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Bitcoin Will Never Stop, Laura

Wed 06 Dec 2023 ▪ 6 min of reading ▪ by Nicolas T.
Learn Invest

Bitcoin is back in the top 10 most valued assets in the world. The throne is in sight.

Bitcoin saylor

Bitcoin first

Here are the top 10 assets along with their market capitalization:

  1. Gold: $13,883 trillion
  2. Apple: $2,974 trillion
  3. Microsoft: $2,783 trillion
  4. Saudi Aramco: $2,142 trillion
  5. Alphabet (Google): $1,658 trillion
  6. Amazon: $1,519 trillion
  7. Silver: $1,431 trillion
  8. NVIDIA: $1,156 trillion
  9. Bitcoin: $845 billion
  10. Meta (Facebook): $834 trillion

Traditional funds typically invest half in the stock market and the other half in government debt. Unfortunately, these investments are unproductive.

The math is simple:

The American stock market (S&P500) appreciates by an average of only 7% per year. The constant dilution of shareholders through the issuance of new shares is unforgiving…

On the other hand, the growth of the US dollar money supply (M2) is also at 7%. This monetary inflation nullifies the gains made in the stock market. Simply put, the dollar has lost 97% of its purchasing power since 1913.

In short, the dollar collapses by 7% per year against the stock market, which just about allows one to not get poorer.

True, holding just a handful of tech monopolies like Apple, Google, or Microsoft offers a higher yield, beyond 20%. But these companies carry much more risk than bitcoin.

A CEO can make a grave mistake. Mark Zuckerberg misjudged with the metaverse and no one knows if the iPhone 25 will still be the smartphone everyone wants.

And let’s not talk about sovereign debt, whose returns have long been way below inflation.

By the way, alongside the monetary Ponzi scheme, the peak global oil that humanity is currently crossing will further accelerate the decline in purchasing power.

Bitcoin, the Ultimate Store of Value

To preserve wealth, one needs to place it in assets that are scarce, desirable, portable, and durable.

Bitcoin is desirable in that it is the most powerful monetary network in the world. It is protected by 16 gigawatts, 500 EH/s, $840 billion, and 220 million investors.

Its supply limited to 21 million units sharply contrasts with gold, whose production continues to increase year over year. Bitcoin’s production halves every four years. Over 93% of bitcoins are already in circulation!

About halving: “For the first time in history, you have an asset that is more scarce than gold.”

The bitcoin money supply will be nearly fixed by 2036, when the “Stock to Flow” ratio will reach 1018. For comparison, gold’s is 60. This means it takes 60 years of annual production to double the existing stock of gold.

Bitcoin’s supply (compared to its existing stock) will be twice as scarce as gold’s after next April’s “halving”. And 17 times less by 2036…

That is why the barbarous relic no longer weighs enough. Not to mention the impossibility of sending gold instantly and for free to the other side of the world, among other limitations.

What About Real Estate?

Real estate in big cities also appreciates by about 7% per year. Once again, not enough to beat monetary inflation.

And let’s not forget the taxes, renovations, or the gravity and entropy causing a building to collapse after a century.

Next, how do you teleport a house to another country in case of war or hyperinflation? Real estate is immovable and illiquid. The selling process takes months, if not years.

One bitcoin can be likened to a block in New York, Paris, or Tokyo with the advantage of being indestructible, liquid, and movable at any time. No Ukrainian and no Argentinean can leave with their house in their head.

Another major pitfall: real estate is reserved for a minority. You have to be already wealthy. Conversely, you can buy bitcoin from 10 euros. Same goes for art. Who can afford a master’s painting?

Owning a building in Buenos Aires helps to avoid the worst. But owning bitcoin allows teleporting your building to another country and selling it instantly.

For Anglophiles, here is the presentation given by Michael Saylor made for the Bitconf and on which this article is based:

1 bitcoin for $1,000,000

Currently, the world’s wealth is stored in:

  1. Stock markets ($115 trillion)
  2. Real estate ($330 trillion)
  3. Sovereign debt ($300 trillion)
  4. Art ($18 trillion)
  5. Gold ($13 trillion)
  6. Bank accounts + cash ($120 trillion)

What will happen when corporations like Apple and Microsoft follow Microstrategy’s lead by swapping their treasury invested in US Treasury bonds for bitcoin?

We’re talking about roughly $20 trillion in cash. That’s nearly twice the value of all the gold in the world. In other words, there’s plenty to do for the years to come.

Michael Saylor predicts an average annual appreciation of 21% for the next ten or twenty years. Subsequently, at maturity, the CEO of Microstrategy counts on 14%, twice as much as the S&P 500.

Bitcoin is a singularity whose impact on other asset promises to be fascinating. A cake of at least a hundred billion dollars is reaching out to it.

Bitcoin ETFs expected for January and the fourth “halving” should perpetuate the prophecy. The Bull Run is launched.

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Nicolas T. avatar
Nicolas T.

Bitcoin, geopolitical, economic and energy journalist.

DISCLAIMER

The views, thoughts, and opinions expressed in this article belong solely to the author, and should not be taken as investment advice. Do your own research before taking any investment decisions.