What's next for Bitcoin? It continues to track a combination of network growth and real rates, which makes sense given that it’s a network asset with an adoption curve affected by the macro. 🧵 
Bitcoin's adoption curve continues to grow—the number of non-zero addresses reached a new high last week. /2
What will keep driving it? First, the macro narrative needs to change from restrictive to accommodative. Below is a regression model that lays out a price band based on a typical adoption curve and a range of real rates (from -2% to +2%). /3
If and when that long-elusive recession finally hits, and the Fed pivots for real, Bitcoin and gold could be viewed as high-powered hedges. /4
Bitcoin has become less correlated to equities, and less volatile. Its annual vol has declined from 85 in 2021 to 55 (which is still high), and its 12-mo correlation has fallen from 65% to only 7%. So Bitcoin might provide uncorrelated returns in the next market cycle. /5
Bitcoin bulls need the money printers to go to work again. The money supply exploded in 2020-21, a scenario in which gold bugs and Bitcoin bulls thrived. When the money supply grows faster than its long-term growth rate, gold’s market share has gone up. /6
In 2022, central banks slammed on the brakes as hard as they had stomped the gas pedal the year before, and M2 has now declined to $20.9 trillion. This suggests that, unlike the 1970s, the money-printing party of 2020-21 probably was not the start of a sustained trend. /7
Bitcoin's biggest bulls hold to a “de-dollarization” view, but there is really no evidence they're right. Yes, the dollar’s share of global FX reserves has fallen in recent years, but the dollar itself has been firm. /8
Bitcoin needs important pieces of the macro puzzle to fall into place, from real rates to the money supply to the dollar. Until then, like gold, it looks like a solution waiting for a problem. /END
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