disagreement with the community, the possibility that CIA/Mossad is Satoshi and decides to conclude the experiment, who knows)
  • Quantum computing risks (not a question of if but when - 256-bit ECDSA will be broken at one point in the next few years, causing dev chaos in making BTC quantum-proof, stolen coins, an inevitable hard fork with <21M supply, and many other problems)
  • Cyber attack (an inside job by intelligence agencies? At least they can use this new crisis to implement digital IDs, tighter controls on the Internet, and so on)
  • No economic incentives for miners, Bitcoin becoming a large regulated bank
    • https://twitter.com/TheDesertLynx/status/1728113528991559728
    • https://twitter.com/TheDesertLynx/status/1716513247241654415

Topic 2: Market Maker Cycles

  • Cryptos are very cyclical, and the reason is not natural demand/supply, but futures manipulated by printed Tether
  • Market makers can artificially create a bearish narrative to make people panic sell while they buy cheap, then pump the price higher, create a new narrative (or have people create it, which they always do), and sell into buy-volume
  • Two main questions. What is the current narrative (answer: halving and ETF), and what will be the next narrative
  • For the next bearish narrative, we can imagine:
    • It is unprofitable for miners to mine after the halving
    • Quantum computer hacking coins (how easy is it to orchestrate a fake quantum hack by some known entity in the crypto space… much easier than the fake ETF news post on Cointelegraph)
    • Risk assets are sold first in recessions
    • BTC is too slow; Ordinals killed it
    • Regulation anti-Bitcoin
    • Institutions are not interested in buying BTC (failed ETF narrative)
    • Governments (US, EU) coordinating to suppress prices to prevent retail interest and competition with their CBDCs
    • Tether and Binance regulatory problems and attacks by governments
  • What could be bullish narratives?
    • BTC as the best inflation hedge (alongside Gold)
    • BTC as an uncorrelated asset to Stocks/Bonds
    • Massive inflows into the ETF
    • Last cycle of Tether minting and pumping all markets (for example, due to legal pressures and knowing they won’t survive for too long)
    • Lightning Network gaining adoption and trust versus CBDCs
    • Rate cuts and US elections

Topic 3: Options

  • There is no liquidation risk, no risk of wicks
  • Limited and known downside
  • Especially for Bitcoin, beneficial to express longer-term hypotheses (X price will happen by Y date)
  • We are starting to incorporate options and are looking forward to buying puts on BTC (detail TBA, but according to our hypothesis that 2024/2025 will be bearish)
  • Puts are a great way to hedge (limited downside, in case the market turns bullish - this downside can be recovered on alts and other opportunities because liquidity enters the markets again)