The King (BTC)
Antifragile, deflationary, scarce, trustworthy, restorative, hardest money, honey badger, unstoppable, censorship-resistant. These are some of the common terms to describe Bitcoin. And unlike many things in life, it has actually lived up to its 'buzzword' descriptors.
Bitcoin is a foundational investment position of Visary Capital. In many ways, it's how we got started in deeper technology investing. It has allowed us to branch into new areas and explore digital assets, as well as enabling a move into early stage seed investments (which are about 1/3rd of our portfolio capital).
With the recent news of MicroStrategy acquiring $425M worth of Bitcoin for its corporate treasury, we thought it was time to dedicate a quick post to Bitcoin. While the MicroStrategy story and the CEO himself are unique in many ways, it helps set the stage for the treasury and reserve asset narrative to play out over the next few years. We wouldn't be surprised to see other companies or institutions adopt this strategy as a long term inflation hedge, instead of entirely holding fiat currency. The macro landscape is especially primed for this and more people will be "getting off zero" than ever.
This has also proven that when real institutional and corporate capital (and eventually governments) wants to acquire digital asset positions, it will only be into Bitcoin. When more renowned fund managers continue announcing their entrance into this space, it will only be into Bitcoin. And that's because it's the hardest financial asset in history and by far the most battle-tested blockchain. The longer it goes and the more adversity and stress the protocol faces (technologically, socially, politically), the stronger it seems to get. It also has the deepest liquidity profile, order book depth, and robust OTC markets that continue to mature. These things matter for real institutional-grade participants.
DeFi is the current hot trend and while some concepts are interesting, judgement is quickly becoming clouded. What will really last in DeFi? What is sustainable there in the long run? These are the questions we've been asking. There are certainly some interesting shorter/mid term trades as well as concepts such as automated Robo-Advisory use-cases, insurance organized by smart contracts, and decentralized P2P exchanging of digital assets. While we have made some plays in DeFi, we always remember what happens later in cycles and have positioned accordingly.
At some point in this cycle, King Bitcoin will "suck the air out of the room" again, as seen above from a previous cycle measured in Bitcoin. Once it starts its liquidity engine, it takes no prisoners. We've seen it happen throughout every cycle, eventually completely flipping dominance on its head. This will primarily happen when new capital enters the space – which seems a bit less likely to happen at large until 2021 or later.
Altcoins will likely continue rallying on and off throughout the cycle, while offering an almost leveraged type of exposure of high risk, low float growth. But the entire space is always at the behest of Bitcoin's overall health and inflows. This is why even though we hold altcoin positions to capture growth and additional upside, we always pay our respects and remain humble (no "new paradigm" or "it's different this time" dogma). The crypto space directionally rises and falls at Bitcoin's will, especially in the long run. Most in Venture Capital don't understand this and fundamentally don't understand Bitcoin. They believe it will get "overtaken" any day now. We see things differently.
This is all without mentioning some of the Bitcoin protocol's exciting upcoming developments. We consistently pay homage to Bitcoin's anarchistic yet pragmatic, conservative development pace and ideology. The "move fast and break things" creed is overrated in many ways, especially when dealing with internet protocols and especially when those protocols are tasked with securing billions of dollars worth of daily transaction value.
Aside from direct Bitcoin accumulation and holdings, in our latest Seed Fund Update, we also mentioned our focus on investing in Bitcoin-only businesses (Unchained Capital and Foundation Devices) before the herd enters at large and before broader macro events unfold.
Stay humble out there and don't forget the king.
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