On the eve of Coinbase's blockbuster direct listing (importantly it is NOT an IPO, meaning employees and insiders can sell their shares immediately) many are speculating that interest in #Coinbase will trigger a fresh wave up in #Bitcoin's bull market. Will it?

A thread 👇
With Coinbase reporting Q1 revenues of 1.8B with huge margins (~800m in profit) it is likely that Coinbase will be valued in the ballpark of 100 billion dollars when they become public. The question is, will this huge liquidity event transfer over to #Bitcoin?
For many unsophisticated retail (and even institutional) investors, buying into Coinbase's direct listing may seem like a good way to get exposure to the "crypto" space. Importantly, the capital allocated with this mindset will NOT be used to purchase #Bitcoin.
While there is a correlation between #Bitcoin's price and Coinbase's valuation, the two assets are very different. One is a form of money and the other is a stock. One is valued based on the attributes that make for a good store of value, the other based on cash flow.
So if investment dollars that flow to Coinbase provide a "crypto" allocation that will satisfy many retail and institutional investors, in a way this steals potential investment demand away from #Bitcoin. However there is another mechanism by which Bitcoin may benefit. 👇
A 100 billion dollar liquidity even puts a LOT of cash in the hands of Coinbase employees and executives. Brian Armstrong will become a very rich man. But should we expect cash-rich Coinbase employees to plow their new new-found wealth into #Bitcoin?
As a company Coinbase hasn't shown a particularly strong desire to acquire bitcoins in its treasury. So why should we expect any different from its employees? Culture starts from the top and Brian has never been the most enthusiastic fan of #Bitcoin.

Unfortunately Armstrong has had a long history of not really understanding what #Bitcoin is and trying to make it something that would have been far less valuable (a payment system).
Furthermore, many of Coinbase's employees may believe that it's safer to diversify *away* from the industry than back into it by buying #Bitcoin. So if Coinbase's listing sucks demand away and employees may not use their new cash to buy #bitcoin is this bearish?
Absolutely not. I remained incredibly bullish on #Bitcoin but it's important to understand that when the next leg up for Bitcoin begins, it is simply because Bitcoin is in a massive secular bull market. It is a false narrative to believe Coinbase is driving Bitcoin higher.

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More from @real_vijay

6 Apr
Coinbase is going to list publicly in less than 10 days and reported blowout numbers today (~800m in profit on 1.8B on revenue).

Sounds great, but imagine how much more they'd be worth if they had held their profits in #Bitcoin instead of dollars for the last 8 years.
According to Coinbase's S1 filing, they own approximately 4486 bitcoins (compared to MicroStrategy which owns 91,579). Given how profitable Coinbase is they have been a net seller of #Bitcoin for years and years (since they naturally accumulate it through fees on trading)
It's almost as if Coinbase doesn't even believe in the industry in which they are one of the biggest players. Sad.
Read 5 tweets
5 Mar
Grayscale's Bitcoin Trust (GBTC) has been a very common ways for institutions gets get exposure to #Bitcoin without having to think about custody or owning the underlying asset. It's currently trading as a steep discount to NAV (almost -12%). What does this mean? Thread time👇
The Grayscale Trust owns bitcoins and issues shares in proportion to the bitcoins owned. The Net Asset Value (NAV) is the value of the bitcoins owned by the trust. Investors can then buy shares in the trust as a way of getting exposure to #Bitcoin's price movements
Theoretically the value of the shares should remain proportional to the the price of #Bitcoin. However, because there is no way to arbitrage the difference in Bitcoin's price with the price of GBTC, the value of the fund can drift away from its NAV
Read 11 tweets
1 Feb
Buoyed by their success in assailing Wall Street hedge funds, the legion of retail investors who are part of the Wall Street Bets movement #WSB have turned their attention to the silver market.

Silver futures are already up 9%. How is this going to end?

Time for a thread 👇
Unlike GameStop ($gme) which is worth billions, the above ground silver market is worth almost 1.5 Trillion (2018 estimate). This is not to mention the massive derivatives market on top of the silver spot market. A short squeeze will be much harder to achieve, so why bother? 👇
It is believed that the silver market is highly manipulated by Wall Street and that the market is shorted by many factors more than actual silver that exists above ground. By trying to corner silver, especially physical, #WSB hopes to explode Wall Street's machinations.
Read 12 tweets
30 Jan
@RayDalio is one of the great investors of our time and he has begun thinking about #Bitcoin. He penned a thoughtful piece on his concerns about Bitcoin and was hoping to get responses, point-by-point.

Ray, here are my responses to your points (screenshotted) in a thread: 👇
Never in the history of the world had it been possible to transfer value between distant peoples without relying on a trusted intermediary, such as a bank or government - until 2009, with the invention of #Bitcoin.

You are correct in your summation of its significance, Ray.
You ask what demand could #Bitcoin have and this is a deep question. It's not a complete answer but I will refer you to a thread on valuation frameworks for Bitcoin that I previously wrote:

Read 29 tweets
19 Nov 20
In the global family of financial assets, gold is #Bitcoin's closest cousin. They are both non-sovereign monetary goods valued for their superior monetary properties (relative to fiat).

However, the ownership distribution of these close cousins is very different. A thread👇
A very large fraction of gold is owned as jewelry (dominated by India) and (ironically) by global central banks. Investment usage in the form of bullion is the next dominant usage and this, in turn, comes in large part through demand from gold ETFs such as SPDR Gold Shares (GLD). ImageImage
Much of the jewelry demand for gold is actually use as an ostentatious store-of-value. This is particularly so in India.

However, outside of India, there is very little retail demand for gold as a store of value, especially among younger savers in Western nations (millennials). Image
Read 11 tweets
18 Nov 20
At this stage in the 2016 #bitcoin bull market cycle, the price dropped about 29%, which in today's terms would be a fall to a bit below $13,000.

Is it possible we have a correction like this before taking the all time high? Yes.

This cycle is clearly being driven more by institutions who generally have much stronger hands than retail buyers.

For instance MicroStrategy has stated their purchase of #Bitcoin is a long term allocation - those bitcoins have been taken off the order book indefinitely.
The larger institutional interest may help dampen volatility in this cycle. Institutions are not looking at #Bitcoin to seek returns of 10 or 20%. They're looking for an asymmetric bet. When they take a position they're looking for 10 or 20x upside. They are also patient.
Read 4 tweets

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