Swan Signal Monthly: November 2020 Newsletter

Welcome to the November 2020 edition of the Swan Signal monthly newsletter.

In this month’s letter:

1. Liftoff: a short essay on an impor­tant topic

2. A curated list of recent Bitcoin content

3. Behind-the-scenes updates from the Swan team

Bitcoin has undoubtedly made steady incre­mental improve­ments since 2017, such as more users, better onramps, improved custody solutions, new bitcoin-only compa­nies, more educa­tion, improved scala­bility, Light­ning Network devel­op­ment, and more. However, the big story in 2020 is how the world around Bitcoin has changed.

Here are 5 ways this bull market is different than in 2017…

In 2017 the economy seemed stable, unemploy­ment was low, and the future seemed bright. Every­thing changed with the events in 2020, leading to 20% of all dollars in existence being printed. 

When more dollars flood into the system, the purchasing power of each unit must decline. For investors, currency deval­u­a­tion means taking a defen­sive position with scarce assets like gold. 

However, everyone is starting to realize that Bitcoin is better than gold and more practical in a digital society. Rick Rieder, the CIO of Black Rock (the world’s largest asset manager), says, “Bitcoin is taking some of gold’s place.”

Grayscale now holds over $10B worth of Bitcoin in their insti­tu­tional-friendly invest­ment vehicle. Investors like it because it’s avail­able in tax-advan­taged accounts and can be acquired through mainstream brokers like Fidelity.

While Greyscale is an ineffi­cient (expen­sive) way to acquire BTC, the demand is exploding. This speaks to a new class of investors entering the market.

Most millen­nials and “crypto-natives” prefer buying BTC outright from places like Swan so they don’t have to pay the high fees and premiums of GBTC. However, many compa­nies, insti­tu­tions, and individ­uals are desperate to get exposure to Bitcoin, so they’re willing to pay the premiums.

In August of 2020, Michael Saylor, the CEO of the billion-dollar enter­prise software company MicroS­trategy, announced they were converting their corpo­rate treasury to Bitcoin. Since then, their stock has increased by over 275%. 

Corpo­rate treasuries around the world have noticed. Quickly after, Square announced a $50M alloca­tion to Bitcoin. Currently, over 4% of the outstanding BTC supply is owned by corpo­rate treasuries. 

The big players haven’t even started to move in yet. Apple alone has $200B in cash on its balance sheet, which is over half the entire market cap of Bitcoin. Even if corpo­ra­tions dip their toes in, Bitcoin’s price will skyrocket.

Square’s Cash App has seen exponen­tial growth in Bitcoin sales throughout 2020 with no signs of stopping. In Q4 2020, PayPal began selling Bitcoin to their ~300M customers. Square and PayPal alone are buying most of the new supply entering the market.

In 2017 the Bitcoin protocol issued 1,800 new BTC per day. In 2020, the protocol was only issuing 900 BTC per day due to the programmed supply issuance schedule. 

Less new supply entering the market and increased demand in 2020 means that basic supply and demand forces will increase prices.

Those who pitched Bitcoin in 2017 received scrutiny from peers and faced severe career risk which made it easy to dismiss Bitcoin

Since then, we’ve seen the U.S. Office of the Comptroller of the Currency (OCC) declare national banks can legally custody Bitcoin. 

U.S. Congressman Patrick McHenry said, “Bitcoin is an unstop­pable force.” Legendary Investors like Paul Tudor Jones and Stan Druck­en­miller are going on national televi­sion explaining why they’re investing in Bitcoin. Citibank Analyst calls a $300k Bitcoin price by 2021. And, of course, major corpo­ra­tions and banks such as Square, Visa, IBM, and Fidelity are investing in Bitcoin projects. 

These combined events have effec­tively de-risked Bitcoin as an asset. This monumental shift led to larger pools of capital entering the space.

We’ve pulled together some great Bitcoin content from around the web for you…

Bitcoin is Winning The Covid-19 Monetary Revolu­tion by Niall Ferguson 
One of the world’s leading economic histo­rians, Niall Ferguson, gives histor­ical context to Bitcoin’s rise as an alter­na­tive money.

Bitcoin Common Miscon­cep­tions w/ Robert Breedlove on 

The Investors Podcast
Swan advisors Robert Breedlove and Preston Pysh explore Bitcoin and money from first princi­ples. A perfect intro­duc­tion for the Bitcoin curious.

Share this one far and wide.

Bitcoin Tidbit: What is the “Bitcoin market cap?…”

“Market Capital­iza­tion” is the best way to measure the total value stored in Bitcoin. To calcu­late market cap, multiple the unit price (~$19K) x the outstanding supply (~18.5M) which gives you a Market cap of about $350B. In November 2020, Bitcoin broke the previous all-time high market cap of $330B from back in 2017. Very impres­sive growth in only 12 years, however, Bitcoin’s market cap is still 50x smaller than gold. Lots of room for growth.”

Bitcoin is Fourth Turning Money w/ Brandon Quittem on What Bitcoin Did
Breaking down the Fourth Turning thesis, demographics, cycles in history, and how Bitcoin acts as an insti­tuion to rally around during a crisis period. 

Bitcoin at 12 (Years Old) by Nic Carter
Written for the 12th anniver­sary of the Bitcoin Whitepa­per’s publi­ca­tion, this piece captures the spirit of why so much intel­lec­tual capital rallies around Bitcoin

Swan Signal Live 36: Marty Bent and Alex Gladstein
Election day special! Join us for a discus­sion about democ­racy, freedom and how Bitcoin is used as a tool to defend individual privacy.

Our Most Brilliant Idea by Robert Breedlove
A must-read. Markets enable trade and special­iza­tion which increases idea gener­a­tion that leads to wealth creation. Robert explains how markets work much better when operating on a sound money standard.

Swan Signal Live 37: Robert Breedlove and Brandon Quittem
Deeply philo­soph­ical discus­sion spanning a wide range of topics including histor­ical cycles, order vs entropy, Bitcoin as a moral oblig­a­tion, Bitcoin and property rights, and how free markets are a positive force in the world

• Swan had another record-breaking month in terms of new customer signups and total Bitcoin acquired by customers 🚀

• Robert Breedlove expanded his role at Swan! Robert is the CEO of Parallax Digital and a well-respected writer in the Bitcoin space. In addition to his role as an advisor, Robert will be publishing monthly articles on the Swan Signal blog.

• Phil Gibson joined the support team at Swan. He’s helping onboard new Swan customers and crushing support tickets. Phil also hosts a Bitcoin podcast called A Boy Named Pseu.

• Swan is now accepting wire trans­fers directly from your Swan Dashboard. 

• Swan is adding the ability to buy now soon. Sign up here for early beta access.

Both Swan and Bitcoin are at the begin­ning of something great. We really appre­ciate your support. 

As always, you can head to your Swan Dashboard to increase your plan size, setup auto-withdrawals, and wire funds for one-time purchases.

Thanks,
The Swan Team

P.S. Have friends and family who are curious about Bitcoin?