Welcome to the Stormrake Monthly Australian crypto market & education update.
For sophisticated investors who want to expand their crypto knowledge.
Written by Michael Milmeister, Doug Hemingway and the Stormrake Team

Coming of Age 
 

In many cultures, turning 13 is a significant milestone.  This year my oldest son turns 13 and is becoming a man. It's a really important time where I have to realise that he is no longer a little boy but rather a man. He can do more chin ups and push ups than his old man, can hold a room when speaking and recently started a relationship with a girl.

Likewise Bitcoin just celebrated its 13th Birthday (The whitepaper was released October 2008). Bitcoin is no longer a little boy. It's smashing the chin ups and setting new all time highs and no longer wetting the bed (losing 80-90% on occasion). It is having adult conversations in Wall St where pension funds and boutique investment firms are adding it to the mix. It's being taken seriously - even by countries and presidents. Individual investors are proud to tell people they have bitcoin rather than being a little shy.

This brings me to the future.
 

4 year cycles

Most people are aware that Bitcoin (and in turn the other coins) seems to follow a 4 year price pattern. This is caused by the halving of mining rewards which happens roughly every 4 years. The "Outspiral" Graph shown at the bottom of this newsletter is constructed in 4 year circles for that very reason. This assumption has been historically solid, however, we expect that the institutional take-up of Bitcoin could significantly change the pattern. We think it's entirely possible that this is the last clear 4 year cycle because the bitcoin issuance (block subsidy) is having a smaller and smaller impact on the total supply. 

 

Volatility

Institutional investors are less emotional and work to strict risk policies and expectations. They are happy to take a 20-50% profit by selling and also likely to buy in on a correction. Both actions reduce the volatility of Bitcoin over time by putting a floor and a ceiling in the price. Indeed, we have already seen volatility reducingand this will only make that pattern stronger.

It is reasonable to assume Bitcoin's volatility will continue to reduce as the market cap rises. The total valuation is over a Trillion now and we would expect significantly lower volatility as bitcoin becomes a man and grows further in size. Bonds are thought of as a fairly low risk investment but when they were first listed on the London exchange Bonds were actually the wild west with high volatility and even cases of outright fraud. But Bonds grew up and Bitcoin is too. Happy Birthday!

On a different note, our clients' reports look pretty incredible this month. We have almost no clients showing a loss and the vast majority sitting on some incredible returns. Some investors have gone 5x in a year and some individual holdings are 10x plus. Our biggest loser is GRIN which has underperformed since privacy coins were regulated to death. There are lots of winners but BTC has made the most dollar gains and coins like BNB, MANA and FTX have made some investors a lot of money. All those that kept stacking BTC are in the black.  Let's not be distracted by DOG related coins though and keep stacking quality coins we can actually trust.