During the last two crypto bull markets we observed two phases:
- Bitcoin is growing and so is its share of the crypto market (the Bitcoin dominance).
- Then the rest of crypto catches up and Bitcoin dominance goes back down.
From the bear market until now Bitcoin has seen its dominance go from 38% all the way to now 53% pretty much in a straight line.
One way of looking at this (if you are optimistic) is to say that we are still only in the first phase of this bull market. And there are plenty of gains to be had both in Bitcoin and in the larger crypto market.
As of now the combined market cap of all crypto assets is something like $2.3 trillion. That’s about the same as the market cap of NVIDIA. So there is certainly a lot of room for growth.
The scale of MicroStrategy Bitcoin holdings
MicroStrategy owns 1% of the Bitcoin supply, about 214 000 BTC.
That’s a lot.
For scale, only two ETFs have more Bitcoins than MSTR:
- GBTC (Grayscale) ~ 292 000
- IBIT (BlackRock) ~ 274 550
And those are ETFs, which means they don’t own the coins the same way MicroStrategy does. When it comes to public companies with a Bitcoin treasury there is no one even close to MSTR.
The longer everyone else hesitate to run the MicroStrategy playbook the harder it is going to be to catch up. First mover advantage.
At this point you’d need to be Apple or Berkshire Hathaway, both with $160 billion cash on hand, to really compete.
The Federal Reserve is doing its best effort with QT
I’m always critising the Federal Reserve for the sub optimal decisions they make. But you have to give it to them that with this QT sequence they are really trying hard.
First they did the fastest rate hike cycle ever. And on top of that they have managed to cut $1.5 trillion from the Fed balance sheet. That’s $1.5 trillion out of the $5 trillion COVID expansion.
When you look at it on the chart you can see that’s much more aggressive than anything that happened after the Great Recession.
And yet… even with that the balance sheet of the Federal Reserve is up $6.3 trillion since 2008. Said differently we would have to stay on this pace of QT for 8 more years to completely reset the clock to 2008.
Mark my words, that’s not going to happen. We are more likely to see QT quickly reversed when the US moves fully into a regime of fiscal dominance.
That’s it for today. I hope you enjoyed this. We’ll be back next week with more charts.
Cheers,
Nick
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