{"id":1458613,"date":"2024-02-21T22:00:00","date_gmt":"2024-02-22T03:00:00","guid":{"rendered":"https:\/\/bugaluu.com\/news\/?p=1458613"},"modified":"2024-02-21T22:00:00","modified_gmt":"2024-02-22T03:00:00","slug":"the-mantra-for-the-next-cycle-allocate-1-to-bitcoin","status":"publish","type":"post","link":"https:\/\/bugaluu.com\/news\/the-mantra-for-the-next-cycle-allocate-1-to-bitcoin\/1458613\/","title":{"rendered":"The Mantra For The Next Cycle: Allocate 1% To Bitcoin"},"content":{"rendered":"

The Mantra For The Next Cycle: Allocate 1% To Bitcoin<\/span><\/p>\n

\n

Authored by Mark Jeftovic via BombThrower.com,<\/em><\/a><\/p>\n

\u201cNobody got fired for buying IBM\u201d \u2026but you\u00a0might\u00a0get fired for\u00a0not\u00a0buying Bitcoin<\/em><\/h2>\n

Every Bitcoin cycle has a theme and a core driver, and sometimes we\u2019re so close to it, we can\u2019t really figure out what it is (or was) until it\u2019s in the rear-view mirror.<\/p>\n

<\/a><\/p>\n

In 2013, I always said it was the Cyprus Bail-Ins and the realization that the banking system was heading in a direction where the expression, \u201csafe as money in the bank\u201d, wasn\u2019t quite true anymore. The core driver was the rise of centralized exchanges \u2013 even though one of them, Mt. Gox, blew itself up in a meltdown event which is still unwinding to this day.<\/p>\n

The 2017 cycle was about the explosion of the cryptocurrency space as an asset class unto itself: Ethereum stormed onto the scene and with the ERC-20 token specification, igniting a mania of \u201ctokenize all the things\u201d. The ICO boom drove the momentum \u2013 and the advent of stablecoins like Tether provided the lubricant to get capital into the digital asset space.<\/p>\n

For the 2020 cycle, it was the arrival of the first maverick billionaires \u2013 Paul Tudor Jones, Stan Druckenmiller, Elon Musk, Michael Saylor \u2013 at the time when their entrance was mistakenly taken to mean, \u201cthe institutions are coming\u201d into Bitcoin as an asset class.<\/p>\n

<\/a><\/p>\n

The Cyprus \u201cBail-in\u201d: By the time you\u2019re in a line-up like this, it\u2019s already too late<\/em><\/p>\n

Not even close. But what did happen was that a lot of hedge funds and high rollers who were ahead of the curve and out to capture alpha started piling into what was then called \u201cThe GBTC arb trade\u201d \u2013 long story,\u00a0explained in detail here<\/a>\u00a0but essentially meant that trading desks could book fat profits before they were actually realized, at the cost of\u00a0\u00a0locking up their capital for six months.<\/p>\n

When it finally came apart (the cycle ended), the GBTC premium morphed into a discount to NAV \u2013 and when things went\u00a0really bad\u00a0<\/em>(LUNA, 3AC, Celsius \u2026 FTX) GBTC\u2019s own parent entity, DCG, went bankrupt and GBTC became an island of trapped capital, over $30 billion worth.<\/p>\n

Now we\u2019re in a new Bitcoin cycle:<\/h2>\n

We have a new theme and a new catalyst. GBTC comes into the picture here again, because it is both the reason why the Bitcoin price was somewhat muted once the catalyst hit, and also part of the new catalyst.<\/p>\n

Remember what we\u2019ve been saying for a year, maybe more:\u00a0in the next cycle, the institutions will show up<\/strong>, and because of the huge asymmetry in Bitcoin, they will find it compelling enough to allocate a small percentage to it.<\/p>\n

I predicted a new investment mantra for institutional fund managers,\u00a0\u201cThe 1% Allocation\u201d<\/em>.<\/strong><\/p>\n

Let the data points commence: Fidelity, with $12.6 trillion AUM and one of the spot ETF providers (the only one who built out their own custodian to handle it) has added an allocation of \u201ccrypto\u201d to their flagship, \u201cAll-In-One Conservative ETF\u201d \u2013 self professed as, \u201cA one-ticket solution diversified across regions, market caps and investment styles\/factors, with the attractions of professional management.\u201d<\/p>\n

<\/a><\/p>\n

You\u2019re going to be seeing a lot of this \u261d<\/p>\n

The one percent allocation goes back years \u2013 in fact the first time I saw it was in a\u00a0Central Bank of Barbados working paper<\/a>\u00a0from a pair of\u00a0 economists there, recommending that country\u2019s\u00a0central bank\u00a0<\/em>hold 1% of it\u2019s foreign reserves in Bitcoin \u2013 that was in 2015.<\/p>\n

By 2022, even the Basel Committee on Banking Supervision\u00a0was setting guidelines<\/a>\u00a0on \u201ccrypto\u201d allocations for Tier 1 reserve assets:<\/p>\n

\u201cGroup 2 exposure limit:<\/strong>\u00a0A bank\u2019s total exposure to Group 2 cryptoassets must not exceed 2% of the bank\u2019s Tier 1 capital and should generally be lower than 1%\u201d<\/em><\/p>\n

(That BIS paper didn\u2019t differentiate between\u00a0Bitcoin\u00a0<\/em>and \u201ccrypto\u201d, although it should\u2026)<\/p>\n

And this\u00a0recent Motley Fool article<\/a>, which is mostly about Cathy Woods\u2019 upping\u00a0her\u00a0<\/em>allocation in ARK Funds to\u00a019%\u00a0<\/em>cites the 1% allocation as rather matter-of-fact conventional wisdom now:<\/p>\n

\u201cUntil this year, the consensus view had been that Bitcoin should account for only a tiny portion of your overall portfolio.\u00a0As a general rule of thumb, 1% was the norm<\/strong>, and any percentage over 5% was considered ultra-aggressive.\u201d<\/em><\/p>\n

The new 1% Rule: Buy Bitcoin<\/h2>\n

We all know the old adage, \u201cNobody got fired for buying IBM\u201d, which was a mantra back in the \u201cNifty Fifty\u201d days (which was before my time, but there have always been later iterations: substitute IBM for Microsoft, Google, Apple, etc.)<\/p>\n

Here\u2019s what I think happens now:<\/strong>\u00a0while today nobody may get fired for buying, say, The Magnificent Seven,\u00a0tomorrow\u00a0<\/em>you may very well\u00a0get fired for not plunking 1% into Bitcoin.<\/em>\u00a0Yes, really.<\/p>\n

What will a 1% allocation across the institutional wealth spectrum do to the value of Bitcoin? My mental model going back to\u00a0The Crypto Capitalist Manifesto<\/a><\/strong>\u00a0has always been to look at the total size of the bond market, compared to Bitcoin and precious metals.<\/p>\n

Basically, thispic.twitter.com\/FhwvjUxYOq<\/a><\/p>\n

\u2014 Mark Jeftovic, The \u20bfitcoin Capitalist (@StuntPope) February 11, 2024<\/a><\/p>\n

From there I posit what would happen if just 1% of that\u00a0\u201creturn-free risk\u201d<\/em>\u00a0(bonds), walks on over to Bitcoin. Considering Bitcoin only recently recaptured the $1 trillion market cap, and there\u2019s anywhere between $150T and $300T in global bonds (depending on what you include), a mere 1% exiting fiat-backed bonds and stacking sats would more than double Bitcoin\u2019s market cap, at a minimum.<\/p>\n

We\u2019re just over a month into this new era of Bitcoin being available as an institutional allocation strategy and early indications are already there that capital allocators are even choosing Bitcoin\u00a0over gold\u00a0<\/em>\u2013 which was something that admittedly, surprised me:<\/p>\n

Can someone do a wellness check on @PeterSchiff<\/a>? pic.twitter.com\/mUc2xGwK2j<\/a><\/p>\n

\u2014 Jameson Lopp (@lopp) February 14, 2024<\/a><\/p>\n

I thought those who had already allocated to gold would stay there, and\u00a0add\u00a0<\/em>Bitcoin, but it is now looking like institutional fund managers who had allocated to gold as an anti-fiat hedge have lost patience with gold\u2019s repeated breakdowns from all-time-highs.<\/p>\n

<\/a><\/p>\n

Gold did print a new all-time high in December,\u00a0but as I\u2019ve observed<\/a>, since the prior high in 2020, a new ATH in gold may mean a multi-year pullback rather than an impending higher high.<\/p>\n

Bitcoin, by contrast, looks poised to put up a new string of them, for the next couple years at least.<\/p>\n

<\/a><\/p>\n

So I now humbly present you with \u201cThe Theme\u201d of this cycle:<\/h2>\n

The Theme is:\u00a0The Institutions are Coming<\/strong>.<\/p>\n

The core driver is:\u00a0The Bitcoin Spot ETFs.<\/strong><\/p>\n

The mantra will be:\u00a0Allocate 1% to Bitcoin.<\/strong><\/p>\n

*\u00a0 *\u00a0 *<\/p>\n

This is an excerpt from\u00a0The Bitcoin Capitalist<\/a>\u00a0\u2013 Mid-Month Portfolio Review,\u00a0we\u2019re halting access soon:<\/strong>\u00a0learn more here \u00bb.<\/a><\/strong><\/em><\/p>\n

My forthcoming ebook\u00a0The CBDC Survival Guide<\/strong>\u00a0will give you the tools and the knowledge to navigate coming era of Monetary Apartheid. Bombthrower subscribers will get free when it drops (and\u00a0The Crypto Capitalist Manifesto<\/strong>\u00a0while you wait),\u00a0sign up today<\/a><\/strong>. Follow me\u00a0on Nostr<\/a>, or\u00a0Twitter.<\/a><\/em><\/p>\n<\/div>\n

Tyler Durden<\/a><\/span>
\nWed, 02\/21\/2024 – 17:00<\/span><\/p>\n

\u200bRead More<\/a>\u00a0<\/p>\n

\u00a0<\/p>\n","protected":false},"excerpt":{"rendered":"

The Mantra For The Next Cycle: Allocate 1% To Bitcoin Authored by Mark Jeftovic via BombThrower.com, \u201cNobody got fired for buying IBM\u201d \u2026but you\u00a0might\u00a0get fired…<\/p>\n","protected":false},"author":0,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_feature_clip_id":0,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_post_was_ever_published":false},"categories":[1],"tags":[],"class_list":["post-1458613","post","type-post","status-publish","format-standard","hentry","category-news","wpcat-1-id"],"jetpack_sharing_enabled":true,"jetpack_shortlink":"https:\/\/wp.me\/pbimBl-67s1","jetpack_featured_media_url":"","_links":{"self":[{"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/posts\/1458613","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/types\/post"}],"replies":[{"embeddable":true,"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/comments?post=1458613"}],"version-history":[{"count":0,"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/posts\/1458613\/revisions"}],"wp:attachment":[{"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/media?parent=1458613"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/categories?post=1458613"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/tags?post=1458613"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}