Blain’s Morning Porridge Dec 5th 2024: Bitcoin hits $100k – Time to sell the fact?
“Faith is like porridge. Better with milk and honey.”*
Bitcoin breaking $100k was a judder moment in a market already awash with signs and portents suggesting irrational exuberance has gone too far, and a correction is coming. Meanwhile… the UK govt declares war on Porridge.
The War on Porridge
Does the fact Porridge has been included in a list of Junk to be banned from TV advertising by the UK government mean I’m in trouble? I market the Morning Porridge as a healthly market breakfast… am I now breaking the law? If I advertise it on Google and X… will I get nicked? Would going to jail increase the paid subscription base of the Porridge? Might be worth it….
Just about every doctor and medical person I know (and that includes some pretty senior ones right down from a former chief surgeon, to my chum the lady who reckons Turmeric can cure everything up to and possibly including amputation), agrees Porridge Oats are a wonder-food. Fibre, protein and lots of trace elements – what’s not to like?
Yet… Porridge Oats have been declared an enemy of the state. Maybe Health Secretary Wes Streeting will explain? Maybe Prime Minister Starmer was being his usual well-intentioned self, reckoning outlawing sugary Porridge microwave-meals might save a few fat inner city kids. He didn’t see the unintended consequence of accidently declaring War on Scotland?
(* I take my porridge with salt. Honey in Porridge is a crime against humanity.)
Meanwhile, back on Planet Sensible…
Did you feel the market judder moment this morning. 2.30am this morning the world was shaken.. Bitcoin finally broke up thru $100k. There is all kinds of nonsense on Bitcoin trading sites spouting guff like: “set stable over the earlier 23.6% Fib retracement”, “next resistance at $106”, or”short-term RSI shows $112k is new target.” Of course.. it all of sounds terribly, terribly professional…
Me? Buy the Rumour. Sell the Fact.
I have a particularly annoying chum down the yacht club. He delights in showing off his bitcoin wallet. He’s told us his trading strategy is to sell half the position when it hits $100k. I strongly suspect he will not be the only holder thinking the same thing. (I once asked him to explain the value proposition of Bitcoin. That was funny.)
This morning’s Bitcoin price breakthrough was kind of inevitable. The immediate catalyst was the appointment of a crypto-advocate, Paul Atkins, to chair the SEC. It follows the near doubling of Bitcoin since the US election on the back of President-Elect Trump’s enthusiasm for crypto, and the wealthy coterie of successful tech investors he’s surrounded himself with. Establishing the US at the core of new digital markets is a stated government objective.
Bitcoin has been the immediate beneficiary of the sudden crypto summer. It’s rallied as it’s the cryptocurrency everyone has heard about – and the easiest to market. That does not necessarily mean it’s the future of crypto, Web3 or the increasingly diverse digitisation of markets. Bitcoin’s structure is too limited and too associated with the kind of negative headlines in the FT this morning: UK uncovers vast Bitcoin/Tether laundering scheme for gangsters and Russian spies.
When the current speculative frenzy stills – as it inevitably will – my guess is Bitcoin will eventually become a footnote in the creation of new digital markets. The future will be about an explosion into a multitude of new digital assets created around Tokenisation, Exchanges and Payments. These will leave Bitcoin obsolete.
Even I have embraced the new digital age – I’m working on the creation of a tokenised Green stablecoin, a Digital Asset that pays interest and values upside, is backed by green real world assets (“RWAs”), and is supported within a robust corporate ecosystem. It incorporates debt, equity, subordination, security and risk. Are such assets better than conventional bonds or equity? I’m struggling to find ways in which they offer less utility.
I’m keen to speak to a wider range of crypto investors – a constituency I’ve previously not reached out to. Feel free to email me.
I’ve written many times about Bitcoin (do a search on the site), but I don’t agree with Fed Chair Jay Powel, who said yesterday: “People use bitcoin as a speculative asset — it’s like gold. It’s just like gold, only it’s virtual, it’s digital. People are not using it as a form of payment or as a store of value. It’s highly volatile. It’s not a competitor for the dollar, it’s really a competitor for gold.”
I don’t agree it’s a gold alternative. It very scarcity means it will ultimately be less liquid – because the intellectual end point to any debate on a speculative asset based on scarcity is the one MicroStategies has recognised in its one guiding principle; never sell. If no one will sell – folk will look for something else to buy. Hence the explosion of Bitcoin alternatives in crypto – all trying to find their unique use case.
Back to the wider market….
For the last couple of days I’ve felt a whole series of little tremblors across the markets. Call it a gut feel, but something is happening and we don’t know what it is. The tremblors are making me nervous. I am going Risk Off into the new year. Gold, Bonds, derisking US stocks and credit, and putting back on a couple of big shorts.
A number of things have “triggered” my spidey senses in recent days:
- Too many headlines saying the market is risk-on.
- France.
- News that one of Tesla’s biggest holders has exited as a hedge on bubble-esque US markets.
- The number of firms putting out 2025 outlooks full of puff about market upside and rising corporate income conditions.
- Current stockmarket/bitcoin hybrid darling MicroStrategy called a Ponzi live on air, with the host agreeing.
- Too much talk about a Santa Rally. (Bah Humbug.)
- Uber-bear Albert Edwards of Soc Gen pointing out US stocks at 75% of the MSCI world index. It means the US market is seriously overvalued or the rest of the world is pants. He raises the issue the US market looks just like Japan in 1980s – when it was 50% plus of global value… today.. 6%.
- The usual fears about overvaluation in tech and AI. Or that fundamentals are fundamentally over juiced.
- Debt Threat rising – and it certainly hasn’t gone away.
- Internal stresses between Trump and certain Republican Senators blocking appointments being openly discussed.
- Rising corporate insider sales.
- A rising number of private credit scams – from the UK’s recent wind-farm debacle, to the latest get-rich-quick investing in Merchant Cash Advances scheme.
- US Department of Defence, Pete Hegseth’s, suit; doesn’t fit and is wrong colour. Completely.
- No idea what the South Korean phyco-drama was all about. I doubt most of Korea did either.
- The general FOMO, this-time-its-different, vibe. It never is.
Let me remind you of Blain’s Market Mantra No 1: The market has but one objective; to inflict the maximum amount of pain on the maximum number of participants.
The top of the market is a frenetic time – everyone keen to pile in. No one ever thinks about the risk they might be the last greater fool.
Out of time and back to the day job..
Bill Blain
Author of the Morning Porridge, and CEO Windshift Capital
