Ready for Adoption

One of the world’s leading investors just went long on bitcoin. The drumbeat of adoption keeps getting louder.

Unless you’re deep in the investment banking scene, it’s unlikely that the name Paul Tudor Jones means that much to you. Yet a few weeks ago, on the eve of the Halvening, PTJ became the most talked about person in crypto.

Why?

Because, as the head of a US$21.6 billion investment fund, Jones publicly announced that he’d sunk 1-2% of his fund’s wealth into bitcoin – around $US400 million. And if that doesn’t sound like institutional adoption, I don’t know what does.

They’re coming

For PTJ, taking a position on bitcoin was a hedge against what he termed the Great Monetary Inflation – basically, the printing of around US$4 trillion since the beginning of the coronavirus pandemic. As he put it, “The best profit-maximizing strategy is to own the fastest horse… If I am forced to forecast, my bet is it will be bitcoin.”

Bitcoin watchers have been waiting a long time for someone of Jones’ stature to venture into the cryptocurrency space, and there’s little doubt that this should prompt other money managers to look at bitcoin with fresh eyes. But his announcement isn’t the only factor suggesting that seismic changes are afoot. To name a few:

• Institutional player Grayscale Investments was revealed to have bought one-third of all newly mined bitcoin over the three months before the halving;
• Payments provider Square announced that in the first quarter of the year they’d sold US$306 million of bitcoin to their users – an increase of 72% on the previous quarter;
• Stablecoin issuance has skyrocketed, growing from US$6 billion before the March 12 crash to well over US$10 billion now; and
• More than US$3 billion worth of bitcoin has been moved off exchanges and into cold storage since March, suggesting an increase in rates of long-term holding.

My two cents

I try to keep my personal takes out of these newsletters, because, well, my opinion doesn’t count for all that much. (Also, your periodic reminder that this is 100% not investment advice). But I will say this:

Over the last few months my perspective on bitcoin has shifted considerably. I’d always seen it existing uneasily in this tension between future money, high-risk/return investment and gold alternative (AKA store of value). Each narrative had its time in the sun, but that fuzziness in bitcoin’s raison d’etre felt to me like the exact reason why it might never break through.

Now, though, I’ve come to see bitcoin as something else entirely – as an insurance policy against wholesale systemic uncertainty. It doesn’t need to replace money, or supplant gold or become the rallying call of the indebted young (although it could do any or all of those). It just needs to be stable – technologically, philosophically and economically – in a time when so much else is spiralling out of control. In truth, that’s pretty close to Satoshi’s original vision for bitcoin back in 2009, but right now the stakes are a whole lot higher.

As always, anything could happen. But all I know is that, right now, bitcoin makes more sense to me than it ever has before.

One more thing…

Like a Muggle walking blindly into a wizarding war, two weeks ago J.K. Rowling downed a few Old Fashioneds and then asked Twitter to explain bitcoin to her.

“A-ha!” I hear you think. “What a great opportunity for bitcoin’s finest thinkers to walk one of the world’s most prominent figures through the abundant promise and profound implications of blockchain technology!”

Things went about as well as you’d expect, with everyone from low-rent trolls to scam project shillers and Elon Musk getting involved while Rowling ripped shit through the entire thing. After two days of chaotic back and forth, she had her final word on the topic:

One minute later:

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