Bitcoin is continuing to crash as it becomes apparent the anticipated Bitcoin reserve is not happening. Coinbase and MicroStrategy stock are down 25-30% for the week alone, erasing the post-election gains:
This signifies a total loss of confidence by market participants of Trump to deliver on anything.
It’s total despondency on X/Twitter:
People are realizing the reserve is not happening, betrayal. So obvious, as I predicted on the blog. Everyone was warned of this. Crypto donors are getting the Art of the Deal treatment. Only they were on the wrong side of the deal. If you don’t know who the sucker is, it’s you. You will be the last to know.
Saylor cannot buy enough to prop this up. His 2.2% ownership of the Bitcoin supply is tiny compared to sellers. Hedge funds, governments, whales, and early adopters are all dumping. Everyone who bought in November-December in anticipation of Bitcoin reserve realizing it’s not going to happen, are selling.
To summarize
1. I continue to profit by shorting Bitcoin on the weekends and market hours. I will open the position on Friday morning and close it at 1:00 PM PST on Monday. This has profited greatly this year when Bitcoin has fallen in that interval, like today, 2 weeks ago, 3 weeks ago, etc. Only recently have others become aware of the pattern of Bitcoin being weak on Sundays and market hours. But I had something like a 2-year head-start.
2. I posited a link between said predictable selling and Coinbase and Silk Road selling. I continue to be right about this too. See here for more info.
3. I was right about Trump delaying the crypto reserve. I also profited with Polymarket by placing relevant bets against the reserve happening. I also profited by shorting Bitcoin, as the price continues to fall as the market loses confidence in Trump’s ability to deliver, which I don’t think he will.
Here was my justification:
3a: Trump hadn’t tweeted about crypto at all in the intervening period between being elected and his inauguration, and still hasn’t. This did not portend favorably to the reserve happening. One can argue that Trump is keeping his cards close to his vest and will announce it as a surprise, or wants to keep it a secret to prevent his opposition from responding. I disagree: Trump has always been open and transparent about policy he endorses, like tariffs and restrictions on immigration.
3b: A crypto reserve only benefits a tiny percentage of the electorate, that being wealthy donors who invested in Bitcoin early. In a democracy, where everyone has a single vote, why waste so much invaluable political capital on such a tiny constituency? Crypto donors are irrelevant now that he is in office.
This is why Trump has not met with Saylor or taken any of his proposals seriously. Trump does not want his legacy and his successor to be tainted by being associated with him or his company. ‘Big tech’ donors, despite also being a minority, have more influence, and big tech is much more important to the global economy compared to crypto.
3c: Save for tax cuts, Trump’s track record on delivering on policy is poor, even when there is a clear opening. Trump will always find some way to mess it up or ‘brick’ lay-ups. For example, he could have issued an executive order for the Treasury to pause its sale of Silk Road holdings. I remember during his first term all the armchair quarterbacking about what he could have done but failed, even he when he had an opening to do so.
Trump is much better at running the country–broadly speaking–and foreign policy (America is safer under a Trump presidency compared to under Biden), than honing-in on a specific policy objective. Consider how hard Obama and Biden pushed for healthcare reform and student loan forgiveness, for example. You will not see this sort of doggedness with Trump.
3d: Trump has always opposed crypto, and it’s premature to say he has come around.
4. Thanks to the above, my personal accounts and ‘total net worth’ are up 30% so far this year versus flat QQQ/SPY. My daily P&L is pretty much a strait line since the inauguration by shorting Bitcoin as a hedge. This is on top of 100% gains in 2024. Tech stocks being flat is overcome by crypto and Polymarket profits. I have pretty much all the bases covered; the only way I lose money is if somehow Bitcoin surges in excess of tech stocks, which is very uncommon.