On January 1^st 2020 and 2021, I wrote re-caps of some of my calls during the prior year. You can read them here and here. In keeping with that tradition, what follows is one Good Call, Bad Call, Interesting Call and TBD Call from each month in 2021. Enjoy.

January 1, 2021

[Good Call] “We believe Bitcoin will go much higher in 2021. There are risks to that view, but they are mostly of large-scale proportions and low probabilities. Yet they could happen. It’s Bitcoin. Bitcoin will face challenges in 2021. Those challenges will be bigger than they’ve ever been before. Bitcoin will continue to display antifragility – one of its most attractive traits.” 

[Bad Call] “There is hope that in 2021 these Americans will have the opportunity to get back on their feet. But that hope is a tired hope. We must work hard as a nation to fulfill that hope in 2021.”

[Interesting Call] “Ikigai is an asset management business, so generating good risk-adjusted returns for our investors is what we do. But that’s not all we’re here for. I could have made a fine living doing a bunch of other things that were way easier than this job. We’re here for something bigger than that - an asset management business is just one piece of it. The bigger thing is The Trust Revolution. 2021 and beyond will require leaders with work ethic and actual ethics to make this world a better place. The world needs more light. We’re here to do our part.”

[TBD Call] “There is a mental model, championed by Raoul Pal and others that Bitcoin is “pristine collateral”. Cash, Treasuries and Gold are all used as collateral, to the tune of many trillions. Cash and treasuries are being actively devalued in terms of their usage as collateral. There’s an argument that Bitcoin has more attractive qualities as collateral than all three of those options. If there is even a small chance that Bitcoin is as good of collateral as Cash, Treasuries or Gold, it is currently deeply undervalued. It would be undervalued at twice the current price.”

February 1, 2021

[Good Call] “This is precisely how to approach an investment in Bitcoin. You take those nine risks I addressed above, and the couple dozen more I listed, plus dozens more. And you assign a likelihood of outcomes and expected price reaction in each outcome. If you assign a 0% probability to all those risks, your expected market cap for Bitcoin should be at least $30 trillion (market value of all Treasuries in existence) and likely $100 trillion or more. Without any risk, your base case is Bitcoin is the world reserve currency, the dominant store of value and the collateral foundation for the global financial system. But there are risks, so that’s not your base case. Your base case is something else. Those are risk-adjusted returns. We believe a passive Bitcoin position presents an exceptional risk-adjusted return opportunity. We believe an actively-managed Bitcoin position presents even more so.”

[Bad Call] “The beginning of 2021 brings hope, albeit with a bit of a rocky start. Hope for change. Change requires action. After all, “the world can only be grasped by action, not by contemplation.” Action requires the motivation to demand a better way, and the willingness to push for it. Motivation and willingness come from inspiration. This is where we find ourselves in February of 2021 - amidst inspiration to find the willingness and motivation to move to action and call for change that will lead to an improvement over the way things are right now.”

[Interesting Call] “Except that’s just it. GME, AMC and others are trading just as much on fundamentals as the $17 trillion of negative yielding debt worldwide. The same fundamentals that are driving TSLA, APPL, AMZN, AAL or anything else. TSLA trades at 28x TTM revenue. APPL trades at 26x EBITDA. AMZN trades at 94x trailing earnings. AAL trades at 343x forward earnings. All of these metrics, without exception, are made possible by the current regime of monetary and fiscal policies. GameStop, and WallStreetBets rallying around it, is also made possible by those same exotic monetary and fiscal policies. All of the above is simply a function of the distortion in free market price discovery caused by the largest monetary experiment in human history – quantitative easing while simultaneously running increasingly larger deficits on top of increasingly untenable debt levels.”

[TBD Call] “In order for the people to demand change, that unchecked power must continue to fail, and fail in increasingly more grand fashion. It must fail more egregiously. It must fail more publicly. It must fail an increasingly larger percentage of the population. It must fail Democrats and Republicans. That serves as the motivation to demand a better way, and the willingness to push for it.”

March 1, 2021

[Good Call] “Another notable market occurrence this month was the GBTC NAV premium, which collapsed from 12% at Bitcoin’s ATH in price down to zero, and even briefly traded negative. The “GBTC NAV trade” discussed at length in previous Monthly Updates, is now in the difficult part of the trade, where the unlocked GBTC share supply that was created at par using borrowed BTC must now find demand in the secondary market. Sufficient demand to soak up all this supply may prove difficult to come by in the coming months, as cheaper competitors to GBTC have popped up and are gaining traction, including a full-blown Canadian Bitcoin ETF. In my view, those that are long GBTC after borrowing BTC to create shares have their work cut out for them in the coming quarters. I would not expect GBTC to trade at a significant premium for any material amount of time the rest of this year.” 

[Bad Call] “Tether was one of the single largest risk factors preventing more institutional capital from flowing into the space. I believe the removal of this risk will be the backdrop for Bitcoin to test $100k and beyond.”

[Interesting Call] “That clogging of the ETH network and the commensurate spike in gas fees to egregious levels has driven large YTD outperformance for Layer 1 smart contracts platforms with high throughput capacity. The thesis of the trade is very simple. ETH is too slow to grow DeFi. These other blockchains are faster. Go rebuild DeFi on other Layer 1’s and take market share from ETH.”

[TBD Call] “Bitcoin’s world is surrounded by the actual world. That’s a world where central banks and governments are going full gong show with their monetary and fiscal policies. A world where those in charge of making the money and spending the money have stopped asking the question “how are we going to pay for all of this?” It’s a world where those same central bankers and government officials have been backed into a corner by financial markets – they cannot tighten policies back up to even somewhat reasonable levels by historical standards, as it will cause a global collapse in asset prices and send the entire world into a deep depression. So they will keep going as they have been, and hopefully kick the can far enough along so that when it’s finally time to pay the piper, it’s not their problem. It’s our problem. My generation’s problem.”

April 1, 2021

[Good Call] “Does ETH have room to run vs BTC? Yes, I think it does. The EIP-1559 upgrade + Optimism scaling makes for easily digestible catalysts that could drive significant ETH outperformance in the near term.” 

[Bad Call] “In March, Bitcoin put up its 6th consecutive positive monthly price performance. And while monthly cutoffs are just arbitrary numbers, it is worth noting BTC price has never increased seven consecutive months before. That said, my base is we’ll break that record in April.”

[Interesting Call] “What if we actually pull off Web 3 and rebuild the whole thing on top of public distributed ledger architecture? No more AWS. Just a bunch of Layer 1’s with use-case specific functionality, all communicating seamlessly with one another. No more Dropbox. Just Filecoin. No more YouTube. Just LivePeer. No more ISPs. Just Helium. No more Twitter. Just Bitclout. No more NYSE. Just DEX’s. No more banking. Just DeFi.

Is that my base case? To be honest, I don’t know. My job doesn’t really force me to think about the world like that. If you’ve been reading these for a while, you know I feel drastically more confident about Bitcoin’s outlook than the rest of it. But the rest of it could come to fruition too. Or if it’s not the projects I just listed, it will be their successors. Maybe it’s not this cycle we really bring all this stuff to the world, but it’s 2025. I’m not sure. But we’ll be here for it. And that sure is exciting.”

[TBD Call] “And then consider the outlook. Both the outlook for Bitcoin (and crypto broadly) and the outlook for monetary and fiscal policies. Is more institutional capital going to flow into Bitcoin? Is Bitcoin going to get even easier and safer to own? Will more products be introduced that make Bitcoin available to more pools of capital? Will more corporates, both public and private, buy Bitcoin on their balance sheets? Will Gary Gensler eventually approve a Bitcoin ETF? Will Bitcoin downside volatility become easier to hedge? Is Bitcoin more investable at $1tn market cap than it was at $100bn? Will it be more investable at $2tn than $1tn? Will the world consider Bitcoin a better store of value the more value it stores?”

May 1, 2021

[Good Call] “I’ll spare the details but from a purely TA perspective this [ETHBTC] chart is bullish three different ways – 1) a breakout of the multiyear accumulation zone; 2) A Bump and Run Reversal (a crypto bull market Hall of Famer); and 3) A Livermore cylinder. That’s a potent combo.

[Bad Call] “Any upcoming increase in inflation on a Y/Y basis has already been deemed transitory due to easy comps, so the Fed will look through that.”

[Interesting Call] “An investor of ours recently posed the question – “on a scale of 1 to 100, with 100 being Bitcoin is fully embraced as a store of value and reserve asset and the Fed holds it on its balance sheet and 1 being Bitcoin will imminently be made completely illegal or too onerous to own because of regulations or taxes…where were we a year ago and where are we today?” It’s a great question and in my opinion the right way to frame the situation. I think we’ve gone from 33% to 67% in a year. I just laid out the case for why I think that. I know plenty others who would say I’m being too conservative with 67% and it’s actually higher than that. Maybe they’re right. I tend to err on the side of caution.”

[TBD Call] “BNB has destroyed BTC and ETH price performance YTD. Yet there remain questions about the legitimacy and quality of BSC DeFi activity. The Ponzi-nomics are out in full force there and the ape-ing is as strong as anything we saw in 2017. There are doubts about BSC scalability. There are naysayers who point out the highly centralized nature of BSC. Which brings up two of the most important questions when evaluating use cases of blockchain – What do you need decentralization for and how decentralized is decentralized enough? We’re seeing an experiment to answer those questions play out in real time.”

June 1, 2021

[Good Call] “What severity of negative news is priced in at this point is an open question. Certainly some amount of negative news is already priced in, and we could end up with a “better than feared” outcome. But there is a severity of announcement from China that could at least cause us to test to the range lows, if not make lower lows.”

[Bad Call] “Less likely but still possible would be for one of Elon’s companies to announce a clean Bitcoin mining project or product of some sort.”

[Interesting Call] Bitcoin being antifragile doesn’t mean the price doesn’t go down. It does go down and sometimes it goes down a lot - over a very short period or over a multi-month or multi-quarter timeframe. That downside price volatility has historically caused change in how the real world interacts with or perceives Bitcoin. While the actual underlying protocol has evolved relatively little over the last 12 years, the world around Bitcoin is constantly changing. Bitcoin is relentlessly fending off attacks and coming out stronger for it on the backside. An incomplete list of antifragility events-

• Satoshi leaving
• Silk Road
• Mt Gox hack
• Double spend and fork
• Bitfinex hack
• Losing Renminbi payment rails
• US banking blockage
• BTCC exchange shutdown
• Block size debate
• Bitconnect
• Bitlicense
• Warren Buffett “rat poison”
• Tether reserve hole
• BCH/BSV hash wars
• Binance hack
• PlusToken fraud
• President Xi edict
• Black Thursday death spiral
• OKEx withdrawal freeze
• BitMEX
• Elon/ESG?
• China mining ban?

So in the face of one relatively new risk (Bitcoin carbon emissions, led by Elon) and one very old risk (China doing something negative towards crypto), what’s to come of Bitcoin? If you base your projection on historical results, then Bitcoin will be just fine. It will grow to become bigger, stronger and more important than it ever has been previously.

[TBD Call] “However, there is an overriding theme that over any medium-term timeframe is more important - if China more forcefully cracks down on mining & trading, this is strongly bullish for Bitcoin. It kills three birds with one stone: 1) BTC no longer so China-centric; 2) BTC mining uses way less coal (Elon); 3) Less highly leveraged speculation. If that ends up being the outcome, it is highly ironic that the CCP, which Western Bitcoiners view as one of the absolute worst actors on the planet, will have acted in a manner so strongly bullish for Bitcoin.”

July 1, 2021

[Good Call] “Bitcoin was down 6% in June and down 41% in Q2-21 - its worst Q2 performance ever. This leaves Bitcoin up a meager 21% through 1H-21. It is my base case that number will be higher on New Year’s Eve.” 

[Bad Call] “ETH has still strongly outperformed YTD and over a TTM basis, and now has the much-discussed EIP-1559 catalyst around the corner. From a purely TA perspective, the chart may be challenged here in the near-term.”

[Interesting Call] “Bitcoin’s antifragility is on display right now. You’d be doing yourself a great disservice to not examine and appreciate this characteristic in action. Market cap went from $1.2tn to $600bn in two months. Hashrate went from 180 TH/s to 90 TH/s in 45 days. While Elon flipped on it. While China threw the book at it. While the Pope sneak dissed it. While Elizabeth Warren droned on propaganda against it. While Nassim Taleb wrote a crappy paper opposing it. What did the Bitcoin blockchain do throughout all that? Same thing it’s been doing since January 3, 2009 - spitting off a new block about once every 10 minutes… while the whole world adjusts around it.”

[TBD Call] “In what was likely the most memorable moment of my crypto career, Nic Carter casually opened a Twitter Space on June 9th to discuss El Salvador. Not long after, the brother of President Bukele joined the Space and began discussing El Salvador’s plans for Bitcoin, while sitting in the congressional building as the presentation, debate, and vote on the Bitcoin legal tender bill was ongoing. Not long after, President Bukele himself joined the Space and with 22,000 people listening in, further detailed El Salvador’s future with Bitcoin. There was a moment, when you could hear applause from congress in the background coming through Bukele’s brother’s microphone as the Bitcoin bill was passed. I will never forget that moment. It was a strong reminder of what we’re ACTUALLY doing here. Paul Tudor Jones is great – but he doesn’t need any help. State Street is great - but they don’t need any help. PayPal. Druckenmiller. Visa. MassMutual. It’s all fine that they’re involved. But they don’t need help. El Salvador needs help. Paraguay needs help. Turkey, Lebanon, Nigeria, Zimbabwe, Venezuela, Sudan. Those humans need help. They need access to sound money and a functional financial system. It will make their lives much better, very quickly. Seriously. Bitcoin actually fixes this.”

August 1, 2021

[Good Call] “There is certainly a chance that large pools of institutional capital are on the sideline waiting to buy ETH. The EIP-1559 and DeFi narratives are strong ones and ETH has managed to mostly dodge the ESG narrative because it has a path to move to Proof of Stake. Now that Bitcoin has stepped back away from the abyss of $30k, that sidelined capital may feel safe to deploy into ETH.”

[Bad Call] “Where does that put us with BTC at the moment? Unfortunately, with a lot of resistance overhead.”

[Interesting Call] “Almost certainly, if you tried to draw a parallel of recent events in Bitcoin to another asset class, say equities, your assumption would be that the entire global financial system would collapse, and the world would spin into a deep depression worse than 2008. Imagine if say, FAANG stocks somehow took the kind of beating Bitcoin just took all at once. How many trillions of QE would that engender? How much support would regulators and politicians be giving FAANG stocks if they got cut in half in a couple months? How big would the “Bald Eagle Save FAANG” bill that Congress would unanimously pass be? Instead, not only does Bitcoin get nothing, but it is also the target for coordinated, global, direct attacks from multiple angles. And yet…

90% of hashrate leaves China. Goes all over the world or gets laid down. Hashrate gets cut in half and begins rebounding. The NAM Bitcoin Mining Council is formed. They begin publishing statistics and pledge to publish more quarterly. Cambridge Center for Alternative Finance publishes new statistics. Bitcoiners get REALLY angry with Elon Musk. Important Bitcoiners immediately begin talking to him behind the scenes and then convince him to change his stance again publicly. Bitcoin moves off Chinese crypto exchanges. Open Interest on Chinese crypto exchanges drops. Crypto VC funds raise billions. Investors deploy billions into crypto VC deals. Deep pockets hold the line at $30k, buying all the Bitcoin anyone was in the mood to sell down there. Influential Bitcoiners fight for Bitcoin in closed-door meetings in Washington. When there is damaging language included in the infrastructure bill, crypto supporters give as much feedback on those few sentences as the entire rest of the bill received COMBINED.”

[TBD Call]  “There is tremendous appetite from all types of capital to get exposure to crypto. Equity investing in crypto companies is the most comfortable avenue for the widest array of capital to get that exposure. These are large capital raises on large valuations. The >50% slide in crypto prices over the last three months did nothing to slow down the pace of venture capital flowing into crypto – many of the largest fundraises ever happened during this period. Critically, NONE of these investments will pay off if number doesn’t go up. Let me repeat that- nearly all of these investments will not be profitable if crypto prices languish. If BTC crashes to $10k and stays there. If ETH crashes to $500 and stays there. If DeFi is a flash in the pan. If NFT’s are a flash in the pan. Then the world doesn’t need Fireblocks. Or Circle. Or BlockFi. Or OpenSea. It’s ALL dependent on number go up. A picks and shovels approach only works if people are mining for gold, and people are only mining for gold if its worth a lot. So follow the money. What’s it saying about the outlook for crypto? What’s it saying about the risk-adjusted return opportunity?”

September 1, 2021

[Good Call] “To paraphrase Field of Dreams, “if you build it and keeping building it and never run out of money and the hunt for outsized returns remains fierce, eventually they will come”.”

[Bad Call] “The other large risk is the Fed beginning to taper in the coming months. This was a much bigger risk before Jackson Hole, but reading the tea leaves of Powell and other committee members’ comments, it appears there is enough risk around Delta Variant, enough slack in the labor market, and weak enough sustainable increases in inflation that tapering has been punted to year-end if not into 2022.”

[Interesting Call] “Bitcoin is BoomerCoin. It’s boring. It NEVER changes. It doesn’t actually DO anything. It just sits there in a wallet and you don’t spend it or use it for stuff or flip it for JPEGs. It just sits there. It’s “Digital Gold”. Yuck! Gold is SO old. It’s literally the oldest investment of all time. Who wants Digital Gold? Most investors hold zero gold in their portfolio. Maybe if you’re conservative you have 50bps or 1% or 2% or if you’re a gold bug psychopath you have 15% of your portfolio in gold. And it’s rarely been more out of favor than it is now – because it was SUPPOSED to go up a lot when the Fed does three towers (slang term for “trillions”) of QE in six weeks but it DIDN’T. You know what did go up a lot? Big Tech. Bitcoin is gold. ETH is FAANG. Layer 1’s are Big Tech. These platforms have the flexibility to innovate until a use case really takes hold and mass adoption comes roaring into crypto.”

[TBD Call]  “It’s true that Central Banks may very well taper asset purchases all the way to zero. They might even get a few rate hikes in (from zero or negative interest rates currently). But both of those will be short lived. A couple quarters or a year or maybe 18 months. Then the cuts will come and then more QE and that QE will be bigger than ever and more exotic than ever. By the time we get to the 2024 Bitcoin halving, there’s a good chance the printing presses will be brrring faster than ever.”

October 1, 2021

[Good Call] “With just a day of hindsight, it looks like ~$41k was aggressively tested multiple times and held firm. Accumulation may very well now be complete, and we just began the markup phase. Reminds me of the battle for $10k last September. We all know what happened next.”

[Bad Call] “We very well may be getting some [regulatory] clarity pretty soon though. Specifically on the stablecoin side, I wouldn’t be surprised if we get something this year.”

[Interesting Call] “It’s just a LOT easier to pump a $8bn market cap to $40bn in six weeks (Solana) than to pump ETH even half that. In turn, it’s even easier to pump AVAX from $2bn to $15bn in six weeks. It’s certainly highly speculative stuff, no doubt. The market is assigning a TON of financial utility on top of limited current application utility. But don’t forget, this is a multichain world. Sure, global macro liquidity conditions and broad risk appetite will have a strong influence over the prices of these things in the short-term, but the trend of the flow of capital to fund innovation on these Layer 1’s is clear. The world is making a massive bet that these Layer 1’s are going to bring new technology to billions of people’s lives, Metaverse and otherwise.”

[TBD Call] “I don’t want to come off here like I think all this is the best thing since sliced bread. There’s real risk to investing money into Metaverse and convincing others to do the same. The largest risk I’m worried about is causing other people to lose money taking risks they don’t understand. Axie Infinity is helping impoverished Filipinos out of poverty. Having that end up as impoverished Filipinos losing their life savings is not an acceptable outcome. I am particularly worried about this aspect because a significant portion of the P2E concept is driven by ponzinomics. That’s a topic I’m not fully prepared to discuss today but will discuss in the future. Ponzinomics in itself are not necessarily bad – after all it’s just mechanism design with a derogatory connotation. Ponzinomics are present everywhere we look, including the US dollar, but even more present in crypto because of the relationship between financial utility and application utility… It’s all fun and games when the risks for potential financial utility are taken by sophisticated market participants who can or at least should be able to evaluate ponzinomics and the like when considering deploying capital. It’s a different thing entirely when someone in a third world country is trying to pull themselves up through whatever opportunity is available and gets the rug pulled out from underneath them. We can’t have that. So what happens when the Fed tapers to zero and then hikes twice and every risk asset on the planet rolls over, BTC gets cut in half, ETHBTC underperforms, the vast majority of Alts underperform ETH and Metaverse is down 80% from the top because the ponzinomics make the reflexivity cut both ways?”

November 1, 2021

[Good Call] “Four weeks after I write about Metaverse for the first time, Facebook goes and changes their name to Meta. In some ways that makes me feel late but in other ways it makes me feel early. I think crypto broadly can have a tendency to make almost everyone feel like that – both late and early at the same time. This entire technology and asset class has been built not on how the world is, but how it might be. Only a few hundred or few thousand people saw it at the very beginning and thought any of it might do anything or be worth anything. Everyone else picked it up somewhere along the way. I bought my first Bitcoin at a $45bn market cap and I felt both late and early then! There’s beauty in that.”

[Bad Call] “Some traders have been worried that price made a new ATH but then pulled back underneath. This is not unprecedented. The below chart shows number of days (subjectively measured) where BTC price “hung around” prior ATH before moving higher. If this time is like the last times, there’s nothing to worry about - we’re heading higher.”

[Interesting Call] “I struggle to see this trend of downward Dominance reversing without a broader macro risk-off move. The prices of nearly every risk asset on the planet have increased meaningfully in 2021, which makes sense when you print as much money as governments have in the last 18 months. The world is awash in liquidity and that liquidity has found its way into the tail-end of crypto assets. In my view, far-and-away the most likely setup to drive Dominance meaningfully higher would be a risk-off, liquidity draining macro move. It’s why I (and many others) have been following the Fed’s tapering plans so closely. When you turn the faucet off on the bathtub, there’s less liquidity sloshing around. And if the Fed actually gets around to raising rates, now you’ve pulled the plug out of the bottom of the bathtub too. If and when we get to that, I would expect BTC price to decline significantly (50%+), ETHBTC to underperform and the large majority of Alts to underperform ETH. A significant rise in BTC Dominance while BTC price is flat-to-up is difficult for me to imagine, but it’s crypto so certainly anything could happen.”

[TBD Call] “Facebook is the least trusted social media platform in existence. There’s also no way Facebook can iterate like crypto can – in its Cambrian explosion manner. Facebook can’t try out a dozen different blockchains at the same time and hundreds of disparate ideas. Facebook can’t juice network effect with a token (yet). Facebook can’t push the envelope in a murky regulatory backdrop.

But they have infinite money and 2.9 billion monthly active users. They have an army of top engineers (although in real-time, less of those are going to FB and more of those are going to crypto). It really sets up for a classic “siloed corporation vs open-source” battle. We’ve had plenty of those battles before. Open source hasn’t won a ton of them, but they’ve won some. This time around, the siloed corporation is run by the least trusted social media platform with the most users, and the open-source technology has a $2.5tn market cap, a massive and growing war chest, enormously improved tooling and technology, and the ethos and potential to make the world a decidedly better place. We’re here for it.”

December 1, 2021

[Good Call] “It would not be my base case we make new ATHs in December” 

[Bad Call] “Strictly from a TA perspective, it would be weird to have BTC price close a new daily, weekly and monthly ATH candle, only to roll over from a slightly higher level. After six months and a 53% decline, consolidation, accumulation and expansion, price should go higher than 7% above the prior high. But hey, TA is just pseudoscience.”

[Interesting Call] “Current all-in Metaverse market cap is under $100bn. It’s a way better bet that's going to $2tn before BTC goes to $10tn.”

[TBD Call] “Whatever bear market may occur in 2022 and even potentially stretch over to 2023, it will not look or feel like crypto in 2018-2019. There are clear use cases for this technology outside of just Bitcoin. There is real adoption across dozens of projects. Hundreds of projects have already raised multiple years of runway and VC’s are fully cashed up and eager to deploy. The innovation will continue at a breakneck pace during whatever bear market may come. The projects that emerge from that period in the strongest positions will likely be incredible investment opportunities and I believe some will change the world for the better.”