1st January 2025 > > NFK 4 of 9, & yet more BTC adoption.

tl;dr

The fourth of the nine NFKs. Adoption, adoption, adoption. It is never-ending.

Market Snap

Market Wrap

A spectacularly quiet start to the year.

Occasional Series – Project K: Pink Nose. NFK 4 of 9

https://www.curiouscryptos.com/projectk

Curious Cryptos’ meme corner

That was me in 2016, as I was beginning to fully appreciate the ramifications of the crypto revolution now fiercely underway. Where is your point of singularity?

Curious Cryptos’ Commentary – Tether

Tether – issuer of USDT, a stablecoin now over-collateralised by cash and cash-like instruments though that didn’t used to be the case – is undoubtedly the most phenomenally successful company of all time. It expects to double (!) its number of employees to 200 (!) by mid-2025 whilst making nine-month profits of $7.7bn to the end of September 2024. That equates to an annualised profit of over $50mm per employee, and then some. Extraordinary. I can only imagine that the annual bonus conversation tends to go quite well.

Tether is ranked 18th globally for its US Treasuries holdings, more than Germany, Australia, and the UAE amongst others.

Tether has an “excess reserve” account comprising investments separate to the assets that over-collateralise its liabilities of issued USDT. At the end of September, the value of this excess reserve was $7.7bn used in a variety of cutting edge, yet risky, investments. We will find out the value of this speculation for YE 2024 in a month’s time or so, but I suspect it is much higher now. What we do know is that Tether now owns 83,759 BTC worth close to $8bn. It has a policy of investing 15% of its net realised profits into BTC.

This is yet another ongoing buyer in size.

Curious Cryptos’ Commentary – Talking of crypto adoption

Franklin Templeton is an early adopter of cryptos, having issued its own spot BTC ETF, but it is far more involved than just that. The company provides institutional grade services for staking and has launched a tokenised money market fund on Arbitrum. Clearly it has skin in the game. It is also a responsible investment manager. You can read its one-page 2025 crypto outlook here:

https://www.franklintempleton.com/forms-literature/download/DAO-F25

Its key message for 2025 is just lovely to hear:

“BTC will solidify its position as a global financial asset acting as a digital store of value, accelerated by sovereign and institutional adoption. We expect to see strategic BTC reserves added by several nations.”

What you must remember is that due to reputational risk, firms like Franklin Templeton do not make statements like that unless they are already in discussions with clients, however early-stage those discussions might be. They must have enough confidence that the Compliance department doesn’t just say “No!”

Sovereign adoption of BTC would/will blow this market apart, as central banks the world over fight with each other to carve out a position in an increasingly scarce resource.

Curious Cryptos’ Commentary – Now Switzerland & Brazil

A proposal to “constitutionally mandate the Swiss National Bank (SNB) to hold Bitcoin on its balance sheet” has been launched:

https://www.fedlex.admin.ch/eli/fga/2024/3277/fr

If (when?) this proposal gathers 100,000 signatures it will be put forward as a referendum, a common process and a key part of the governance of Switzerland. Given the Swiss reputation for sound finances and general commonsense, one must assume that any such referendum has a high probability of passing. This is despite the best efforts of Martin Schlegel, Chairman of the SNB, who is clearly not up to speed with the implosion of Warren’s anti-freedom and anti-liberty army:

“Cryptocurrencies require a huge amount of energy and are also linked to illegal activities”.

Those tired old tropes just keep on getting repeated by the uninformed.

…

Brazil is considering a new bill to create a Strategic Bitcoin Reserve of up to 5% of the country’s reserves (https://www.camara.leg.br/proposicoesWeb/fichadetramitacao?idProposicao=2471228) which would currently add $70bn of additional demand for BTC. I have no inside information on the likelihood of this being made law or otherwise, but the direction of travel gets clearer by the day.

What was I saying about sovereign adoption of BTC?