Welcome back Bitcoiners to our penultimate monthly newsletter for 2024. What a month we just had! This is what we’ve been waiting for since all the excitement of January and February. For those of you who have stuck around, congratulations! I hope everyone here has been stacking cheap sats along the way. It might get quite a bit more expensive in the months ahead.

Price action in November was satisfying to say the least. Many of us have been the butt of jokes for maintaining our conviction through the 2022/23 bear market but nobody is laughing at us now. On the contrary many of those friends who thought we were crazy back then are asking our advice. “Should I buy now?” “Have I missed the trade?” “Can you remind me again why the corrupt system of central bank currency is doomed to fail, and government engineered inflation is stealing our wealth, and what, if anything, can I do about it?” OK, I haven’t had the last question from anyone. If you know, you know, and you don’t need to ask.

There’s no doubt the move higher in crypto prices (and equities!) was spurred by the US election on November 5^th. More about that in a moment, but first let’s ignore the headlines and just look at the price of Bitcoin.

Bitcoin printed its largest ever monthly gain in November in US dollar terms, up $26,903 or 38% (open-to-close), with a range of $32,914 or 49% (high-to-low). This is impressive, no doubt, and cause for much celebration, but it’s also to be expected.

To put the move in context, let’s look at the same chart in log form so we can see it in percentage terms. As you can see the impulse moves higher in 2017, the second half of 2019, and the first half of 2021 all had several months of candles which were larger in percentage terms. This is what Bitcoin does.

For scale, you can see just how dramatic November was in dollar terms when comparing it to the two large runs in 2021. Q1 2021, open-to-close, was $29,694 and Q3 was $26,391. So November 2024 was roughly the same as each of those moves. This is why you want to be long an exponential asset with asymmetric upside: you don’t have to stay invested too long to remember when a move like we just had would have been unimaginable.

As a final note on scale, to emphasize the point, while November’s price move was similar in dollar terms to Q1 and Q3 2021, it was not notable in percentage terms; Bitcoin moved up by 103% and 76% respectively.

OK, so have I missed the trade? This is THE question we are getting this month from those who have not yet allocated. Again, let’s look back at the 2021 market for some context.

The Q1 2021 run (+$29,694 or 103%, mentioned above) was preceded by a gain of 179% in Q4 2020. So, if you concluded at the end of 2020 you had “missed the trade” and stayed on the sidelines, you missed out on a significant move higher in 2021. Not to mention you also missed out on the excitement of being involved in crypto in 2021 which was most notable for the launch of Bitcoin ETFs in Canada in February 2021, in particular the Evolve Bitcoin ETF (tickers EBIT & EBIT.U), see our website www.evolveetfs.com/EBIT for more information.

So, have people missed the trade? As we make new highs we are in price discovery territory. Nobody can be sure where the peak of this run will be, but we hope this historical context provides some help in thinking about the subject. Furthermore, there are catalysts on the horizon which support the bull case.

Looking closer at the price action for November, it’s easy to spot when it started to move. Bitcoin started the month selling down slightly as uncertainty about the US election dominated the news cycle, but once it became clear that Donald Trump would return to the White House, the price ran higher by 39% without taking a break over the next nine days.

The reason for this run, as we’ve covered in previous updates, is because for the first time crypto was on the ballot. Trump spoke at the Bitcoin conference in Nashville back in July promising to be pro-crypto, to create a US strategic Bitcoin reserve, to fire SEC head Gary Gensler and to make America the most pro-Bitcoin country in the world. (On the last point he said he wanted all Bitcoin to be mined in the USA, which is of course impossible to dictate, but we appreciate the enthusiasm even if the President-elect perhaps doesn’t totally appreciate the nuances of a decentralized blockchain technology.)

The market believes Trump will be pro-crypto for good reason. He has surrounded himself with pro-Bitcoin people, and is in regular contact with the community. Vice President Elect JD Vance has publicly disclosed Bitcoin holdings. Health and Human Services Secretary nominee Robert F. Kennedy jr. has spoken at the annual Bitcoin conference on more than one occasion making the case for ending the Fed and moving the US to a Bitcoin backed currency. Scott Bessent, nominee for Treasury Secretary has said “everything is on the table with Bitcoin” and spoke on several occasions about Bitcoin’s potential as an anti-inflationary asset class. Howard Lutnick, nominee for Secretary of Commerce is chairman and CEO of Cantor Fitzgerald, which has announced plans to launch a Bitcoin financing business line. The list goes on, but the election results were very clear: there are no votes for being anti-crypto, but there is a cohort of single-issue voters who will support you if you are pro-crypto. This message has been heard by politicians around the world. We think they will act accordingly.

The biggest catalyst from all this news from a market standpoint is the potential for nation-state adoption to accelerate in response to the establishment of a US strategic bitcoin reserve. Republican Senator Cynthia Lummis, frequent speaker at the Bitcoin conference, has already shared a draft bill that would call for the US to buy 1 million Bitcoin over the next five years. To put this in context let’s first remember there are only 21 million, so this plan calls for the US to accumulate 4.7% of all Bitcoin. It would put them up there with Satoshi Nakamoto and be larger than the total Bitcoin held by all ETFs currently. An ambitious goal! Another way to think about it is in terms of newly mined Bitcoin. Currently the block reward is 165,000 Bitcoin per year, and there will be another halving in less than four years which will reduce the amount to roughly 82,500. It works out to 656,250 Bitcoin starting from December 1, 2024. The Lummis bill calls for them to buy an average of 200,000 each year. So, this is significantly more than new supply and of course others will follow their lead. Since the election we have seen the state of Pennsylvania introduce the Bitcoin Strategic Reserve Act to allow it to hold up to 10% of state funds in Bitcoin. In the final week of November, Vancouver Mayor Ken Sim proposed a motion for the city to hold Bitcoin as a reserve asset. The government of Brazil has proposed a bill for a national Bitcoin reserve of up to 5% of the country’s international reserves. This list is growing.

We believe these governments will become a new cohort of HODL’ers. They won’t be day trading the asset. They have access to capital, and in the case of the USA a blank checkbook. This could once again move the Overton window of thinking around the need for everyone to have an allocation. So perhaps the best way to answer the question “have I missed the trade?” is to remind people that the biggest capital allocators in the world are getting off zero. Perhaps everyone should.

The future is bright. We wish you all the very best for the holiday season.

– Elliot Johnson CIO, COO Evolve ETFs

 

Shutterstock Credit: Godlikeart

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