Back Over $40,000!

CRYPTODAY #002

1. $BTC is officially back over $40,000 today, which means I can include my Bitcoin price milestone poster in this newsletter! This NFTart was published 157 days ago, the first time we ever broke past the $40,000 price point, and it feels like a lifetime has passed since then. Although Elon’s tweets yesterday may have sparked the change in the charts, it was Paul Tudor Jones on CNBC that really drove the point home.

   Documenting Bitcoin 📄 @DocumentingBTC

   Paul Tudor Jones, "#Bitcoin is math. Math has been around for thousands of years. 2+2 will equal 4, and it will for another thousand years. I like the idea of investing in something reliable, honest, secure, and hundred percent certain. #Bitcoin is a way to invest in certainty."

   Tudor Jones stated that he was looking to maintain 5% of his portfolio in $BTC.

   Pomp 🌪 @APompliano

   Paul Tudor Jones says he wants 5% of his portfolio in bitcoin and he doesn't even look at the price anymore.

   If you don’t know who Paul Tudor Jones: he’s #369 on Forbes’ list of wealthiest individuals, with a decades-long track record for investing in currencies and a net worth of $7B. (That 5% target therefore looks to be about $350M worth of Bitcoin.) https://www.forbes.com/profile/paul-tudor-jones-ii

2. I like the 5% target because it works well for most Philippine investors. For you, personally, that could be 50,000 pesos, 5M pesos, or 50M pesos. But the idea is to make it a small enough chunk that you could probably take a beating on it for a year or two without substantially shifting your overall position. There’s a very large caveat though! Please read on.

3. Last night I did a recorded interview with the BitRefill team for their podcast, and we touched on why Bitcoin isn’t catching hold in the Philippines, or in a lot of other developing countries. In the PH, the primary crypto is $USDT, with $ETH a distant second. I suspect that nationwide, $BTC isn’t even in the top 3, but I only have access to BloomX’s data and no one else’s. (BTW if you’re thinking about El Salvador as you read this: Jack Mallers’ Strike wallet runs on $USDT as well.)

4. The problem with Bitcoin really is that it’s an investment with an unknowable time horizon. If you bought Bitcoin today at $40,000, you have no idea how many years you’ll have to maintain that illiquid position before you’ll see a 2x, 3x, or 10x return … or a -0.5x return. If you’re lucky, and we hit $100k this year, then you can laugh all the way to the bank. But if we go sideways or downwards instead, you could be holding until 2024. Or any of a million other scenarios, all with differing rewards or penalties.

5. Now you may be saying that ALL investments behave similarly, and you would be right. HOWEVER, we fantasize about making Bitcoin accessible to the common man, and the truth of the matter is, the common man can’t afford to freeze assets for undefined lengths of time. The average Philippine household only makes 300,000 pesos per year, which implies that most adults here subsist on minimum wage.

6. The technical way to say this is that most Filipinos have a “high time preference” on their investments. This is NOT because they’ve been brain-washed by consumerism to want instant gratification, but because they won’t eat tomorrow if they didn’t. Which brings me back to why Bitcoin isn’t being adopted by anyone in the lower income brackets here, while USDT and ETH are. (And note that when I say “lower income brackets,” I am referring to >90% of the population.)

7. In 2021, the Philippines’ crypto economy is composed of two things: the first is reselling USDT and the second is earning ETH. And really it’s only one thing, because USDT probably accounts for ~90% of that these days. Where is all this USDT trading happening? Everywhere from Telegram groups to Binance P2P. (Honestly, the only reason it isn’t 99% is because CoinsPH and PDAX don’t support it.) Filipinos actively resell USDT and earn 1% with each successful trade. Meanwhile, other Filipinos earn ETH via DeFi or play-to-earn games. In all of these scenarios the time-horizon is measured in weeks or months, not years.

8. There’s a narrative that I see a lot in the FB groups, that Bitcoin is a rich man’s investment, and when you look at the data, it does start to feel like that’s true. As Bitcoin diehards, we like to remind people that you can buy fractions of a Bitcoin, which is technically true, but even a fraction of a Bitcoin is equivalent to a day’s wages in this country. A household that is living month-to-month can’t afford to freeze their money that way.

9. So yes, although I do recommend converting up to 5% of your portfolio into $BTC ala Tudor Jones, I don’t recommend it if your total net worth is under 500,000 pesos. You’ll probably make more money just reselling USDT.

See you all tomorrow cryptofam, and don’t forget to join the waitlist at BloomX.app!