A Watering Hole In The Desert

You don't need an economics degree to know what happens when demand increases with low supply.

Price goes up:

Bitcoin is complicated to understand on the technology side.

When seeing it purely from an investing point of view, it's a simple question of supply and demand.

People make the mistake of not seeing Bitcoin as an asymmetric bet:

When the potential upside is greater than its potential downside.

Consider this analogy:

Bitcoin Is Like A Small Waterhole In A Hot Safari

We know there will be a finite amount of 21 million bitcoins by 2140.

That's just the expected amount. Considering lost bitcoins, the real number would be ~18 million, making it 16% less BTC in rotation.

The water hole might dry up quickly.

Institutional Investors Are The Elephants Hogging The Waterhole

  • Microstrategy purchased 70,470 BTC for $1.13 billion
  • Square owns around 4,709 coins at the price of $50 million

All within this year.

These institutions aren't alone. Expect hippos, rhinos, and lions to follow. It'll be gradual, then sudden.

Grayscale added around 210,000 BTC in the past 6 months. For perspective, roughly 185,000 BTC has been mined in 6 months. That means Grayscale has bought more bitcoins than the amount supplied.

The elephants won't give other animals a chance to drink.

Bitcoin Miners Are The Rain - And There Seems To Be A Drought

The miners are not cashing out the bitcoin they've mined. There's an increase in miner unspent supply (BTC that doesn't leave the miner address). It's been rising since the last halving.

This will result to a bitcoin bottleneck the more miners plan to hold. There'll be a cut off from supply if miners be greedy (it's already rising).

The lack of rain won't fill-up the waterhole anytime soon.

Exchange Balances Are Dried Up Lakes and Rivers

There's a liquidity crisis for crypto exchanges like Coinbase, Binance, and Bitstamp.

Bitcoin supply on exchanges have been dropping 20% since January:

People are moving their bitcoin to more local spaces (hardware wallets) instead of relying on crypto exhanges. Less capital is moving into the exhanges as a result.

The lakes and rivers are drying up to a point where animals won't have access.

The Waterhole Is The Largest Water Supply In The Safari

Still skeptical? Bitcoin is now the largest financial service in the world by market cap:

It goes to show that owning BTC, even a little, can go a long way. That's what asymmetry is, and why you should consider being a part of it.

The downside will be you losing your money invested.

The upside would be owning a really scarce asset, which has potential to be the global currency.

Which side are you on?