This weekend both Donald Trump and Robert F Kennedy spoke at the Bitcoin conference in Nashville. It was a huge moment for Bitcoin, it was the first time that US Presidential candidates talked about Bitcoin in public, and announcing ideas for a US strategic Bitcoin reserve.

This could have a huge impact on the Bitcoin price. It’s all about game theory: once one large nation states announces it will start buying Bitcoin, other nations states will immediately start doing this as well. Nobody wants to be first, but certainly nobody wants to be last. And when the US is first everyone wants to be at least second.

Because Bitcoin has a limited supply (only 450 new BTC are created per day, about $30M at current prices), the only way for these countries to get these coins is for others to sell them to them. This is different from Gold, where higher prices means that it’s now possible to mine at more expensive locations, so the Gold supply eventually will go up when the price goes up (and the market expects that, thereby capping the growth of the Gold price). Most people will not sell their Bitcoin if they see nation states are starting to buy (why sell today if you can sell for a higher price tomorrow?), leading to much higher prices.

How high? If the US would follow RFK’s plans it would mean that the US would buy more coins per day than are being mined. This would be ongoing for years to come. That would be the moment Bitcoin could go up hundreds of percent within a few months, simply because people won’t sell anymore. My expectation is that very soon other countries would follow (the longer they wait the more expensive it would be to build a Bitcoin reserve), meaning that Bitcoin could break $1 million within a year.

Neither Trump nor RFK are in office (yet), and even if they would be elected it’s the question whether they will follow through on their promises. But these speeches will have woken up other countries. Because of their announcements, talking about Bitcoin is suddenly something that won’t get you fired for anymore if you bring it up. On Sunday a Hong Kong politician announced that he will start looking at a strategic Bitcoin reserve for Hong Kong. A Dutch friend of mine (and a Bitcoin whale) has been working on a Dutch Bitcoin party idea for a while and he just posted about it. I am quite sure there are several other countries looking at a Bitcoin reserve idea right now, they have just not announced it yet.

Once the cat is out of the bag you can’t get it back in. When we will look back in a few years this weekend could have been the watershed moment for Bitcoin as a reserve asset for nation states. One of the reasons I started to invest in Bitcoin years ago was that I knew this moment would come one day. However, I am surprised to see how quickly it could now all of a sudden happen. My expectation was that this would start bottom up, with small countries like El Salvador (that has been buying BTC regularly for years) leading the way, not with the US as the main cheerleader for Bitcoin. There will be very interesting times ahead!

When you ask people what kind of company Tesla is, almost everyone will say it’s an Electric Vehicle company. The same is the case for Wall Street, most investors see and value Tesla as an EV business. I think they are wrong though. Right now most of Tesla’s revenues still come from the sale of EVs, but that is changing fast and within a few years selling EVs may just be a side business. In reality Tesla is an AI company disguised as an EV company.

The company is in the early stages of a complete transformation. As Elon put it a few weeks ago, they are not just writing a new chapter for Tesla but a completely new book. Because of that I believe the company is extremely undervalued and will be one of the best long term investments you can make right now. Once I realised how big of an opportunity there was I started investing in Tesla and I plan to keep adding to that investment. 

When I try to put a value on Tesla, I do that based on its upcoming Robotaxis, on the Optimus humanoid robot, and on its energy business. The sale of EVs is not relevant long term in my opinion, so I won’t even take that into account when calculating the potential future value of the company in this blog post.

Tesla Energy

The energy business will be important for Tesla and it could double or triple Tesla’s valuation over the next 3 years. Tesla produces Powerwalls (batteries for homes, sufficient to power a small home for one day) and Megapacks (large battery packs for industrial solutions). Because the demand for energy is growing extremely fast due to Generative AI, Tesla is doing very well in this sector. In Q2 they produced double the amount of battery storage from Q1 and they will keep on ramping this up in their Lathrop factory, with a new factory in Shanghai opening before the end of the year. I expect margins for the energy business to be potentially a lot higher than analysts expect, therefore I believe that the Q2 results (due on July 23) for Tesla Energy will turn out to be much better than expected, which might lead to another surge in the stock price. Because Wall Street only looks at the next 12-18 months and doesn’t really see the opportunity in Tesla’s long term plans yet, over the next 2 years Tesla Energy will be very important for the Tesla stock price, possibly even more important than the current EV production and sales. But in the long run most of the market cap will come from Robotaxi and Optimus. Therefore I will only focus on these 2 products in the rest of this post. I will explain what they are and what their potential is and what will likely happen to Tesla’s stock price. 

Robotaxi

I am convinced that the automotive world will change completely before the end of this decade. I think we will see a major shift from people owning their own cars to people using Robotaxis to get around. This will start in big cities where it’s hard to get around and where parking is expensive, but will quickly happen in smaller cities and more rural areas as well.

A Robotaxi is a fully autonomous electric vehicle that works likes an Uber, but without a driver. You will use an app to get one and there will be no interaction with any human beings etiher before or during the trip. The major difference with Uber or a taxi is that it will likely be 80%-90% cheaper. Nobody knows what the price per mile will be, it will likely depend on the location and on future competition. As an example, geo-fenced robotaxis in China currently charge less than $0.10 per kilometer. I don’t expect prices to be that low in the US, but over time it may happen. 

Many people don’t believe Robotaxis will be possible anytime soon, likely because they have not been following how quickly Fully Self Driving (FSD) has developed over the past years. Tesla self-driving systems have gone from an autopilot where a human being had to be at the steering wheel at all times, to an AI-based FSD where the car does everything for you and human intervention is not needed anymore. No other car companies come even close to what Tesla has built. Where regular drivers have an accident rate of about once every 200,000 miles, Tesla’s old FSD only gets into an accident once every 3.2 million miles. That’s an improvement of 16 times and it’s not even the latest FSD yet. Tesla got here by collecting all driving data for many years, but it also went from a rule-based system (“if A happens then you do B”) to a neural network that ’thinks’ like a human driver would think. That means you can drive anywhere, even in places where a Tesla has never been before. I would compare it to how Large Language Models like ChatGPT have changed the way we work and create content, that is the leap that Tesla has made in this field. You have to see it to believe it. Watch some YouTube videos if you are not convinced or even better, try it out by doing a test drive in a Tesla with FSD 12.4.

Having the best FSD is not sufficient to start a Robotaxi company though. You will need a huge network of cars to get started, the same problem that Uber faced when it launched. My assumption is that Elon will use his existing fleet of Tesla cars that have FSD installed for this. It basically means that anybody who owns a Tesla can use it as a Robotaxi and make additional money with it (depending on which assumptions you use a Tesla owner could potentially make $50,000 of profit per year, after Tesla gets a big cut). This will be a game changer, because cars that are used maybe 5% of the time could suddenly be used 50% or more. Suddenly Tesla vehicles will go up in price instead of depreciating over time. Uber could shut down right away, because no company with physical driver can compete against Tesla’s prices.

The next step will likely be a dedicated Robotaxi that Tesla will build. Nobody knows yet what it will look like, but it will probably be revealed later this year. Originally a Robotaxi presentation was planned for August 8, but it now seems that may not happen until October. My assumption is that it will be a 4 seater without a steering wheel, but that there may be other versions as well (a larger van or maybe even a future sleeping version). I believe that Tesla may not sell these vehicles to the public, but keeps them for its own fleet. In that way they can get 100% of the revenues that these vehicles make. 

The estimation is that by 2030 the global market for Robotaxis will be in the $8-10 trillion range. At this point Tesla has no real competion. Nobody else has FSD as advanced as Tesla’s and even existing players like Waymo (owned by Google) or Cruise (owned by GM) still have regular remote human intervention, even though the cars have no drivers on board. Waymo and Cruise are no competition for Tesla because they are geo-fenced, meaning they only operate well within a predefined area. Next to that no other competitor will likely be able to scale as fast as Tesla can. Because of that Tesla has a good chance to dominate this industry.

But let’s be conservative and assume that China’s car companies can scale as well and will be able to get to a similar vision-based neural network type of FSD. In that case Tesla will still have at least 10-20% global market share, meaning revenues of $1-2 trillion per year just for robotaxi. Given Tesla’s current P/S ratio this would mean a market cap of $10-20 trillion for the robotaxi businesss. The current market cap is only about $800 billion, so there will be a HUGE opportunity here.

Optimus

The Robotaxi business will be huge, but the biggest opportunity for Tesla will be its humanoid robot Optimus. I believe that we are seeing a new industry forming that will become the largest in the world – humanoid robots will transform how we make things and create a massive new industry. 

This week Elon Musk announced on X that Tesla will finish the design of its Optimus robot this year, so Optimus is something that will probably happen sooner rather than later. What is special about the Optimus is that it can basically learn to do anything that a human can do. So it’s not a specialised robot that can do just one thing, but you can teach it anything. You want a robot to clean your house or do the dishes? Optimus will be there for you. Don’t like to hang up the laundry? Optimus is ready to help. Do your kids need a tutor for their homework? Optimus can do that as well. Almost anything that we as humans can do Optimus will be able to to, and likely faster, better and longer than we can do it.

But not just household tasks, it can do any physical labour job that humans do as well. At a much lower cost than humans and for much longer periods of time. Factory workers might work 8 hours a day, Optimus can work 22 hours a day before it needs to recharge itself. Optimus won’t get bored if it needs to do the same job over and over again. And if a job is dangerous Optimus has no problem doing it. Security guards will soon be replaced by robots and I expect that wars will soon not be fought by human soldiers anymore. Firefighters don’t need to risk their lives, Optimus will do their work for them.

Optimus will completely change the way we live our lives. Almost any job can eventually be done by Optimus for a fraction of the cost of human beings, which will lead to huge deflation. That means that over time almost everything could become almost free. It will take some time to get there and I expect there to be a lot of chaos during that time, but we will eventually get to the other, much brighter, side. I don’t want to go into that in this blog post, but the dark side of mass unemployment and chaos is something we have to keep in mind when discussing robots. 

There are already a number of humanoid robot producers, with some humanoids already being sold to companies and doing real work. However, even though Tesla is not the first to market, I expect the company to dominate the sector, like they have done with electric vehicles. They have everything lined up for success: they have the batteries (Tesla Energy can produce them) and they know how to scale up production (something that many robot makers will struggle with). They have the AI models available for these robots and they have the data centers that are needed for the model pre-training and for the inference.

Just Optimus itself could catapult Tesla to the most valuable company in the world and make Elon the world’s first multi-trillionaire. If we would have 1 billion robots and these robots would earn a profit of $10,000 per year, and we would assume that Tesla would have 10% of this market, that would mean $1 trillion profit per year for Tesla annually. At a P/E ration of 25 the market cap of Tesla just because of Optimus would be $25 trillion. Likely there will be a lot more than 1 billion robots though, I actually expect that we will have more robots than human beings in a few years time. And possibly Tesla will have a market share of more than 10% of the market. It’s all speculation right now, but the point is that if they pull this off the stock price of Tesla will go up exponentially over the next couple of years. Based on the current valuation the stock price would go up at least 30 times, and that seems still very conservative to me. 

What’s next for Tesla?

If you follow robotics and AI closely like I have been doing, you might start to understand that Tesla could become the most valuable and most important company in the world. Elon has all the ingredients to pull this off, but the world doesn’t see it yet. That’s the real reason I am investing in Tesla. To me it feels similar to when I first had my Eureka moment with Bitcoin (11 years ago, when it was still below $100). Yes, there are many hurdles and many risks, but Elon has shown time and time again that he can pull things off that nobody else has been able to pull off. If he manages this it will make him incredibly rich, but also the many people that believe in him and that own Tesla shares. Wall Street doesn’t see it yet, even Cathie Woods (ARK Invest) has not put a valuation on Optimus yet. But once Wall Street will understand what’s going on the sky is the limit for Tesla. 

This is part 2 of this blog post, part 1 is here. If you are interested to follow Tesla more closely you could follow this Twitter list I put together. The list has been super valuable for me and it’s how I get most of my Tesla news. I also listen to a number of podcasts and YouTube channels, one of my favourites is Herbert Ong. If you want to go deeper into the Robotaxi check out this report by ARK Invest’s Cathie Wood. The best humanoid robot expert on Twitter is Cern Basher. His calculations are a hidden gem, this tweet has links to all his previous bot research.

As always, my posts reflect my personal opinions, are not related to any of the companies I am involved with, and are not meant as financial advice. Do your own research before you invest.

For years I used to be a 100% Bitcoin maximalist. I basically used all of my investment-related time to better understand Bitcoin and the crypto ecosystem. I loved understanding the market dynamics better than most and made many good friends in the space over the years. But looking back I closed my eyes a bit for what else was happening in the investment world. It went so far that I didn’t even want to spend much time looking at the stock market (except for some Bitcoin-related stocks), because I thought nothing would outperform Bitcoin in the long run.

But things have changed a bit, and over the past couple of months my main focus has slowly shifted from crypto to AI. Of course I still follow everything that happens in the crypto space on a daily basis, but because I have less time available now that I also focus on other things, I don’t listen to all the podcasts anymore and I tend to stay away from the often toxic crypto discussions on Twitter.

Part of the reason is that the crypto space has changed a lot, there is a lot more of a focus on quick money now and I see scams everywhere. That is not my world. I also got a bit bored, I have seen everything so many times already. The Bitcoin drama (especially on Twitter) simply doesn’t excite me that much anymore. I know Bitcoin will keep going up long term and that we will likely see a huge bull market later this year, so I am not interested in all the people that tweet about panic selling because they don’t understand what’s happening in the market.

At the same time I realised that there may be other investments that could potentially do better than Bitcoin over the next couple of years. Since I got into Bitcoin I have seen a 500X price increase, but unless the USD gets inflated away that likely won’t happen again. Long term Bitcoin might do another 50X, but there are other investments (in crypto or outside crypto) that are easier to understand and that could generate similar returns. 

Artificial Intelligence

I have been looking at AI for years and even did some online AI courses about 7 years ago already. But those were quite technical (‘How do neural networks work?’ etc.) and they didn’t really open my eyes to the possibilities that I am seeing right now. Only since ChatGPT became mainstream in my world about 1.5 years ago, I realised what the potential opportunities were. So a couple of months ago I decided it was time to go much deeper into AI. I read technical papers and books, but mostly started using a lot of the existing Large Language Models to understand what they can (and can’t) do, and how they are different. I went to AI conferences and started to follow AI blogs, podcasts and YouTube experts. Because of this I simply didn’t have the time anymore to focus on Bitcoin as much as I did before.

Based on the knowledge I gained about AI I developed a new investment thesis, and I decided to take the summer off to mostly focus on that thesis and to start making investments. Over the past couple of weeks I have been spending 4-6 hours every day reading, writing and thinking about investment strategies for AI. I believe that when you go really deep and you combine it with in-depth knowledge of other industries, you will see things that others don’t see (yet). It worked for me in the past and I believe it will pay off this time as well.

Initial findings

My findings so far have been remarkably simple. In times of exponential change you can make enormous amounts of money if you invest early and don’t sell during market downturns (HODLing as Bitcoiners call it). This was the case with Internet companies, later with Bitcoin and I believe now with AI stocks. Anybody who had done his/her research and invested early in quality Internet stocks or in Bitcoin, could have easily turned $1 into at least $100. That is also the case with AI right now, maybe not 100X anymore because many stocks already made huge moves over the past year, but still sufficient to generate real wealth. I have selected a portfolio of about 10 companies that I am focusing on as investment targets and most of these are large public companies. 

Investing in AI start-ups?

Unlike in many other sectors, I believe that investing in AI start-ups is not the way to get rich, simply because in order to become successful they need a) lots of money, b) lots of chips and c) lots of power. Maybe start-ups can raise a lot of money, but getting access to chips will be a lot harder. Nvidia simply puts its largest customers (Google, Meta, OpenAI, Microsoft, Amazon and Tesla) first because the demand for GPU chips is much higher than their chip production. Why sell to a small start-up while saying no to your best customers?

The access to power is another problem that start-ups will face once they start growing. There is a reason why all the large tech companies have their own data centers and power supply agreements: it’s the only way they can secure their future energy needs. Start-ups simply don’t have the resources to do that and so they will eventually hit a ceiling.

Another reason is that AI’s capabilities have been growing exponentially. That means that what a specialised AI company has built over a period of say a year, can all of a sudden be part of a new LLM update and so that company suddenly becomes obsolete. Each time OpenAI announces a new version of ChatGPT a number or AI companies are immediately put out of business, because ChatGPT can suddenly do what they have been building. I am not saying that no AI start-ups will be successful, but I believe that investing in selected public companies may be the easiest and most liquid way to make outsized returns over the coming years.

Ultra-cap companies

One of my conclusions is that AI will fairly soon lead to something that I call ultra-cap companies. My definition of an ultra-cap company is a business with a market cap of $10 trillion or more. Currently the largest company in the world is Microsoft with a market cap of $3.4 trillion, meaning it would have to grow by 300% to become an ultra-cap. Ultra-caps will become so big because of what I would call dehumanisation: taking away human jobs, with the monetary value of these jobs ending up as revenue for these future ultra-caps.

Emerging ultra-caps will set themselves apart by their ability to dominate new sectors. You already see that domination with companies like Nvidia, Amazon, Apple and Tesla. I expect that dehumanisation will for a large part happen by replacing human labour with humanoid robots. These humanoids will transform how we make things and perform tasks, and will create a massive new industry. I am now convinced that the robot industry that is starting to take shape will become the largest industry in the world.

My favourite potential ultra-cap: Tesla

My favourite AI company is Tesla, partly because I think they could end up dominating the humanoid robot industry, making $TSLA potentially the biggest company in the world (they are currently about 5 times smaller than Microsoft). Tesla could also outperform Bitcoin over the next couple of years. Maybe Bitcoin will do better than Tesla during the next 12-18 months, but after that Tesla will shine. I started investing in Tesla about 2 weeks ago (I posted it on Twitter) and the stock has already gone up over 25% since then. I have to admit that that timing was lucky, but I do expect the stock to go up a lot more soon.

The second part of this post will go into much more detail about why I think Tesla is a potential ultra-cap and why I believe most analysts don’t see it yet. I plan to write part 2 later this week.

Since the Bitcoin ETFs launched 2 months ago most of the price action seems to take place during weekdays. During weekends volatility is generally very different than during the week. That means that almost all of the price action in Bitcoin at the moment is caused by the ETF. I was thinking about this while having a coffee in my garden yesterday and then had realised that because all the volumes in the Bitcoin ETFs are public, you can model where the price will go using a Bitcoin ETF multiplier.

It’s of course a purely mathematical exercise, but it is useful because it shows the effect the ETFs will have on future prices. This model is only valid as long as the ETFs are the main price driver (or unless all other flows turn out to be highly correlated to the Bitcoin ETF, which is possible), but for the near future that seems to be the case. I would not dare to make long term predictions using this multiplier, but I think you can use it to predict when Bitcoin will hit $100K and what the price by year end will be.

The Bitcoin ETFs started on January 11 when the Bitcoin price was about $46,000. Today the Bitcoin price hovers around its all time high of about $70,000. That means the price went up by about $24,000. During this time there was a net inflow of about $9.5B into the Bitcoin ETFs. The Bitcoin market cap went up from $884 billon on the day before the ETFs launched to $1342 billion on Friday when the market closed, so an increase of $458B caused by an inflow of $9.5B, which results in a Bitcoin ETF multiplier of about 48.2.

This we can use to calculate when Bitcoin could hit $100K, because we know that at that price the market cap will be about $1990B. So in order to get to $100K the market cap will have to increase by $648B. With a multiplier of 48.2 that means $13.4B will have to flow into the ETF. The ETFs on average had a net inflow of $240M per day, meaning we will need about 55 trading days to get to $100K. That’s 11 weeks from today, so at current ETF net inflows I expect this to happen by mid- to late May. 

Of course this assumes ETF inflows stay stable, which is a conservative assumption. I expect inflows to go up once the Bitcoin price will be over the $70K hurdle, because of the hype that will start. At the same time I expect the outflows of the GBTC ETF to go down, meaning the net inflows will likely go up even more. Over the past 2 weeks the net ETF inflows were on average much higher than the 2 month average of $240M, meaning that if this continues we could actually reach $100K a earlier already. You just have to keep following the net inflows to get a feeling for this. Next to that we will have the Bitcoin halving coming up in just over a month, in which the Bitcoin supply will go down by 50%, making Bitcoin’s inflation lower than that of Gold. Lower supply means the multiplier should go up. Finally, very soon financial advisors can start selling the Bitcoin ETF to their clients, that could lead to another large pool of inflows that people are not expecting yet. 

So where will the Bitcoin price be at the end of the year? There are 205 trading days left on Wall Street in 2024 according to ChatGPT. The average inflow per trading day was $240 million, so ceteris paribus we will have total new inflows of roughly $50 billion until the end of the year. That means the market cap will increase by about $2470B by the end of the year, which implies a price increase of about $124,000. The current Bitcoin price is about $70,000, so this model leads to an expected Bitcoin price of $194,000 by the end of the year. 

A year-end number of around $200,000 is in line with my current expectations. The ETF has been much more successful than almost anyone had imagined, so a few weeks ago I increased the number I have in mind for the end of the year, but I had no data to back it up. I believe that once a hype starts the multiplier could increase: during a hype phase more people will want to buy Bitcoin, while less people would be willing to sell. However, the $100K could turn out to be a big psychological hurdle. Many people who don’t fully understand what drives the Bitcoin price (that’s probably most people who own Bitcoin…) may want to take some profit, so a lot of new inflows may be needed to offset that.

By the way, the $200K number will not be the top of this cycle, right now I think that will likely be a few months later around $250K. But a supercycle is also a (still very small) probability, in that case Bitcoin will keep on going up without any major bear markets like we had in the past.

This model is obviously a bit too simple for exact price predictions, but its simplicity makes it useful to see where markets are heading over the next couple of months. Just follow the Bitcoin ETF in- and outflows to get a better feel for the market. If big external events should take place that change the structure of the market, for example large corporates or nation states announcing that they start to invest in Bitcoin, this model won’t be useful anymore.

Nobody can predict the price, but for me this model is an interesting mental exercise. And whatever happens, there will be amazing times ahead this year for Bitcoin! 

I think I have never been more bullish about Bitcoin than I am right now. We are close to an all time high, we are up 60% in one month and there is not even a hype yet.

I now start to believe that we could even be at the start of a supercycle where new money keeps on flowing into the ETFs. Some reasons for this:

1) Funds suddenly started to announce that they will allocate to Bicoin ETF (Blackrock’s Strategic Income Opportunities Fund made an announcement this morning). This will be a constant flow of new money into the ETFs

2) The flows into the ETF are getting bigger, not smaller. The Bitcoin ETF was the most successful ETF launch ever.

3) Most financial advisors can’t allocate to the ETFs yet, but in a few weeks they can. Then the gates of money will reallly open up.

4) Microstrategy keeps on using leverage to buy more Bitcoin and they have one of the best performing stocks ever. Their main business is not even important anymore. At some point other CEOs will take a closer look at this and do something similar, it’s inevitable.

5) Since November 2023 a wallet has been adding on average about 100 BTC per day, the wallet now contains over 50,000 BTC. Nobody knows who this is, but speculation is a billionaire like Jeff Bezos. Once one billionaire starts doing this others will follow, that’s how the world works.

6) Nation states have not started to buy Bitcoin yet, at least not in meaningful quantities (El Salvador bought just a few million dollars). This is likely to change this cycle. If that happens it will lead other nation states to follow. The first ones to start buying large amounts of BTC could become the leading countries once the fiat system starts to collapse

7) Retail is still on the sidelines in this cycle, but once we hit an ATH media will start writing more about BTC and a new hype phase could start. That will lead to FOMO and in case of a supercycle the FOMO will keep going and lead to people taking money out of other asset classes and put it into BTC.

8) A supercycle will be a self-fulfilling prophecy. Once Bitcoin keeps going up for months without big dips (because of a constant inflow of new money) more people will bring up the concept of a supercycle. This will lead to more institutions taking a closer look and to allocate capital, meaning a supercycle is even more likely.

It is still very early in this cycle, so it’s not a meaningful prediction yet for me, but simply something you need to keep in the back of your mind. Right now I think there is chance of maybe 10% that this will happen and that chance is (very slowly) going up.

However, if it does it will change the existing world order. It will suck money out of the stock and bond markets, out of gold and other commodities, and even out of real estate (global housing prices could collapse). This will lead to BTC prices that we can’t even imagine today, potentially millions of dollars per BTC.

It will mint many billionaires and even some trillionaires, but maybe those fiat currency terms will not even be used anymore. The largest companies in the world will be Microstrategy and others that dared to follow them early on. And new (probably smaller) countries could become the leading countries in this world. The UAE and Singapore are likely contenders for this, but at this point any country could still get on this list. Interesting times ahead!

It’s Saturday afternoon and I am sitting at the pool at the sailing club while Scott is sailing a regatta in his Laser. It has been an insane week in the crypto markets, so I am using this time to think about what’s been happening in crypto. Writing it down always helps, so I am doing that now and will then post these thoughts on my blog. These are just my thoughts on the market, where prices will go and when, and what other coins or projects I am looking at. As always, no investment advice. I you want to follow my ideas do your own research first.

Returns since my last public blog post

In a bull market it’s easy to make money, so my predictions in my last public post about crypto turned out to be pretty good. I put that blog post online on 4 December 2023 and less than 2 months later 6 out of the 7 tokens that I discussed are doing extremely well, the only one that went down is Rune.

BTC + 55%

ETH +55%

Doge +52% 

Solana +104%

INJ +150%

Rune -16%

Filecoin +88%

I have closed some of my alt coin positions now and switched these profits back into Bitcoin. Because BTC ‘only’ did 55% over the past 2 months I now have more Bitcoin than in early December plus I still have positions in some of these alts. As I said before, getting more Bitcoin is my final goal of playing with alts. I think there is still a huge alt coin summer coming, but we are not there yet. Over the next couple of months my focus will be on BTC, ETH and Solana and some other ideas (see below). I will also keep my DOGE (see my last post for the reasons why), but that’s a fairly small position. 

Bitcoin price predictions

The reason these tokens went up is simply because the first phase of a new bull market has started now that the Bitcoin ETFs have finally launched in the US. I am extremely bullish on Bitcoin -and therefore on many other quality tokens- over the next 12-18 months. The money that is flowing into the ETFs beats almost every prediction and there are not many coins left to sell, so prices have to go up. Bitcoin will hit an all-time high soon and may hit $100K before the summer already. The sky seems to be the limit right now and I expect a parabolic increase in crypto prices. It’s hard to say where Bitcoin will land over the next 12 months, but I expect it to triple from here, unless inflows in the ETF should stop or another Black Swan should appear (like Terra Luna and FTX in the last cycle).

Why does TradFi not understand crypto?

To me it’s so clear what’s happening, but it seems most traditional investors for some reason can’t see it. I have lost all interest in equity markets (except for crypto stocks), why would you spend time and money on stocks that go up 15-20% per year when it’s pretty much guaranteed that crypto could do that every few weeks for the next year or so? When I read analyst reports on stocks I feel these guys are simply wasting their time. I actually feel a bit sad for people working for investment funds or pension funds that are not even allowed to allocate to crypto. They are simply fooling themselves and their customers because they don’t see that Bitcoin will eventually suck in all monetary premiums from the stock market (and from real estate, but that’s a story for another day). Yes, Bitcoin is volatile but that is temporary and if you are a decent trader you can get out when the price is high and get back in at a lower price.

Worldcoin

Next to Bitcoin, Ethereum and Solana, one thing I am looking at right now is Worldcoin and that’s actually more by coincidence. I happened to see their stand at Token2049 Singapore in September last year and decided to do a face scan. Many people were actually mocking me online at me for doing that, but it turned out that this scan is now making me money. Because of the face scan I got some free WLD tokens and even though they were not worth much it caused me to spend quite some time after the conference on how Worldcoin works and what it can achieve. As you probably know Worldcoin was started by Sam Altman, the founder of OpenAI, and that’s why I think there may be more behind WLD than most seem to realize. Sam is one of the smartest people on this planet, he is one of the few stars of AI and he is an incredible businessman. Therefore the reason for setting up WLD for him is not to make money (although it may net him billions once again), but mostly to help the world to create a Proof of Humanity. 

Basically Proof of Humanity means that in a world dominated by AI this might be the only way to prove that you are a human being. Just that fact could eventually lead to a multi-trillion dollar company, we just don’t see it yet. When I got my free coins they were worth about $1.45 per coin. I got 25 of them, so in total about $36. After doing some basic research I bought a few thousand dollars more on another exchange, just to make it more interesting, but then I still managed to forgot about the token.

Then about 2 weeks ago my son Scott told me that WLD has free airdrops every week, and I then remembered I still had a WorldCoin wallet on my phone. So I opened it up and saw I had missed a lot of airdrops, but most had expired already. I managed to get an additional free 13 tokens right away, simply by opening the wallet, and this morning I received another 3 coins, so I am now the owner of 41 coins in the main wallet.

Surprisingly the price has gone up from $1.45 to about $8 (=700% in less than 6 months), so just these free tokens are worth a couple of hundred dollars already. I missed hundreds of dollars worth of free coins already, but from now on I will open my app once a week. Any human being can do a free face scan and get these tokens. Just the new tokens you get airdropped every week are worth about $25 already, not bad for many people in third world countries. The small amount of WLD I bought of course also went up 700% and I just bought a few more coins. I will certainly keep following WLD more closely over the next couple of months, especially once ChatGPT 5 will come out and/or when we get close to AGI this could be a token to watch. I don’t know if it will outperform Bitcoin, but it’s a bet that could pay off if we suddenly realise AI is taking over and we need to be able to have Proof of Humanity.

Coinbase

Another thing I am looking at is Coinbase stock. When $COIN went down a lot in January and I was reading the analyst’s reports, I realised these people seemed to have no idea about about Coinbase’s potential in a raging bull market. So I decided to put my money where my mouth is and I bought long-dated out-of-the-money call options Coinbase on February 8 (and tweeted about it, in case you think I am making this up after the fact). The share price was about $132 when I bought the options and today (just over 3 weeks later) the share price is at $205. A return of 55% is not bad, but because my calls are now deep in the money I made my money back several times that so far – and the options have still 16 months until expiry. Once the bull market really starts these calls will bring hundreds of percent of additional returns. It’s so obvious to me…

Because the market still does not see what I see in Coinbase, I am actually thinking of buying some additional calls, again out of the money and again with an expiration in Q2-Q3 next year (=at the end of the bull market). It’s much more expensive now, but it should still outperform Bitcoin in a bull markewt. Coinbase is almost a monopolist at the moment, they are by far the biggest regulated centralised exchange in the world. Sure, eventually decentralised exchanges will take over, but that will be years from now.

Next to that I think the market does not understand the real valuation of the investments in many start-ups that Coinbase has made over the years. As far as I know they invested in hundreds of start-ups and many of these have done very well over the past years (potentially 10-100X for many of them). Because of US accounting rules they are all still at cost in their books, but guess what? These rules have changed this year, so at the end of 2024 they could all of a sudden have billions (!) of dollars of additional profit on their balance sheet. In my opinion this is NOT reflected in the current share price yet because analysts don’t understand what’s on Coinbase’s books.

Not only that, but Coinbase could even become a leader in Web3 through Base, a L2 solution built on top of Ethereum. I would not be surprised if they would eventually issue a token for Base, which could again net the company billions of dollars. Next to that Coinbase makes custody fees on the BTC ETFs, because most of the ETFs store their coins with Coinbase. Because the ETFs are such a success it will make Coinbase even more profitable. Finally I think stablecoins will become much more important in this cycle and guess who is the second biggest player in stablecoin land? Indeed, that’s USDC that Coinbase is backing through Circle. Just in Q4 2023 Coinbase already made over USD 170 million on USDC and that will only increase this year.

Coinbase is certainly not the best company in crypto. Their service desk is terrible, they make it impossible to move to a different country, and they even went down this week when Bitcoin went up too fast (with a lame excuse). I also know several people with coins stuck in Coinbase for years, that can’t get them out because of ever increasing and very opaque KYC regulations. But for now it is the biggest global exchange and it has a strong senior management team, so for now I am rooting for them – and making a ton of money while doing that.

Stacks (STX)

One last thing I am super bullish about is Stacks ($STX). This token has done incredibly well over the past couple of months (but at that time I was not an investor yet) and I think it might keep doing well. Stacks is Layer 2 solution on Bitcoin, just like Lightning, Liquid and Rootstock, but unlike Lightning and Liquid it has its own token. Right now Web3 is mostly built on top of ETH and SOL, but now that Bitcoin Ordinals have taken off I believe a lot more will happen with smart contracts on top of Bitcoin. Imagine to get (re)staking on Bitcoin, like Eigenlayer is doing Ethereum – with Stacks that might be possible! I will spend significant time on this over the next days and will start building out my position if I think that STX is undervalued. 

Conclusion

Rereading this post it feels a bit like I am showing off my investment capabilities. But that is not the case at all: anybody who invests in crypto will make these returns right now, especially if they look further than just Bitcoin at this stage of the bull market. This will go on for many months to come in my opinion. As I said before, I don’t understand why people keep money in the stock market right now (or worse, in cash…), you are missing out on the opportunity of a lifetime.

2024 can be life changing if you are willing to spend some time on educating yourself and then take the jump into crypto. Even just buying the ETF could lead to an early retirement if you hold on to the shares for the next 5-6 years (through the next bear market, even without selling on buying back). Anyway, these are just my personal thoughts on a sunny Saturday afternoon and not meant as investment advice. The only advice is to spend time to understand Bitcoin and why it is still around despite governments and traditional media trying to stop it. I have been writing about Bitcoin for 11 years now on this blog, I hope you will trust me if I tell you that it is not going away anymore.

I have been a Bitcoin maximalist for a very long time, because I am convinced that Bitcoin is not only the first but also the best crypto token. Despite a lot of competition over the past decade it remained the safest, the most decentralized and the most valuable crypto token out there and I am reasonably sure that this will never change. When crypto will eventually replace the fiat financial system Bitcoin will be the store of value to keep your assets safe.

Because I think the fiat financial system is on its last legs and will eventually fail, I believe that the most important thing you can do for yourself and for your family, is to get as many Bitcoin as you can, while you still can. The window to buy affordable Bitcoin could be closing fast, with the upcoming spot ETF and the next mining reward halving in April 2024.

In the last bull market I saw many friends get very rich by trading altcoins, but it never held any appeal to me. Alts seemed like a casino and I did not believe that many altcoins would survive long term. However, after spending significant time studying crypto market structures during the bear market, I believe you can easily earn a lot more Bitcoin by taking early bull market positions in specific (large cap) altcoins and sell these for Bitcoin once the hype mania phase has started. If you do your homework you can also get in and out of small caps, but it gets pretty close to gambling and you should be willing to follow forums day and night in order to buy and sell at the right time.

I decided to try out a buy and hold strategy for large cap alts during the new bull market. I realise a lot of people will laugh at this and that’s fine. It’s simply a way to increase my Bitcoin stack without taking too much risk. I do not actively trade but I do a lot of research on a token and then deploy a relatively small amount of capital in it. After that I just wait 12-18 months before selling it. I started doing this in September and so far the results have been quite spectacular. I have only sold one of my positions and will likely not sell any others until I feel the altcoin hype phase has started, when I will start selling them for Bitcoin. I expect a 10X or more on some of my tokens and on average at least a 2X versus BTC. 

This post is NOT investment advice. These are purely my own ideas that I like to share with people and they may be completely wrong. During the time that we started Hut 8 Mining I have written about Emercoin, a token that looked great with a very good team. However, that token blew up and I actually lost all my tokens because the exchange I used pulled an exit scam. Lesson learned. No big deal for me, but I know some people followed me in that trade and lost money and that’s something that I don’t like to see. 

When I posted on Twitter about my altcoin strategy about a week ago some people approached me with questions about the tokens that I bought, so I decided to write a post about what I bought and why. Generally I don’t buy ICO’s or tokens that have recently been created. I look for tokens in the top 50 that have done well in the last bull run, that lost at least 95% since that top and have started to outperform Bitcoin since then. There are many tokens like that, so I only look for tokens that have a real story behind them and that have strong founders and a vibrant community. There is one exception to that rule, that I will explain at the end of this post.

Ethereum

First of all, I own a bit of ETH (of course). As the Digital Silver to Digital Gold (Bitcoin) it seemed like a good hedge, just in case something should happen to Bitcoin. The ETH community is vibrant and its leader (Vitalik) is a very smart guy. I bought a little bit of additional ETH earlier this year but I don’t plan to add any more. ETH is vital part of the crypto ecosystem and in the last bull market it has done very well. ETH may outperform BTC in the later stage of the bull market, especially if a ETH ETF should be launched (several applications have been filed already with the SEC). In the short run I expect it to perform similar to Bitcoin, but as it is also a hedge I will hold my position for a very long time to come. However, ETH has not done very well over the past couple of months, it only went up about 36% over the past 3 months. Some ETH maxis are not happy with it and don’t understand it. I think the reason may be that in some ways ETH is being surpassed by Solana, and investors are swapping ETH for SOL. A bit similar to what is happening with Gold: the Gold price is not moving much, likely because a lot of Gold investors now invest in BTC.

Solana

A couple of months ago I decided to get into Solana myself. I actually don’t remember what triggered that initial decision, most likely a podcast, but it was a very lucrative one. I had looked at SOL during the last bull market of course, but because I didn’t trade alts I never bought any tokens. That may have been lucky because SOL went from a top of $280 down to about $4. I got into SOL below $20 in September and added a bit more after the seeing the success of the Solana conference in Amsterdam in October. So far I made over 200% in 2 months, a lot more than I had expected.

I think SOL will completely outperform both BTC and ETH during this bull run, the chain is extremely well suited to run a huge number of financial transactions on it (especially once Firedancer will be launched next year) and the team behind it is very strong. Anatoly (the founder) is much more charismatic than Vitalik (ETH founder) and is able to articulate his vision for Solana very well. It’s early days but I can actually imagine that one day Solana could run the whole global financial system on its blockchain (on its base layer, so not an L2 solution), something that ETH could never accomplish. When I bought I had a price target in mind at which I will sell which is a huge multiple of the current price, but I may actually keep some tokens ‘forever’ because of the potential I see for Solana.

Filecoin

During Token2048 in Singapore Arthur Hayes talked about Filecoin on stage. His thesis was that decentralised storage will be the future, especially because AI will need it, and of all the tokens in the space Filecoin seemed the best. After his talk I spent an hour or 2 on research on these tokens, agreed that Filecoin seemed like the best choice for decentralised storage and saw that the token was starting to go up again. I bought in at about $3.20. The token did okay but I think it may not do as well as Solana, so I recently I sold my Filecoin around $4.60 (+40%) for Solana. 

Rune

Another token I found in September was Rune, the token that runs the Thorchain. If you want to swap Bitcoin for Ethereum without having to use a bridge (bridges do get hacked sometimes!) Thorchain is actually a good way of doing it. It’s not a direct swap, because the transaction will be to buy Rune for BTC and then sell Rune for ETH. Because of the team behind Thorchain and the interesting community, plus the fact that the token has real value, I decided to buy a number of Rune tokens as well. Also here I did surprisingly well (over 200% in 2-3 months). Rune is a long term token for me. I am not planning to sell it any time soon. I expect it to outperform BTC during this bull run and will eventually sell it for BTC once alt season really starts.

INJ

Sometimes I like to gamble a bit and that’s the case with INJ, a very fast blockchain for Web3 apps. It could do well, but I find it hard to judge on my own. A trader who I respect very much has a fairly large position in it and he posted a lot about it. I got a bit FOMOd by that and eventually bought a small number of tokens. Because the token did really well (also +200% over the past 2-3 months) I decided to buy some more. I have a short term target for this token, if it hits that I may sell half of it for BTC and keep the other half until alt season takes off. If it loses more than 50% I will sell and still have a nice profit.

Dogecoin (and Elon Musk)

The last token of which I own a bit is Dogecoin. I have never believed in this coin, it is a total joke that I believe was started as a fork of Bitcoin. I met the founders back in 2014 or 2015 and they literally laughed about what they had built. Because of that I never bought any of it at the time and decided to never buy any either (had I bought during that time I could have turned $1000 into $50 million and at the top of the last bull market even into $350 million). However, despite DOGE being a total sh*tcoin I still took a position in it recently.

\What happened is that I read the Elon Musk biography while doing a 5 day detox in a resort in Thailand. I had a lot of time to think about the book while there and one conclusion I came to was that Elon Musk is most likely going to turn Twitter into the largest financial institution in the world. He has been working on this idea for 25 years already. In the late 1990s he founded a company called x.com with the goal of making it into a global digital bank. Eventually he merged with PayPal but the PayPal team didn’t want to use the name x.com. It seems Elon took the domain with him over the past 2 decades and several of his companies (and his kids!) use the letter X in their names. I believe the reason he renamed Twitter to X.com is because he can now finally execute on his vision for a global digital financial platform, basically allowing any Twitter user to send money to other users or to invest/lend/borrow etc. through the platform.

Of course Elon will not use the traditional financial rails for this, this will be a blockchain play. Any reasonable person would probably use a Solana or a Bitcoin L2 solution for this, but Elon is different from a normal person. As you may remember Elon has on several occasions heavily promoted DOGE. At the time I thought that was really strange, because he is one of the smartest guys on the planet so he should see that it’s just a joke, right? Well, he probably does, but as it turns out he may also be the largest DOGE holder in the world. There are rumours that he owns literally billions of dollars worth of DOGE (although others say significantly less) and of course that makes things different. He has financially supported the DOGE developers and has even changed his Twitter picture to DOGE in the past. During a Saturday Night Live session that he hosted he kept on promoting DOGE, which sent the token sky high (before falling back to earth). There is no logical explanation for that, unless he indeed owns a huge number of DOGE.

If that’s the case what token do you think he would use for X.com? Right. If he would announce that X.com runs on DOGE it would send the price to the moon. It would not be a 10 or 20X but a much larger number. So large that it may potentially pay for his whole Twitter investment! When I realised this I immediately bought a small position in DOGE. I plan to keep it until Elon announces that he will change X.com into a decentralised financial system using DOGE as its base layer or until DOGE hits zero, whatever come first. Because DOGE is a memecoin I am totally prepared to lose this investment, but if my theory is correct it could be a very nice return.

Bullrun strategy

I am now fully invested and ready for the bull market to really take off. Bitcoin has done quite well (+60% over the past 2 months), but that seems to be mostly from existing users that add to their Bitcoin stack. There is not a lot of new money coming into the Bitcoin ecosystem yet, there is no hype yet and the man on the street doesn’t talk about Bitcoin like they did in 2021. Once retail start coming back in all bets are off, especially because most of the current BTC holders are simply not selling (70% of all coins have not traded over the past year, despite a 160% increase in price.

The only bet I am making is that some altcoins will outperform during the upcoming bull market (or right after BTC has reached its top), and I will sell them once they have beaten Bitcoin. High risk, potentially very high return. I will not do any short term trades, so I don’t need to constantly check the prices of these or other tokens. I will mostly look at BTC and check the alts once a week or so, although I set up an alarm system in case strange things should happen to the price of one of these tokens or if unexpected news comes out. I am looking forward to the new bull run, or in crypto-speak: to the moon!

Note: As mentioned in the post as well, this is not investment advice. You can very well lose all your money if you would copy these strategies. 

This weekend I read Micheal Lewis’ latest book ‘Going Infinite’. The book recounts the story of Sam Bankman-Fried (SBF) and the FTX exchange that collapsed in November last year. Although I had no direct personal losses, I hated SBF for how he had betrayed his investors, caused many people to lose all their savings and potentially their livelihoods, and generally gave crypto a bad name in mainstream media. At first I didn’t really want to read the book because I was disgusted about what SBF had done, but because I was still interested to better understand how it had been possible that SBF went from being a total nobody to the richest person under 30 in about 3 years and then lost it all in a week’s time, I decided to read the book. Unexpectedly, I see SBF in a very different light after reading it and I now even wonder if the whole downfall of FTX could not have been avoided. I know this is extremely controversial and it won’t make me any friends, but I still want to share my thoughts. By the way, I fully expect SBF to be convicted and sentenced to at least 20 years in jail, but that’s how the system works unfortunately.

From a nobody to a multibillionaire

The book describes how SBF grew up as an antisocial, extremely gifted child in a family of university professors. He was always bored in school and only found his calling after ending up at Jane Street Capital after graduating university. There he made very good money for the firm (and himself), but even though they told him he might be making tens of millions of dollars per year within a few years, he decided to leave and start its own trading fund (which became Alameda Research, and he later also founded FTX). Sam was a strange person, but he was not after money. He totally didn’t care for money actually and his only goal was to make as much money as he could so he could give it all away, as a so called effective altruist. He surrounded himself by other effective altruist, who also supplied the original capital for FTX. Although at first they lost money, Sam soon turned it around with a trading bot strategy and since then the company was literally printing money. The rest is history: he soon attracted a lot of outside capital, set up the FTT coin and within 2 years he was a multi-billionaire. 

The FTX organisation was a total mess

He might have been a great trader, but he was not a manager. He was clearly on the autism spectrum and he didn’t have a lot of empathy for other people, which should have disqualified him for any C-level position. However, the investors didn’t (want to) see this because he was making so much money. SBF didn’t care about any details of the business, from the book it became clear that he had only a very rough idea of what was going on in the company. He just couldn’t be bothered. FTX didn’t have an organisation chart, there were not even any real job titles. But despite that they were growing extremely fast and making incredible returns. How much? It seems nobody really knew because there was not even a formal CFO or a Chief Risk Officer. 

From no bank account to a bank run

Alameda Research, the original trading firm, had a bank account, but FTX couldn’t get one during the first couple of years of its operations. That meant that investors who wanted to put money on to the FTX platform had to wire it to Alameda first. I think that’s where things started to go wrong, because it turns out that money was never wired to FTX! Alameda traded it and did very well with it for a long time. But I believe that when in May and June 2022, when the crypto ecosystem started to collapse because of Terra Luna (taking down Three Arrows Capital, Voyager Digital, Blockfi and Celcius as well), Alameda may have had too much leveraged exposure (with forced liquidation at lower prices) or may even have been hacked. At the same time SBF went on a spending spree and by doing that helped to save crypto, but he may have not realised that he turned liquid capital into illiquid capital. That wouldn’t have been a problem if there wouldn’t have been a bank run, but that is exactly what happened when his main rival, Binance CEO Chaopeng Zhao, announced on Twitter that he was selling all his FTT tokens. 

FTX is not insolvent

During the bank run SBF may have realised for the first time that Alameda may not have sufficient cash to pay back all clients. There seemed to be a hole of $7 billion between deposits and liquid assets, and SBF didn’t know where the money was. At first he didn’t seem to care, because in his mind he would be able to find the money or to earn it back, and he could always raise more outside capital. But after Binance didn’t want to invest nobody else wanted to put money in either, and suddenly SBF was in real trouble. His laywers put tremendous pressure on him to sign bankruptcy documents and he eventually signed them, which in my opinion led to his downfall and the current court case. The lawyers knew they could make incredible money in a FTX bankruptcy (his law firm will make about $200 million according to the book), so they had an incentive to push the company into bankruptcy.

I think that was SBF’s biggest mistake. Why? A few months later it turned out there actually was no gap of $7 billion! The bankruptcy trustee found that the money was there and all the creditors can be paid back all the money owed to them. Even better, it turned out that SBF had invested $580 million into Anthropic, giving it a 20-25% stake in the company. That company was just valued at up to $30 billion, meaning the stake would be worth at least an additional $6 billion. Interesting fact is that the prosecutors asked the judge this week to not allow the defendants to mention this as a defence for SBF! SBF is now in court because his firm is bankrupt, but in reality everyone will get their money back – and there will likely be billions left in the company.

Was SBF a crook?

SBF’s former colleagues are all testifying against him, trying to save themselves after making plea deals with the prosecutors. I am not saying that SBF was innocent, because from a US legal perspective he is not. He made a lot of stupid mistakes and because of his psychological issues he lived in a parallel world instead of realising what was at stake. But he was not a crook. He didn’t do this to get rich or to get more famous. He didn’t care about money, it was just a tool to make the world a better place for him.

SBF is now caught in a web of people who can make money off of him (total bills for the bankruptcy team could be $1 billion!), and the prosecutors seem to make an example of him to make crypto look bad. I don’t believe in jury trials for complicated cases, in my opinion ordinary jurors simply can’t comprehend the details of a case like this. So he will most likely be convicted and locked up for decades despite, in my opinion, not intentionally having done anything wrong and without (as it turns out) anybody who lost their money. It won’t feel fair to me: SBF is not innocent, but he is not a crook either. It will be a sad ending for a flawed genius.

Note: This is my personal opinion based on the Michael Lewis book combined with my personal knowledge of the crypto world and the role that FTX played in it. Nothing I wrote here is related to any of the companies I am involved in. Of course none of this should be used as investment advice for any securities related to FSX or its bankruptcy.