Thread by @mutatrum

How would hyperbitcoinization look like from a market perspective? Two recent events happened which show a glimpse. If you combine them, an interesting picture emerges. A short thread: 👇

The first event: the conversion of company cash reserves into #bitcoin. There are currently two known companies which did so and announce it publicly. These reserves are relatively small, and those orders could probably fairly easily be filled OTC.

https://twitter.com/mutatrum/status/1295806028819431424

The second event: @CashApp was sold out on #bitcoin. More and more bitcoin onramps, or maybe better, fiat offramps are available. They have to source a steady stream of supply.

https://twitter.com/BTCization/status/1295421252203622401

There is anecdotal evidence that only @CashApp alone is already responsible for sucking up a large portion of the daily newly mined bitcoin.

https://twitter.com/listedreserve/status/1258268244319694848

And @CashApp is not the only one, more and more DCA platforms are emerging: @SwanBitcoin @vimbaco and @BitarooExchange. In some markets such as Europe there are not that many yet, for now only @Relai_ch AFAIK, as @GetBittr had to close (for now).

https://twitter.com/FriarHass/status/1279038381226246144

If these markets are unlocked, a steady stream of bitcoin is bought up and locked away into cold storage. If rates go up, some people will sell because they need to live, and pay expenses, probably in fiat for a long time. But the buying pressure is relentless.

How would these events look, combined? Currently, people are still willing to sell. Those people are not the DCA crowd, they are accumulating and mostly HODL for life.

https://twitter.com/100trillionUSD/status/1294898697051013120

Companies who just converted their cash reserves into #bitcoin won't sell, at least not much. If enough companies have their cash reserves in #bitcoin, payments between companies stay in #bitcoin. Maybe on-chain, maybe through private wumbo Lightning channels, maybe over Liquid.

If more and more companies store cash reserves in #bitcoin, and NgU keeps going, the ones staying in fiat have to start paying a premium to do business with #bitcoin companies.

If both of these flows increase, at some point it will go beyond the daily mined issuance, if it's not already. It starts sucking up floating supply. One of those supplies are shitcoins. Those are fairly liquid markets, as most of this is on exchanges.

If time goes on, the ask side on open order books will get thinner and thinner and the spread widens.

Less and less people are willing to sell, less and less liquidity is available to feed the DCA stampede and the companies needing to convert their cash.

https://twitter.com/FriarHass/status/1296069709201174530

Companies that are still have costs in fiat are at a disadvantage, as everything denominated in fiat will get more expensive - aka their fiat purchasing goes to 0 in the limit. All the while the companies with bitcoin reserves can take over their competitors.

The end game here is that there is no ask side anymore. The bid side is a free for all. Whoever still has something to liquidate, shitcoins or fiat, has to outbid the rest of the world trying to obtain the last sats that are sold on open markets.

In the end, all liquidity is sucked into bitcoin.

CashApp selling out is a precursor to all this.

/fin