Why I'm Bullish on Dogecoin
Friday April 1, 2022 - Issue # 10
Today, the 19th million Bitcoin will be mined.
That’s right folks, after today there will be less than 2 million bitcoin left to be mined at a slow release supply schedule that is set to be chopped in half in just about 2 years from now. And after that, sometime in May 2028, the Bitcoin block rewards will be down to just 1.5625 BTC (the current reward is 6.25 BTC). Imagine, a deca(+)-billion dollar mining industry competing to earn 1.5625 BTC every 10 minutes…either the price has to go way up to justify that level of industry, or Bitcoin transactions will have to skyrocket for miners to keep the lights on to earn income only from transaction processing fees. Either way, exciting times ahead.
We’ve seen BTC and the broader crypto market rip up to highs for 2022 over the last couple of weeks; which I believe is heavily supported by this Terra triangle — UST, Luna, and BTC. I wrote about it last Friday but I don’t blame you if you missed it — looking back on it that letter was way, way too long.
Terra is planning on building a $10bn+ treasury of BTC and has started to ramp up with massive purchases over the last couple of weeks. Their most recent purchase was on Wednesday where they completed another ~ $139 million purchase of bitcoin. That is more than 3x the daily incoming supply. Over the last few weeks, Terra has scooped up over 30,000 BTC ($1.5bn) making it the third largest disclosed bitcoin treasury behind Tesla.
In layman’s terms everytime a new UST (Terra’s algo stablecoin) is minted, 40-50% is used to buy BTC for their reserves. Currently, there’s roughly $100m-$200m in new demand per day for UST. Back of the napkin math will show you that there is simply not enough bitcoin available to support this type of persistent buyer.
People much smarter than I have dived into Terra’s algo stablecoin fractional reserve treasury system and it seems like the consensus is that we’ll have to wait and see what happens. This is the best article on Terra/UST/Bitcoin I've read to date. It’s an incredibly complex situation that I’m keeping a very close eye on.
The New Bitcoin Standard
In 2020 and 2021 we saw some publicly traded companies like MicroStrategy, Tesla, Square, and a slew of privates view Bitcoin as a prudent treasury asset. It was what everyone was talking about — a potential catalyst that could send BTC to $100k. MicroStrategy even hosted a wildly successful “Bitcoin for Corporations” event that attracted executives from Fortune 500 companies and the like. Cathie Wood of Ark Investments chimed in and laid out the case for much higher prices assuming participation by every S&P 500 company.
As it turned out, we weren’t quite there yet and this corporate rhetoric eventually died down with the exception to MicroStrategy who stayed the course and has been buying massive amounts of BTC ever since.
Doesn’t it make more sense that Bitcoin would first be adopted as a treasury asset by crypto/Web3 companies/projects? This whole Terra UST situation has got me thinking that this could be the start of a new Bitcoin standard for companies in the crypto ecosystem that care about treasury management. I’ve talked to a few founders about this over the last week or so and they all agreed that this is something they’re looking into. I can personally attest as Satstreet holds a meaningful part of our treasury in BTC and we’re looking forward to increasing our position over time.
I think it’s worth thinking about.