Time for this month’s installment of Bitcoin is eating the world. “Resistance is futile, you will be assimilated.”
1.) After the Blackrock CIO mentioned Bitcoin positively last month, now Larry Fink, CEO and Chairman of Blackrock the largest asset manager in the world, was asked about Bitcoin. He essentially gives a politically safe, hedged answer by saying it is “a small market” and “untested,” but “has created a lot of imagination, a lot of interest, and certainly has the potential to evolve into something real.” Interestingly, he cites stats from the Blackrock website. Articles about the Covid and federal reserve policy each received about 3000 clicks. An article about Bitcoin received 600,000 clicks. The take away here is Fink is paying attention, and likely readying Blackrock to own Bitcoin if they don’t have a position already.
Also interesting is that Mark Carney, Governor of the Bank of England and former Governor of the Bank of Canada, won’t even say the word Bitcoin. Instead, “the B word.” I’m telling you, central bankers are having nightmares about Bitcoin, which is slowly but surely undermining confidence in central banks and appropriating their power. You can almost see Carney wincing while Fink was posing questions about Bitcoin reducing the role of the dollar as the world’s reserve currency.
Carney does admit that Covid is accelerating the shift of the global economy towards a digital currency. As with the rest of the central bankers, he believes CBDCs will be the global Schelling point. Like other central bankers, he also seems to believe that ‘digital currencies’ are simply a payments revolution. He is (willfully?) blind to the fact that Bitcoin is really a monetary revolution. Yes, Mark, Bitcoin is going to replace the monetary base, clearing, and settlement functions of today’s central banks. But, less importantly, payments efficiencies and innovations will also result.
https://www.youtube.com/watch?v=YEq2vAg2zzw&feature=youtu.be
2.) Niall Ferguson, a monetary historian, who was previously a Bitcoin skeptic, has pulled an about face. He published an Op Ed in Bloomberg titled Bitcoin is Winning the Covid-19 Monetary Revolution. Like I said earlier, resistance is futile. Everyone will eventually own and use Bitcoin as a matter of economic necessity. The cool part is the quicker you are to adopt it, the more purchasing power you will gain. On the flip side, if you are unfortunately among the last to adopt it, only out of necessity, you will likely have lost a great deal of value from your other assets. Act accordingly.
3.) The most bullish news of the year: MassMutual, one of the biggest life insurance companies in the world, has bought $100M worth of bitcoin. It also bought a small stake in NYDIG, a subsidiary of Stone Ridge Asset Management covered here, which provides cryptocurrency services to institutions.
Insurance companies were bound to come. In a world in which $18T of global debt has a negative yield, insurance companies are starved for yield. An asset with a yield of zero such as gold or bitcoin starts to look pretty good when bonds with low credit risk are priced so high that they are to a contract to lose money, and bonds with high credit risk barely yield enough to outpace inflation. For God’s sake, even Greece, a country that has defaulted and had to restructure its debt several times in the past decade, is issuing debt at a negative yield. It’s Bizarro World out there!!
When a portfolio of 99% cash and 1% Bitcoin has been shown to have a better Sharpe ratio than stocks, bonds, or gold, bitcoin starts to look like a must own asset for insurance companies in a world of zero bound interest rates.
What’s more interesting though is that MassMutual has said it is exploring the opportunity to offer Bitcoin Based Life Insurance (BBLI) and Bitcoin Based Annuities (BBA). This is an astounding revelation. BBLI will be the next trillion dollar industry.
What most people don’t realize is that up until about the 1930’s (just after the Federal Reserve was established), the life insurance industry was larger than the banking industry and most families’ largest asset was a cash-based life insurance policy. After Federal Reserve induced debasement of the currency took hold, life insurance policies that pay a fixed amount fell out of favor. Who wants a policy that pays out a fixed amount, if that amount won’t buy you squat compared to what it would have bought when the policy was initiated? However, BBLI will completely reanimate the life insurance industry and give families something safe to invest in rather than have to be over exposed to risky markets just to maintain their standard of living. Mark my words BBLI and BBA will be huge in the future. And if you can buy a BBA before the Bitcoin adoption S curve is fully realized, that will be a fantastic investment.
A lot of dominoes fell this month. I’ll be back in another post to highlight some more. Until then, keep stacking sats. And don’t worry about the 25%+ price rise over the month and 140% rise over the last quarter. With the wall of money that is flowing into bitcoin, $23,000 is still extremely cheap.
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