The Rake Review: December 2020
Welcome to the Stormrake Monthly Australian crypto market & education update.
For sophisticated investors who want to expand their crypto knowledge.
Presents for Everyone
Whether you celebrate Hannukah, Christmas or Kwanza it seems that Bitcoin investors will have the best of presents this festive season. Every day brings more gifts in the form of new All Time Highs.
Bitcoin has exploded and begun a parabolic move smashing the old $20,000 USD 2017 top and already breaching $24,000 USD. It was only March this year where doom and gloom culminated in a price below $4,000 USD. If you had invested a parcel of $10,000 then (you would have been brave), it would be worth $60,000.
As we've said previously Bitcoin was already at All Time Highs in many currencies, but it was the USD high that was the most important. In AUD Bitcoin has already smashed the $30,000 barrier.
We are seeing Altcoins bubbling along too. Litecoin & Dogecoin are up over 50% in a week. SNX and BCH up over 30% in a week.
Many investors are asking WHY? Well, it's all those things we've been banging on about in this newsletter for a year. Bitcoin is going mainstream and demand is growing, with a new wave of corporate and institutional demand. Supply on the other hand is lower, with Bitcoin leaving exchanges and Bitcoin mining at its lowest ever level against existing supply. There will only ever be 21 Million Bitcoins and investment banks are lining up to get their share, unlike a few years ago when they were too scared to enter. Check out the news below, but everyone from Billionaire investors, to Corporate giants to investment funds is jumping on board.
One thing is for sure, 2021 promises to be an incredible journey. There will be Highs and Lows but either way we're gonna have a lot of fun.
So, let's get into it.
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This month's listeningWhat is a speculative attack on currency? Pierre Rochard predicted in his 2014 article, that Bitcoin will drive out weaker currencies via a series of waves. With companies borrowing cheap dollars to invest in Bitcoin a new wave has begun. |
Markets
Bitcoin is flying as we already discussed up 120% in 3 months. Litecoin and XRP are the big movers. Last month Litecoin wasn't even in the top 8 and is now 5th up 37% in the month. XRP (Ripple) is now 3rd by Market Cap and had a huge pump before coming back slightly.
* Top 8 Coins by Market Cap thanks to Coin Gecko
In the NEWS
Firstly the unavoidable positive news in short:
1. Speculation of Elon Musk putting Billions into Bitcoin
A twitter exchange between Musk and Michael Saylor about converting some of Teslas funds into Bitcoin sent the speculators wild. Musk is a significant influencer and would be welcome as an investor by Bitcoin Hodlers. Musk asked if it was possible to buy Billions worth of Bitcoin.........
2. JPMorgan Bullish on Bitcoin floating the possibility of $600 Billion flowing into Bitcoin. This follows them quoting a price above $200,000 USD for Bitcoin. Only a short few years earlier Jamie Dimon was saying Bitcoin has no value. Another one bites the dust.
3. US Treasury has proposed a rule to monitor self-hosted wallets. At this stage its just a proposal but it has crypto users scrambling to understand privacy implications. Is a rule like that even workable and what will it mean for privacy coins and OTC markets?
4. A large Ledger database leak has caused 270,000 ledger customers to be hit with phishing emails in an attempt to steal their crypto. The scam emails try to trick the user to enter their recovery seed phrase. This sort of risk is something that Stormrake manages for custody clients but as a public service announcement, for anyone who owns a personal hardware wallet, do not ever enter your recovery seed phrase into a computer.
Bitcoin Dashboard
This month we focus on just one part of the Dashboard.
Future Supply estimates when Bitcoin supply milestones will be reached.
Currently 88.5% of Bitcoins 21 Million maximum cap has already been mined. 90% will be reached next year. People ask me about this all the time thinking you can always just mine more Bitcoins. The truth is that there is very little to be mined and even then, the cost of that mining is significant.
The last full Bitcoin is estimated to be mined in 2138 long after I'm gone but by then the inflation rate will be minute anyway and miner fees will form the majority of miner income.
Stock to Flow Valuation:
Current Long-Term Stock to Flow (StF) Price: $24,042 USD vs Current Price - $23,500 USD. Market price is lower than the historical trend suggesting that Bitcoin is undervalued today. However, the StF model also shows an increasing price every day for the next year to $103,000 USD. According to the efficient markets hypothesis, a rational investor would buy today and wait for the $103,000 USD price to materialise if you trusted the model. That’s why we rate Bitcoin as a Strong BUY
Plan B has stated that the next year will make or break his model and it seems the model is holding true!
Monthly Memes
Bitcoins smallest unit is the Satoshi.
There is no smaller unit than a Satoshi :)
There are 100 Million Satoshi's (Sats) in every Bitcoin.
Currently the price is 4,150 Sats per dollar. Cheap.
So, if you have $10,000 to invest you can still buy Bitcoin and you don't have to buy a currency with a lower valuation.
