The Breakdown - Billionaire Bill Ackman Looks At Bitcoin at $72,000

Episode Date: March 12, 2024

A new all time high means a whoooole lotta different types of folks are back looking at Bitcoin once again. Today's Show Brought To You By Kraken - Go to https://kraken.com/thebreakdown and see what crypto can be Ledger - 5% to Bitcoin Developers When You Buy https://shop.ledger.com/pages/bitcoin-hardware-wallet Enjoying this content? SUBSCRIBE to the Podcast: https://pod.link/1438693620 Watch on YouTube: https://www.youtube.com/nathanielwhittemorecrypto Subscribe to the newsletter: https://breakdown.beehiiv.com/ Join the discussion: https://discord.gg/VrKRrfKCz8 Follow on Twitter: NLW: https://twitter.com/nlw Breakdown: https://twitter.com/BreakdownNLW

Welcome back to The Breakdown with me, NLW. It's a daily podcast on macro, Bitcoin, and the big picture power shifts remaking our world. What's going on, guys? It is Monday, March 11th, and today we are talking about Bitcoin at 72,000. Before we get into that, however, if you are enjoying the breakdown, please go subscribe to it. Give it a rating, give it a review, or if you want to dive deeper into the conversation, come join us on the Breakers Discord. You can find a link in the show notes or go to bit.ly slash breakdown pod. Well, friends, Bitcoin has finally, definitively, smashed through to a new all-time high. None of this flirting right on the edge know it is firmly in new territory as I record this show.

And boy, has it been flirting for the last week. After a few brief touches around $69,000 during the week, Bitcoin spent most of Sunday trading in a new range around $69,500. Technically, the new all-time high had been reached on Friday morning when Bitcoin surged above $70,000, but it was yet again another situation. of a collapse just minutes later. Bitcoin traded above 69,000 for more than 20 consecutive hours over the weekend, establishing the new range with tight consolidation,

only to have that level be lost temporarily on Sunday night, with a little baby plunge down to 67,000, and then, of course, a sore up to the 72,000 plus that we have been in for most of today. Tomorrow, I will have way more coverage as we process all of this, but for now, know that we are firmly in new all-time high territory, and what we're going to do for the rest of this show is catch up on narrative, drivers from over the weekend. Indeed, with Bitcoin back at all-time highs, people are coming out of the woodwork to give it a second look. One of the highest profile figures reconsidering his view on Bitcoin

is hedge fund manager Bill Ackman. On Saturday, he tweeted, a scenario. Bitcoin price rise leads to increased mining and greater energy use, driving up the cost of energy, causing inflation to rise, and the dollar to decline. An increased mining, driving demand for energy, and the cycle continues. Bitcoin goes to infinity, energy prices skyrocket, and the economy collapses. Maybe I should buy some Bitcoin. Many prominent bitcoiners chimed in to point out that this isn't how Bitcoin mining works. In fact, Bitcoin mining is more likely to drive electricity prices down as it subsidizes excess infrastructure and generation. Michael Saylor was among those offering to take Ackman under his wing tweeting, You should buy some Bitcoin but not for the reason cited above. Most Bitcoin miners are driving

the cost of electricity down for other consumers, not up. Let me know if you would like to discuss one-on-one. For our purposes, it doesn't really matter whether Ackman has the correct thesis at this point. What's interesting is that the new all-time high and the focus around it has given him a context to question previous views. Throughout the last cycle, Ackman largely stayed clear of crypto, however, was never an outspoken skeptic. He made a handful of small investments in crypto-related companies, things like tax services and analytics firms. He had also previously said that crypto is here to stay, his words, but he's generally been silent about Bitcoin up to this point. The question is whether Ackman is signaling a change in thinking that is more broad among the venture and hedge fund

community. Gaborga Box writes, It's 2024 and celebrity hedge fund managers just starting to ask about Bitcoin after it hit a new all-time high. If it's truly the first time you start thinking about Bitcoin, fire your entire research and management team. Do they live under a rock? Can't miss a $1 trillion plus asset. Kamikazeeth writes, Bill Akman finally taking a look at Bitcoin at 70K, tells me this cycle will not be short. In fact, I'd be shocked if the cycle topped at 150x. I don't think people like Ackman corner markets for a 2x. Numbers like 300K and 500K are looking reasonable. Justin Belcher writes, guys like Bill Ackman are coming to Bitcoin. That is inevitable. And since we understand their strategy,

we realize that these comments we perceive our fud are much more than that. These money guys are so heavily invested in the status quo that even if they're sold on Bitcoin, they're not going to reveal it without grooming their sphere of influence. That's what we're witnessing now. The ETFs changed everything. Their money is here and more is coming. There was a similar reaction to Bitcoin's all-time high on this weekend's All-In podcast. Chimath Palahapatia explained the common view that Bitcoin is on a path to 100K sooner or later, adding, we're going to get to a tipping point where everybody really talks about this. I think that psychologically it's proven a lot of folks wrong. These things are becoming part of the financial fabric, and I think that should not be underestimated.

Even All-In host Jason Calacanis, who is one of the loudest cryptocritics during the bare market, was forced to bring some humility to the show, adding, Bitcoin is incredibly resilient just on a technical basis. You have to be impressed by the fundamental technology here. Today's episode is brought to you by Cracken. For far too long, the whole financial system has been standing still, too slow, only on for certain hours, overly designed for some types of people, but not for others. Crypto, at its best, represents progress. It asks the question, what if? It invites people in instead of leaving them out.

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Crypto trading involves risk of loss. Cryptocurrency services are provided to U.S. and U.S. territory customers by Payward Ventures Inc. PVI, DBA, DBA, Cracken. Breakers. Today's episode is sponsored by Ledger. As another cycle ramps up, it's another chance to think about your Bitcoin custody best practices, and of course, to help all the new folks do the same. Ledger is the global platform for securing Bitcoin and other crypto. Ledger combines both hardware wallets and the Ledger Live app to offer the best way to buy, sell, swap, and stake without sacrificing on security or self-custody. Ledger features cutting-edge technology in the form

a certified secure chip and a proprietary operating system, but also brings ease of use. This makes Ledger a safe and secure way to manage your digital assets without all the stress. Check out the link to the Bitcoin Ledger Nano in the show notes. 5% of all sales of the Bitcoin Ledger Nano go to support Bitcoin development. Thanks once again to Ledger for supporting the breakdown. So what is going on? Well, there are a couple different dimensions of this. First of all, one of the questions that we had,

especially after 50K Bitcoin came and went without so much as a notice, was what it was going to take for people who were not just dying the wool bitcoiners to start paying attention again. The next obvious candidate was when we got to all-time highs, to $69,000. And that does seem to be a psychological level that has brought a lot more attention to the fold. There is also this question of, did the ETFs really change everything? And so far, the short answer is yes. Now, that's not to say that there will not be cycles and corrections and downturns

and moments where critics get loud again because they get to say that Larry Fink was wrong, at least in their estimation. But it's hard to overstate how different the change of guard and cheerleaders this cycle around really is. Paul Tudor Jones and Bill Miller and Stanley Druckin Miller last time were a big shift from the previous Bitcoin advocates who had come before. However, to the extent that those folks are in the financial mainstream, they're widely considered Mavericks. That's how they've made their money. Larry Fink of BlackRock, Jenny Johnson, and Franklin Templeton, these are very different types of folks. And so the fact that they've gone so all in on this just sends a wildly different type of signal.

Speaking of, let's actually just listen to a clip of Larry Fink talking on the news shows this weekend about Bitcoin. There's a lot of opportunity. It is a great store, and this is where you can debate. Is it a good store? Do you know how it's made? A bunch of computers figure out. But there's only, but the issue is if people believe that it can be an asset that can be cross-border. And let's be clear, if you're in a country where you're fearful of your government, and maybe this is one of the reason why China has banned it, if you're in a government where you're in a country where you're fearful of your future, fearful of your government, or you're frightened that your government is devaluing its currency by too much deficits. Like us. I'm not going to go there. the little elephant in a room here. You could say this is a great potential long-term store of value.

And as I said, it's like digital gold. And I believe... But you still can't buy a slice of pizza with it. Isn't that kind of odd that work? But you can't buy a price of pizza with palladium or gold. No, but you can do stuff with them. I can get stuff. I mean, people use gold for stuff, right?

People, you could buy and sell your Bitcoin, no different than gold. So it is very... But gold is put in like... Jewelry. And, you know, iPhones, I think there's... In some electronics, there's gold. It's more silver and nickel. But you see what I'm saying.

There are practical uses. Bitcoin, it's literally a ledger. It is a ledger. But it's a international ledger. It's cross-border. It's bigger than any government. Expanding out this BlackRock conversation just a little bit, last week the Bitcoin ETFs achieved a string of milestones,

symbolizing this changing of the gar that we've been talking about. BlackRock's ETF now hold more Bitcoin than Micro Strategy. As of Friday, Ibit has almost 196,000 Bitcoin compared to micro strategies, 193,000. BlackRock has now captured 10 billion worth of inflows, making their Bitcoin ETF the fastest fund to reach this milestone. They achieved it in under two months as compared to the previous record high, which was held by Invesco's QQ-Q NASDAQ-NASDAQ, which took more than a year. Between them, the nine new Bitcoin ETFs are now larger than GBTC.

Grayscale still holds around 400,000, meaning that the combined holdings of all U.S. Spot Bitcoin ETFs is around 4% of total supply. On Friday, the ETFs passed 100 billion in cumulative trading volumes since they were launched. In short, the ETFs now represent a meaningful fraction of global spot Bitcoin trading, and they don't look like they're slowing down at all. Now, I had prepared that little segment on Ibit, jumping out above my micro strategy, only to have this morning, Sailor tweet, Micro Strategy has acquired an additional 12,000 Bitcoin for $821.7 million.

So yes, now Micro Strategy holds 205,000 Bitcoin that were acquired for an average price of $33,706 per Bitcoin. Add to all of this, the fact that while their pure play Bitcoin ETF is a runaway success, BlackRock appears to only just be getting started. According to a new filing, they're seeking the option to add their Bitcoin ETF into their global allocation fund. The fund was launched in 1989 and seeks to represent a diversified allocation to global investable assets. The actively managed fund is modeled on a 60-40 split between stocks and bonds and is intended to give

proportionate exposure to major economies worldwide. It currently has $18 billion in assets under management. Earlier this month, BlackRock applied to add Bitcoin to their strategic income opportunities fund, and while neither of the changes have yet been approved, the implication is clear. BlackRock views Bitcoin not as a novelty but as a genuine asset class that should be included when considering global exposure. Now, staying on the ETF train for a moment, one of the big questions, one of the big debates going on right now, is whether an ETH ETF is next to be approved. Looking out across potential catalysts, we've got the halving now less than six weeks away, and then a big decision coming up for the SEC around whether or not to approve spot Ethereum

ETFs. Opinions have varied on whether the SEC will be forced into approval in line with Bitcoin products or stubbornly deny, no doubt pushing the issue into the courtroom once again. For those reading T-Leaves, what we haven't seen so far that we did see shortly before the Bitcoin ETFs were approved was a flurry of meetings and comments. There have been, however, some. Last week, Grace Gail and Coinbase met with SEC staff to discuss Ethereum ETFs. Coinbase's meeting was of particular relevance as the exchange had provided correlation data between spot and futures markets. Their study found a tight correlation, implying that the spot Ethereum ETFs should be approved for the same reason as the Bitcoin

products. In terms of timeline, we're looking at May 23rd as the final decision on VanEx application. with numerous others due the following week. Bloomberg Senior ETF analyst Eric Buchanis thinks the SEC is cutting it very close if they do intend to approve, tweeting, normally I'd say this was a good sign, but as far as I know,

the staff has not given any comments yet to the issuers, which is not a good sign, as were past the point when they gave comments on Bitcoin ETFs. Eleanor Territ of Fox Business spoke with her sources and tweeted, optimism about the SEC approving the ETH spot ETFs by May 23rd is waning.

Based on my conversations with people familiar, meetings in recent weeks have been very much one-sided, with issuers and custodians trying to rally SEC staff to get the process rolling, but staff not really engaging in meaningful ways like they did with the Bitcoin spot ETF applications. Why? I'm told that Gensler believes he already placated the industry with the approval of the spot Bitcoin ETFs. Also, influential anti-crypto politicians like Senator Warren are already angry at the SEC for approving the Bitcoin ETFs in the first place and are rallying against the same thing happening for ETH. One source tells me, staff has been

very hard to gauge on this and we're not sure if anyone really knows what's going on in their heads. but they're going to have to start working soon if it's going to have a shot. D5Squared noted that prediction markets are now assigning the chance of an Ethereum-Spot approval at the May deadline to be just 24%, which is the polymarket odds, and down more than 40% from the beginning of March. Makesy summed up my feelings when they wrote, The amazing part here is that legal analysis plays close to zero role in any of these decisions, 100% party politics.

I expect a denial and I am bullish on the second order consequences of that decision. Still, it's hard to be too concerned about anything right now. Alongside a new all-time high in price, Bitcoin transactions have also spiked hitting an 18-month high. More than $70 billion worth of Bitcoin was transacted on chain last week, which is the highest volume we've seen since September 2022. This spike in volume has also led to a dramatic rise in fee revenue. Miners cashed in more than $65 million per day last week, just shy of all-time highs from May 2021. All-time highs in price and near highs in fee revenue means that Bitcoin miners should skate through the halving with little stress. This setup validates the planning from large miners

who have been doubling down on hash rate over the past six months. According to Bloomberg reporting, filings from publicly listed miners showed one billion has been spent on new equipment since February of last year. These firms are also hitting new records for energy usage up by 33% annually. Crypto exchanges are also churning through volume at multi-year highs. Last week, crypto exchanges hit $100 billion in aggregate daily volume for the first time since November 2021. Compare that to the beginning of February when only $24 billion in daily volume was

flowing through exchanges. Monthly volume has been slowly ticking up since October, but so far, looks on track to challenge records. Binance has also roared back to life as traders head out on the risk curve, with the exchange back up to 43% market share. Upbit and OKX round out the top three exchanges in terms of volume this month, suggesting massive demand from Asia. Like I said, we will be back tomorrow with more commentary discussion, exploration of

Bitcoin above 70,000. But for now, that is going to do it for this episode. I want to say one more big thanks to my sponsors for today's show. Go to crackin.com slash the breakdown and see what crypto can be. and of course a big thank you to Ledger. Check out the Ledger Bitcoin Nano where 5% of sales will go to Bitcoin Development. Until next time, be safe and take care of each other. Peace.