Old Money Season
Efficient Frontier biweekly newsletter: Why Bitcoin’s future depends more on Generation Z than the current establishment + market wrap
Why does it feel like one year in crypto-land is like 5 years of normal life? The news pace is just staggering, and endorsement and news of institutional interest keep piling in while Bitcoin’s price is hovering close to its all time dollar heights.
Though this price run has taken a pause, the bigger picture looks positive for cryptocurrency, not only due to the endorsements by the American establishment, but also because of the dry metrics:
The number of addresses with a non-zero balance, as well as addresses with over 1,000 Bitcoin are both at all-time highs:
Investment advisor Lyn Alden explained in a Swan Bitcoin interview this Monday that ‘Squeezing’ Bitcoin’s price upwards causes whales to bring Bitcoins out of cold storage and sell onto the market, providing liquidity to the institutions who are now no longer afraid to invest in it. She added that as this year was characterized by institutional buying, she expects somewhat more shallow pullbacks. On the money printing or MMT front, she noted that having a former Federal Reserve chair, Janet Yellen, as head of the treasury is a strong signal that the Fed and Treasury will be working closely together.
Prolific establishment historian and official biographer of the controversial Henry Kissinger, Neil Ferguson, champions Bitcoin in a new Bloomberg opinion piece. “We are living through a monetary revolution so multifaceted that few of us comprehend its full extent.” He wrote. “Rather than seeking to create a Chinese-style digital dollar, Joe Biden’s nascent administration should recognize the benefits of integrating Bitcoin into the U.S. financial system — which, after all, was originally designed to be less centralized and more respectful of individual privacy than the systems of less-free societies.”
Boomers VS Zoomers
While the cryptocurrency world has been excited over the growing form the establishment and the wealthy older generation running hedge funds, governments and banks, last week’s causal affirmation of Bitcoin by Zane Hijazi and Heath Hussar, two of the most popular people on the internet, slipped under the radar of online cryptocurrency press and social media, due to the fragmentation of online entertainment.
Two weeks ago on Heath and Zane Unfiltered Podcast, as part of their usual free flowing conversation, which advertisers pay $200,000 a month to be featured in, the topic of Bitcoin came up. Zane joked that he might be able to save all his friends financially if the end of the world is coming, with the fraction of a Bitcoin he found. Heath went on to explain what Bitcoin is: “It’s an online currency that is universally accepted. Say you have a dollar here and another dollar [currency] somewhere else. They’re not worth the same exact thing. And this allows it to be universal. It’s all equal. I like it.” He went on to explain that the dollar used to be backed by gold and that cryptocurrency is similarly scarce. Then, answering the question of why isn’t it used for everything? he agreed “I think that’s going to happen very very soon, it’s like a one world currency.”
For the younger generation, internet native entertainers have replaced rock stars, and they don’t seem to have an issue with internet money replacing banks. Surveys from the last several years show that English speaking children today aspire to be Youtubers, Vlogger and Bloggers even more than Hollywood actors or footballers seen on TV. Teenagers today do not have the same biases. The internet generation doesn’t start the Bitcoin conversation by thinking that ‘Bitcoin is backed by nothing, how can it have value?’ explained Block-Fi’s article “Because Bitcoin just does have value, they don’t have the false notion that [for example] dollars are backed by gold.”
The fact that Bitcoin works and has a value is taken as a given to most people under 23. That’s why we should no longer wonder how to make Bitcoin mainstream, it just seems to be in the cards, like past technological progress and social progress. The benefit and lasting effectiveness of Bitcoin as a savings tool, is ultimately not dependent on the old guard, but on the future and the young people who will make the decisions down the line.
News & links
FTX Podcast: The story of Genesis Trading, crypto’s biggest lending desk
Venezuela army officially mining Bitcoin
China crafts law to legalize digital Yuan and outlaw competitors
Rekt blog on the “Ape tax”, gambling culture and DeFi
Visa to create USDC corporate credit card
Deribit insights: An Ex-Central Banker’s Perspective on Clearing Crypto Derivatives
12 years old trader explains his Bitcoin investment thesis