Thread by @Moon__Rekt

1/ This thread will explain why Bitcoin will become the first world currency worth ≈ $98 Million USD per Bitcoin (in today’s dollars).

Timeline: 1-2 Decades

2/ What is Bitcoin?

Bitcoin is software that transfers value using a currency protected from unexpected inflation without relying on your government or bank.

3/ In short, Bitcoin is the best and final form of money ever created.

4/ Bitcoin has existed since 2009, and it has gone through multiple boom and bust cycles. Each boom cycle brings unimaginable gains, and each bear cycle brings devastating losses. Through these cycles, the price continues to rise.

5/ The bull markets attract attention, speculators, software developers, banks, asset managers, and miners.

The bear markets drive out all those that still do not understand bitcoin, pushing the prices down for others to accumulate more.

6/ Bull cycles begin by:

1) Someone speculates that Bitcoin will be worth more in the future.
2) This takes Bitcoin off the market and drives up the price.
3) The price goes up, which attracts more speculators.

7/ Now of course this will not happen forever. The price continues to rise exponentially in a positive feedback cycle until it pops and the trend reverses. The bear market begins because there are more people selling bitcoin than there are buying.

8/ Bear cycles begin by:

1) Someone deciding to sell bitcoin.
2) Bitcoin miners selling Bitcoin to pay for electricity.
3) Price falls, which scares away buyers, and brings more sellers.

9/ These above reasons are what contribute to Bitcoin’s extreme boom and bust cycles. Bitcoin is procyclical. People buy tops and sell bottoms. The interesting thing about Bitcoin is that while these cycles exist, the price is still clearly on a massive upward trajectory.

10/ Why is that?

There is a group of people who are considered the Bitcoin Holders of Last Resort.

Holders of Last Resort recognize the significance of Bitcoin and are able to profit off its inevitable global adoption.

11/ These people buy and hold bitcoin in the depths of the bear market because they know for a FACT that eventually the trend HAS to reverse. This is because as the price falls in a bear market, they can buy exponentially more Bitcoin.

12/ This same cycle repeats over and over.

https://twitter.com/Moon__Rekt/status/1084486056681111558

13/ In addition to the demand from Holder’s of Last Resort, the available supply is GUARANTEED to decrease over time as Bitcoin has something called “halvings” built into the protocol every 4 years.

14/ A halving is a decrease in the reward to miners for mining Bitcoin blocks. This means miners will be earning less Bitcoin and therefore, will have less Bitcoin to sell to cover their electricity costs.

15/ Halvings have a clear effect on price and they act as a MAJOR supply shock to the market.

16/ The next halving is May 2020, when the annual inflation rate of bitcoin will drop from 3.8% to 1.8%. This lack of supply will be unprecedented, and it is beginning to be front run as the price has already started creeping back up again.

17/ All of these market forces combined lead to the inevitable adoption of bitcoin.

Now, how do we get the $98 Million mark?

18/ Currently the world’s broad money is roughly $90.4 Trillion. Broad money includes: coins, banknotes, money market accounts, as well as savings and checking accounts. Bitcoin gets 100% of this.

19/ Gold is roughly $7.7 Trillion, Bitcoin takes 90% of this. That’s $6.9 Trillion.

20/ Since Bitcoin has a perfectly fixed supply, it will earn a real rate of return equal to that of global GDP. With bitcoin as a unit of account, growth rates will be massive (as explained in the Bitcoin Standard). We’ll be conservative and say global GDP growth will be 5%.

21/ Bitcoin will suck up value from all bonds that earn less than a 5% real rate of return. Global debt is at $215 Trillion. Bitcoin takes 50%. That’s another $107.5 Trillion.

22/ Bitcoin drastically raises the cost of capital which will also slash stock market valuations. Global equities are currently $73 Trillion. Bitcoin takes 50%. Another $36.5 Trillion.

23/ Last, Real Estate will not offer the same returns as it does today. Home prices may depreciate or remain stagnant over time. Real Estate is roughly $217 Trillion. Bitcoin takes 25%. Another $54 Trillion.

24/ So far that’s a total of $294 Trillion.

$294 TRILLION Dollars will flood into Bitcoin, the new global unit of account.

25/ Unfortunately for non holders, 84% of all Bitcoin have already been mined, and millions of BTC are already in the hands of the Holder’s of Last Resort.

26/ This means that $294 Trillion Dollars may be fighting over the “available” ≈ 3 Million Bitcoin.

That’s $98 Million / Bitcoin.

27/ This was this mornings Moon Capital Issue #2 : Possibilities of Bitcoin are Incomprehensible

If you want access to the Moon Capital newsletter, subscribe and get it in your inbox every Friday morning.

mailchi.mp/f0739c194b57/m…