BitDrip

Like most goods, Bitcoin’s price comes down to supply and demand.

Unlike most goods, Bitcoin’s supply is fixed.

So when Bitcoin becomes available to new groups of investors, the new demand is met with the fixed supply, and the price shoots up.

This week, a lot of new demand is coming to Bitcoin.

First, ProShares will launch the first U.S. Bitcoin-Linked ETF on October 19. Any investor, or investment advisor, can now buy the ticker BITO on the NYSE to get some exposure to Bitcoin.

It is worth noting that this ETF is technically a “futures” ETF, so instead of trading the asset directly, you place buy and sell orders at specific prices or times. The futures ETF doesn’t track the asset directly. Many diehard bitcoiners are upset that this is the first ETF to get approval since Bitcoin is designed to be a long-term savings technology.

Second, Interactive Brokers (IBKR) — one of the largest U.S. brokerage firms — gives financial advisors the ability to buy and manage Bitcoin for their clients through their all-in-one trading platform. According to IBKR, they custody over $350 billion in assets and serve over 1.54 million clients.

Third, Grayscale Bitcoin Trust has announced they are converting their $38 billion Bitcoin trust to a spot ETF, which will allow investors to trade shares much closer to the price of Bitcoin than before.

Unlike the ProShares futures ETF, the spot ETF basically trades the asset much closer to the current price. This is the ETF we really want!!

More ETFs and funds are around the corner. These next few months are going to be huge for Bitcoin investors.

Time in the market is always more profitable than timing the market. Today is a great day to buy and hold some bitcoin.

Earlier today, Esther Crawford (Staff Product Manager @ Twitter) announced on the Twitter company blog that Twitter’s “Tips” feature was being released to everyone.

From the blog:

People already drop links to their payment profiles in their bios and in their Tweets. Tips makes this easier to do, offering one fixed spot, right on your profile, where you can link to your Cash App, Patreon, Venmo and other platforms where people can support you.

I read rumors of this feature a while back. What I wasn’t expecting was the next section:

Tipping with Bitcoin over the Lightning Network

In addition to the services currently enabled through Tips, people can now seamlessly tip with Bitcoin using Strike – a payments application built on the Bitcoin Lightning Network that allows people to send and receive Bitcoin. Strike offers instant and free payments globally. 

Strike is available to people in El Salvador and the U.S. (excluding Hawaii and New York). People in the eligible markets will have to sign up for a Strike account and add their Strike username to receive Bitcoin tips over the Lightning Network. You can use any Bitcoin Lightning wallet to send tips to someone’s Strike account.

Awesome job again by Strike. This team isn’t just hot, they are on fire. Just within the last year they:

1. Helped onboard first nation-state, El Salvador, to the Bitcoin network
2. Became the first place to let you buy bitcoin without any fees.
3. Created a way for people to get paid in bitcoin (through a standard direct deposit!)
4. And now building their Bitcoin payment API directly into one of the world’s largest social networks.

While Bitcoin tips can currently only be accepted by Strike users (read USA and El Salvador), the tips can come from any Bitcoin user in the world without a fee. No other payments company or provider can do this.

Jack Dorsey, Twitter and Square CEO, is a big Bitcoin believer. I am sure he’s looking to expand this feature everywhere as soon as he can.

I hope this is just the beginning for Bitcoin on Twitter.

The other day Fidelity hosted a webinar covering investment opportunities in Bitcoin and showed off a graph that speculates a $100M price point for a single bitcoin by 2035.

Lots of finance and tech bigwigs have made bold price predictions — high and low — which rarely pan out.

What’s specifically interesting about Fidelity’s recent price prediction is the model they used to make it.

The pricing model is called Stock-to-Flow (S/F) and the idea behind the model is rather simple.

From Fidelity’s Bitcoin Investment Thesis:

The stock-to-flow ratio (stock divided by flow) is a metric commonly used to quantify the scarcity, or hardness, of commodities. Stock is the existing supply of a commodity less the portion of supply that has been consumed or destroyed. Flow is the annual incremental production of new units. Together, the stock-to-flow ratio measures how many years of production are required to achieve the existing level of stock.

Commodities with a stock that is difficult to double due to a low rate of production relative to existing supply have historically served as superior stores of value. Such commodities are largely used for investment purposes, and occasionally industrial uses. On the other hand, consumable commodities that are susceptible to large increases in supply, are less effective in storing value.

S/F was popularized by an investor — under the psudonym “PlanB” — in a 2019 essay titled “Modeling Bitcoin Value with Scarcity“. (If you’re more of a podcast listener I recommend PlanB’s conversation with Natalie Brunell in the Coin Stories podcast.)

PlanB mapped this model to gold, silver, and other precious metals to accurately calculate their current market values.

What gives Bitcoin investors an advantage over other scarce investors is that the stocks and flows at any given time are transparent on the blockchain.

We know exactly how much bitcoin is in circulation today and how much will be added until mining no longer mints new Bitcoin in the year 2140.

Glassnode, a company that visualizes real-time bitcoin blockchain data, has a graph dedicated to measuring this relationship.

Obviously as a holder of bitcoin I’d love to see a 2000x return on Bitcoin in the next 15 years, but the fact that this projection suggests that there will be more money in bitcoin than the entire stock market might test this model’s limits.

Time will tell.

This is a fun one.

New York Giants’ running back Saquon Barkley announced on “The Pomp Podcast” that he will be receiving his $10 million/year endorsement payments in Bitcoin.

What is really noteworthy about this is that the people paying him don’t need to even know a thing about Bitcoin.

Saquon will be using a new feature on the payment app Strike that allows him to set up direct deposits and convert a percentage of each deposit to Bitcoin. He’ll be converting 100%.

Can’t wait to see his lambo collection.