Haven't posted about the magic beans for a bit, but thought i'd sneak a quick one in (sorry, not sorry).
Not to evangelize, but just a nudge for sceptics to consider a small allocation. Fidelity has put out a report that essentially says that, at this point, not owning any BTC is riskier than holding some.
It's not making a "all-in" maxi case, just using historical data to show that a very small allocation can increase returns AND lower risk (or more accurately volatility) at the same time. Which sounds a bit magic, but is just a function of strong returns and the fact it tends to be more uncorrelated to typical risk assets.
The key thing is that adding just 1% bitcoin to a traditional 60/40 portfolio produced 30% more compounded value over the study period, increased risk-adjusted returns by 20%, and only increased maximum drawdown by 0.27%. And interestingly, the first 0.5-1% of allocation delivered the most efficient improvement in portfolio performance. As the report says, get off zero.
I know it's harder to make the case after a drawdown, but i find it kind of amazing that despite all that's happening around the world, we're only 35% below an all time high. Which is less of a drawdown than many of our bluest of the blue blue chips. And even then it's on a 5 year CARG of over 24%pa.
I was going to post this on the AI thread, but will put here so as to not derail the convo and distract those that aren't interested in Bitcoin (as a note to new members, you can mute threads if you dont want to see them in your newsfeed)
Anyway, there's an interesting angle with AI that most people are not talking about.
The power of AI agents is not only growing, but so too is their capacity to coordinate and cooperate to reach aligned goals. In fact, like with humans, effective cooperation would inevitably enhance their collective ability and reach quite a lot.
But, like us, the bots face the same issue of trust with unknown economic actors. Something money, of course, solves. But the type of money matters a hell of a lot. If autonomous AI agents are ever going to function effectively as a network, they need a means to transmit value instantly, cheaply and permissionlessly. In the same way they must communicate with each other via TCP/IP they will need to center on an agreed value transfer protocol.
Of course, there is only one with the necessary liquidity, depth, infrastructure, programmability and decentralisation to be credible (sorry crypto bros)
The reality is that traditional payment systems are not built for this. They're burdened by KYC/AML requirements, have painfully slow settlement times, and very high fees. Moreover, they are structurally incompatible with agents that function without legal identities. There is just no way to stream micropayments between non-human actors in real time over the SWIFT network.
Closed proprietary networks could attempt to solve this, but the fact that they are permissioned, censorable, and have direct operating costs create inescapable frictions and limitations. Conversely, an open protocol that can be spun up by anyone (or anything) at any time, in a matter of minutes, and that is infinitely scalable.. well, it's not even close.
It’s an engineering necessity, not an ideological one -- if an agent needs to stream micro-payments for real-time GPU cycles, pay a fraction of a cent for a single API data pull, or outsource a tiny sub-task to another bot, it simply cant do that with the legacy banking world.
Just this month lightning labs released a set of tools that allows agents to operate natively and autonomously on the bitcoin lightning network. I'd urge you to read the release, cause it's kind of wild that AI agents can now just set up a wallet and accept payment without needing anyone's permission or knowledge.
I liked how Jason Lowry wrote on twitter: “AI agents independently discovering that Bitcoin gives them cyber sovereignty & then starting a bidding war with humanity over the only remaining Bitcoin available is not priced in.”
(That's because I like anything that reinforces a bias, haha)
But even if theres a lot of wishful thinking there, you'd think that, at the least, it would add some marginal demand for BTC.
Annyway, my view is that if you are bullish the internet and bullish AI, it's kind of hard not to be indirectly bullish bitcoin. At least over the very long term. It's just hard to see how BTC doesnt continue to gain adoption, utility and value as AI become more abundant, more capable and (most importantly) more networked.
Man, BTC is taking a beating.
Trumps pick for the Fed looks likely to set up an exciting week.
“May you live in interesting times” and all that….
wish I had some more dry powder but pulled the trigger on SDR and PME yesterday and nothing left. Might have to have a careful portfolio review when I get back from my ski trip, ahem, conference.
c
For those interested in Bitcoin this is an interesting viewpoint by Jordan McKinney on limitations of the Lightning Network and of Bitcoin in its current iteration. He points to a possible fractional reserve Bitcoin system with compliance audits of institutions and breaking of the hard cap as an outcome of the current trajectory of Bitcoin - basically another fiat system. He suggests a hard fork may be necessary.