Bitcoins Insatiable Demand

As-salamu alaykum everyone, I hope you are doing well. It is Thursday and we had quite a bumpy ride today in the markets. We'll go over what happened and some key metrics and we'll let you go after that. So without further ado, let's get started. As always, this is not financial advice, so be sure to do your own due diligence before making any investing decisions. The market today retreated a bit on news of inflation being higher than expected. We had the PPI report come out this morning and it was the inflation numbers were higher than expected and we saw a retreat in equities. We also saw a brief pullback in cryptos but they quickly recovered. The rate cut is still expected to be in June, although the probabilities have fallen somewhat. That being said, the delay of rate cuts will only come if the economy has not exhibited enough stress and therefore corporate earnings remain healthy. So we're in this odd historical moment wherein bad news is good news because that means rate cuts are going to come in earlier and also good news is good news because that means corporate earnings will be higher. So this does make me uncomfortable because if you think just from a philosophical perspective, we can't be at a point where anything that happens is necessarily good in the market. So perhaps there is something here that is missing, perhaps there is something that has got to give. So I would say with regard to investing, given valuations are where they are, proceed with extreme caution and don't invest in something that you don't think or you're not very familiar with. And I was asked actually about our portfolios, the PIF growth portfolio, and with regards to interest rates and inflation, and I said that yes, there may be a pullback. However, the names that we have in our portfolio are at cycle lows for those respective names. So if you're picking individual names, then you may get away investing and even investing aggressively at this point. But just buying the broader market, I would say proceed with caution. The Bitcoin halving is fast approaching. And with that comes the historical pattern that we've seen around the Bitcoin halving, which is the Bitcoin price basically appreciating in anticipation of the halving. And then after the halving, immediately after the halving, there is a dip and then we see a quick recovery and then making new all-time highs. Now, this schedule may be pulled earlier a bit, given that we've already reached all-time highs, but I think the general pattern will probably still hold. And the all-time highs that we've seen are largely due to the Bitcoin ETFs, which were not present in the previous halvings. So we saw Bitcoin experience a very short-lived dip today, not unlike the short-lived dip it reached, which was higher in magnitude, which it experienced a few weeks ago. But in the case of today, it only really dropped to 68.5. So sorry for those who had limit orders placed at 68. Typically, when you do put limit orders, put them like a bit higher or below, depending on whether they're a buy or a sell, higher below the round number that they are closest to, because typically it'll stop before that or after that. So these short-lived dips, I think, are primarily due to the Bitcoin ETFs hoovering up all Bitcoins on exchanges. And so we're not really seeing any sustained deep dips in the price of Bitcoin. If you look at the volume of trading in these ETFs, these new ETFs, they've already, we're only two weeks into March and we've already blown past the record set in February. We're now north of $65 billion in terms of trading volume in these Bitcoin ETFs. So the demand is insatiable for these ETFs. And so long as the demand remains as it is, I think you're going to see a steady March upwards for Bitcoin price, maybe interrupted by some brief dips, but they will be short-lived so long as the demand from the Bitcoin ETFs remains what it is. Because remember, when these ETFs issue new shares to new investors, they have to, within 24 hours, buy Bitcoin. So regardless of the price, they have to buy Bitcoin. So there's less sort of tactical maneuvering space that these ETFs have. And this has given the Bitcoin price a lot of stability. Now, Coin has also decoupled from liquidity levels. So as a result of Bitcoin ETFs and their steady demand, we've seen the price of Bitcoin basically March upwards at a time when the liquidity levels, the overall liquidity has fallen. And historically speaking, this has not been the case. You haven't seen a sustained run-up in the price of Bitcoin when liquidity levels are falling. And yet the Bitcoin ETFs have changed this dynamic. So we're really seeing a maturing of this asset in front of our eyes. Now, as the price of Bitcoin continues its March upwards, the imagination of commenters is placing higher and higher targets for the price of Bitcoin. So for example, British HODL, which I think is a good follow on Twitter, he says total Bitcoin net inflows are now averaging $275 million per day through ETFs. That's on track to $69.3 billion in the first year of trading. Now keep in mind, the expectation before the ETFs launch was around $10 billion. So it's far exceeded what anyone was anticipating. And this puts us in line to add$3.8 trillion to the market cap by the end of the year. If we use the bear market multiple, that is approximately a $214,000 price point for Bitcoin by the end of 2024. Now, if we're using a bull market multiple, that's $424,000 per Bitcoin. Now, the math here checks out. The one caveat is that the demand for the Bitcoin ETFs remains what it is today. And I think if you're looking at, okay, when should I take profits with my Bitcoin investment, if you're looking into some tactical changes to your Bitcoin allocation, keep an eye on the Bitcoin trading volumes every day. And the moment you see sort of a dropping off in that volume, that means there's going to be a dropping off in the net inflows. And if we sustain that for two or three days, I think we could see a much larger dip on the order of 20 to 30 percent in the price of Bitcoin. So I think so far Bitcoin ETF inflows have basically served as a backstop for Bitcoin's price. If you want to know when we'll see a much sharper downturn, you need only make sure to keep an eye on the Bitcoin ETF inflows. And if they drop for, you know, a two or three day period, that means we're headed for a pretty big correction. Now, speaking of historic days for ETFs, the semiconductor ETF SMH just took in 1.6 billion dollars, about double its old record, which is noteworthy because this is an ETF that is, you know, not a spring chicken. It's been around for 12 years. And, you know, breaking its record by a factor of two is quite impressive. And this, if you watched my live yesterday, it was around, you know, where what's my main investing thesis for the next few years. And basically, AI is going to eat everything. And so everything that supports AI that is in its ecosystem, I think, will be a good place to put your money for the next few years. Not financial advice. Do your own due diligence. Now, in other news, there is an investor group with deep ties to Israel that is trying to buy TikTok. I saw the interview this morning. Steve Mnuchin, who is former Treasury Secretary under President Trump, is trying to gather a bunch of investors to buy TikTok. And this is sort of when I heard this, I was like, oh, now everything's making sense. Because, you know, we knew about the Chinese connection with TikTok for a long time. And all of a sudden, the American government is extremely gung ho about banning it. And basically, the bill that's passed the House already is basically giving TikTok an option, either, you know, ByteDance, the parent company of TikTok. The offer is basically sell TikTok or it's going to be banned. And I think partly this is due to the fact that TikTok and the content in TikTok is not under the control of the Israeli lobby. And recently, there's been a lot of content on TikTok that has been pro-Palestine, and perhaps it has changed the minds of many here in the United States. And they don't want a message that is not completely under their control. And this is why this this bill to ban TikTok has been expedited through our legislative system. And this is unfortunate. I think that people should reach out to their senators and try to see if they can influence them to to not have this ban. Because I think ultimately, and I'm listening, I think TikTok is poison, right? I think it's a complete garbage. But I do believe that there should be some modes of mass communication that aren't controlled by, you know, a single lobby and basically, all sort of mass communication here in the United States, the most popular ones are heavily influenced by this lobby. So I also think that it's probably a good idea if Muslims had a, you know, if Muslims create a, like a TikTok equivalent that only Muslims were on, it doesn't matter, right? You have to create something that's a global, a global reach that appeals to non-Muslims as well, so that we can have our voice heard. So it's something that we really need to think about. All right, to end with that, if you'd like to become a PIF member and follow our portfolios, move4move, and today we added a, so there's a weather warning here, so I may have to skip the the questions. But today we added a new stock, which a dividend paying stock, based on the thesis that I shared with you guys yesterday. If you'd like to follow all those moves and do become a member, until next time, make sure to take care of yourself. As-salamu alaykum and peace be upon you all.