Hi,
Welcome (back) to MWAVC for my 546th post on about finance, investing, venture capital and all that jazz. My name is Ato (more about me here and here) and I try to write every single day, inspired by Seth Godin (Seth’s Blog) and Fred Wilson (AVC). I haven’t done the best job over the last few months (read: years 😬), but I’m working to be better and more consistent, even as I manage this crazy schedule.
In case you’re new here, quick introduction: I’ve been investing in some way shape or form for the last 12+ years and now work with one of the pre-eminent VC firms in Africa - Microtraction, and the family office that acts as the GP - Pave Investments. Read more on us here and here. Much of the writing I’ll share here are based on things I find interesting that I’d like to share and hear your thoughts on. This is also an outlet for my thoughts, lessons, asks etc. and I think you’d find most of it valuable if you’re remotely interested in learning about venture capital.
I’ll be developing the content further, including things I think will be helpful and would appreciate any feedback on what’s working vs. not, and what could be helpful for you over the long term. If you’d like to sign up, you can do so here. Or just read on.
And BTW, If you are a (or know any) pre-seed, seed or Series A investor, looking to co-invest in African founders, please introduce them to me (ato@microtraction.com). Happy to learn about the next generation of category-defining businesses.
Why Aren’t You Buying BTC?
Read this piece from @APompliano yesterday. And today, BTC hit $64k. Something is up. Check out the full piece here.
Bitcoin went vertical yesterday. The digital currency is up more than 11.5% in the last 24 hours. This type of performance is rare in financial markets, especially if there is no obvious catalyst such as an earnings announcement or M&A activity.
So why is bitcoin rapidly appreciating over the last few weeks?
The common answer is that the bitcoin spot ETFs have led to significant demand for the asset. This answer is not wrong. Yesterday we saw $520 million in net inflows to the ETFs.
As the folks at @BitMEXResearch pointed out, that is 9,510 bitcoin of net inflows when you price the capital flow in bitcoin. To put it in perspective, the bitcoin network is producing 900 net new bitcoin per day. So there is more than 10x demand for bitcoin than what the network can produce daily.
That imbalance of supply and demand would not be shocking if we were evaluating it during the first few days of the ETF launch. But we are now 45 days after the ETF launch, so the 10x demand imbalance is mind-boggling.
The ETFs have also officially crossed over $6 billion in cumulative net inflows since launch. Blackrock’s fund has $7.2 billion in assets as the leader and there are 5 ETFs with at least $1 billion in AUM. The launch of the bitcoin spot ETFs have been the single greatest launch of any ETF in history by almost every measurement.
This brings us to the most important question — why are so many people buying bitcoin right now?
The easy answer would be some version of “the institutions want to make money and now that they can buy the best performing asset of the last 15 years, so they are going to buy as much as they can.” There is some truth in that statement, but I don’t think it is the full story.
In fact, there is a hidden detail that most people are missing, which may scare the hell out of you.
What if people are buying bitcoin because we are going to see a resurgence of inflation and investors are preparing for the inflation shock to their portfolio?
Let me explain here.
Currently Reading 🎒
Liquidation Analysis 1 and Liquidation Analysis 2 from Fred Wilson.
Currently Listening 🎧
FT Partners’ FinTech in Africa 2023 VIP Video Conference. Link here.
I hope this is helpful to some founders out there. I’m happy to speak more on this with anyone looking to build a company and wants feedback. Thinking of bringing my Office Hours back for founders to book 30 minutes to tell me about themselves, their businesses and ask for feedback, but haven’t made a full decision yet. Should I? 😬 (I’ve got 8 yeses to this so far, and looking for 2 more before I push it).
If you are a (or know any) pre-seed, seed or Series A investor, looking to co-invest in African founders, please introduce them to me (ato@microtraction.com) and let’s do some work together.
Remember: “Until the lion learns to write, every story will glorify the hunter.”
Please share and subscribe as well.
Till tomorrow,
AB