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The Crypto Thesis 2023 šŸ•µšŸ» - DAY 4

Lets find šŸ”Ž out the trends of 2023

GM Guys and Gals,

As we are on the trail on covering the awesome crypto thesis - Here we are with the 4th Day where we'll cover Top 3 Crypto Currency Trends šŸš€

1. Bitcoin is ā€œOutside Moneyā€ šŸ’°

Bitcoiners often get ridiculed for ā€œmoving the goal postsā€ on bitcoin as an inflation hedge, but most of us have always used inflation as shorthand for ā€œlong-term monetary debasementā€ (QE is permanent), not point in time hedges on changes to Fed rate policy (target interest rates are temporary and subject to rapid adjustments).

Bitcoin is big now, and its continued ascendance will be slow, but powerful.

Weā€™re in a foot race to see whether more emerging market central bankers begin to bid on BTC or the big reserve currency nations move to kill the invention.

Pro-crypto reservists are starting to pop up in unlikely places like the Harvard economics department, so weā€™re getting closer to the end game than ever before, despite this yearā€™s market stress.

Bitcoin maximalists are often rightly derided for their tone and toxicity, but itā€™s telling that Vitalikā€™s tongue-in-cheek April Fools post on maximalism does steelman the thesis for Bitcoin.

2. Memes & Ripples šŸ˜‚

Out of the top 25 crypto assets by market cap, the top three performers in Q4 have been Dogecoin, Litecoin, and Rippleā€™s XRP.

If you had told me this when I started writing ~200 hours ago, I would have done a tweet thread instead and called it a day.

3. Bitcoin Yield ā›ļø

Thereā€™s no such thing as a free lunch. One of the knocks on bitcoin over the past few years has been that it doesnā€™t generate yield or ā€œdo anything.ā€ That is a feature, not a bug of a store of value that is difficult to confiscate (or borrow).

Bitcoin canā€™t be staked, and recent history has shown why you donā€™t really want to lend it out to centralized counterparties. But what if there was a way to generate yield on bitcoin natively without incurring counterparty risk?

Thatā€™s something Sami wrote up for us earlier this year, and Iā€™m fascinated by the concept, particularly for countries and companies that are otherwise sitting on large stashes of BTC.

It all boils down to a bet on the Lightning Network, which I have grown tired of betting on as it has only ever disappointed me. Current lightning capacity is about $90 million. Wrapped Bitcoin on Ethereum (WBTC), which is itself just 10% of the TVL in DeFi applications, is 40x larger.

In a rising rate environment, Iā€™m not sure that many corporate treasurers are willing to load up on balance sheet bitcoin.

If anything, weā€™re more likely to see supply-side shocks from miners covering costs and debt service payments, tax loss harvesting, and (in very bearish scenarios) potential default driven sales from Microstrategy. Short of a significant Fed pivot on interest rate policy, the next demand-side shock for bitcoin will likely happen at the global government level, not big corporations.

That's it for the day, Web3Shala šŸ‘‹

To the moon šŸš€LFG šŸ”„