BTC Hit $100k, So Where Are We??
While I know most of the world isn’t paying attention to the price of Bitcoin or the overall adoption of other “crypto/blockchain” technologies such as zero-knowledge proofs, public/private key encryption, stablecoins, DeFi, etc… and that kind of makes sense! We are at an inflection point, the early to late-early adopters are here but the masses are just barely (and I mean barely) getting their feet wet. BTC and ETH ETFs are a huge boon for the digital asset space but they aren’t what makes the technology of crypto cool! That’s because ETFs are a product created by the current financial system (TradFi) but integrates the custody and transfer of these native blockchain assets. Other than setting up the infrastructure for TradFi to handle blockchain assets it does help align millions of Americans with 401ks, IRAs, and Brokerage Accounts who can now participate “safely” in the price action. However, the future of these technologies and assets lay in the hands of people across the globe. Whether Trump and our most “pro-crypto” Congress ever, plans to undo “Operation Chokepoint 2.0” and make America a better place for blockchain innovation without fear of regulation by enforcement through REAL executive and legislative action will be a story for next year. From a technology perspective, our global society may be on the cusp of a whole new era - similar to the industrial revolution or the more recent internet revolution in the early 2000’s. If you don’t believe me, go try to learn something new using ChatGPT or one of the many other AI large linguistic model chat bots out there. Try sending value, real digital value (ETH or BTC), to someone across the world in seconds to minutes using a crypto wallet instead of several days through ACH/Wire Transfer. Heck, if all that doesn’t convince you, go watch a video on Youtube from Boston Robotics, SpaceX, or biotech/life longevity companies like Altos Labs.
But if you’ve made it this far you know me, let’s get back to crypto for a bit. BTC just hit $100k with news cycle highlights from Michael Saylor/Microstrategy playing out one of the world’s largest trades (Microstrategy is levered long on BTC), countries like El Salvador already have BTC treasuries, US Senators are proposing a US BTC Strategic Reserve, and BTC ETFs have $110B+ of BTC within the first year! Couple notes here, whether the Microstrategy treasury trade works out or not is up to market participants - we saw what happened to FTX, Celsius, Alameda, Three Arrows, and others last cycle… Could this be different? If you think one way or the other, put some money behind it. Will more countries put BTC in reserves like Gold? Most likely, if the US does it then things could get pretty wild. BTC ETFs? They have been the most successful ETF launches in history. It took Gold ETFs almost 10 years to get to similar AUM, BTC ETFs have top volume among ETFs this year, and the BTC can be tracked onchain! Could something go wrong on the custody side? Yes, Coinbase does custody several of the majority ETFs… So what about everything else? Well the top stories besides Bitcoin have been stablecoins on smart contract blockchains like Ethereum, Solana, and Tron. Stablecoins are doing volumes similar to major payment networks like Visa and FedWire. Remember what I said earlier, it’s about combining technologies - AI Agents and robots can’t have bank accounts, but they do have access to the blockchain and crypto wallets! So what else has been newsworthy? Well, sadly - because of our current SEC regime (bye bye Gary) “memecoins”. Since the SEC wanted to make it nearly impossible for blockchain digital assets and protocols with real UTILITY to find a path toward innovation and incentive creation/experimentation, the world of crypto has turned to “valueless” tokens based on memes. And of course our society likes to gamble, just look at sports these days, so there are plenty of funds and entrepreneurs who will make the market work. Anyway, as much fun as speculation can be, building things that are anti-fragile and not reliant on number go up are far more important IMO.
So what happens next? Well that’s a great question and if I had to take a stab at it, I’d say volatility. Whether digital assets and blockchains become the next stocks and tech rails for money or if some huge catastrophe happens because of oversized/leveraged bets by the current big names in the space is yet to materialize. From a technology perspective, Bitcoin miners are very centralized - a few pools control over 50% of block production and on Ethereum’s side block builders (those sending the order of transactions to validators) is basically two entities at this point - Titan Builder and beaverbuild. Tether, the largest USD stablecoin, is making killer profits on its $140+ billion of assets but whether there is something else going on, we don’t really know. Memecoins are a casino so that’ll end up wrecking most of retail if they keep buying. If in 10 years both Bitcoin and Ethereum’s blockchain continues to produce blocks on schedule and reduce centralization risk, I view it as a win.