Happy New Year Bitcoiners! As we kick off 2025 we’d like to wish you and your families happiness, health and prosperity. 2024 was a remarkable year in so many ways, and for Bitcoin in particular. It was a year of validation for our laser eyed community. A year of finally being taken seriously.

In January the much-anticipated US Bitcoin ETF launch brought the asset to a vast new audience. Total AUM in US spot Bitcoin ETFs now exceeds USD $120B, not far from the roughly USD $130B in spot gold ETFs. Makes sense right? Bitcoin is digital gold after all. But it took 20 years for gold ETFs to grow to that size. Bitcoin ETFs did it in less than 12 months! The category launch was unprecedented. We cannot emphasize strongly enough the significance of this: there was and continues to be massive unmet demand. Many large wealth management platforms still do not permit their clients to use these ETFs. And yet the demand so far is dwarfing everything that has come before. Ignoring these basic facts is unwise. The market is voting with its wallet.

Price update:

The great thing about the holidays is we get a chance to step back and look at the very big picture. As you can see from the yearly candles, Bitcoin had a monumental year from a price perspective. We touched USD $100,000 following the US election which in our view unlocks the investment in the minds of many who viewed that level as the test for whether the rally was real or not. This could spark a FOMO move in the months ahead as investors take stock of their 2024 returns and those who have no Bitcoin start to question a zero allocation. Be sure to talk to your investment advisor about this subject. What do they think? If they argue for zero, do they have a strong rationale? Now is the time to press these questions. It’s easy to ignore Bitcoin in the bear markets but money is made in the bulls.

On a monthly basis, the candlestick chart was similarly impressive. As we’ve written all year, it was an interesting ride. The gains mostly happened in February and November. The waiting period in between was characterized by relentless choppiness with several drawdowns of 25% or more. This is what makes the asset so hard to hold for investors who view 25% as an unacceptable level of volatility. But the gains were worth the wait, and therefore we take issue with using volatility as an excuse to stay away. Any volatile asset is perfectly investable if you size your position accordingly. Every investor has tolerance for some draw down. For example, if you can tolerate a 0.8% uncrystallized loss, you can hold a 1% position in Bitcoin and stay in the trade through the worst of the bear markets. We’ve been encouraging clients to think along these lines because the overall benefit for portfolio construction is no longer debatable.

Presented for your consideration, here is the monthly candlestick chart on a logarithmic Y-axis. The cup-with-handle formation only broke to the upside in November. Would you buy this chart? Technical analysis literature would say yes.

This chart shows the last two years of Bitcoin, roughly from the bottom of the bear. Congratulations to everyone who hodled through! We’ve come a long way from the lows of USD $16,000. I’m sure many people wish they had bought more (or any!) back then. Before you beat yourself up too much, let’s remember that $16,000 was the top of the 2017 bull run, so while it seems cheap today, it was expensive back then. That’s not so long ago. How will you feel seven years from now about the opportunity you have today to buy Bitcoin at USD $100,000?

As a final note on price action, we have updated our Bitcoin vs. other assets table for the full year of 2024. Once again, on schedule, Bitcoin was the top performer when compared to traditional asset classes. And this was a year when everything except US long bonds was positive: gold had a great year, so did North American equities, and Canadian preferreds. But none of them came close to the year-ending returns of Bitcoin. Now every other asset had less volatility and a quieter ride, but I think we’ve made our point about the value of Bitcoin as a portfolio diversifier.

We spoke a lot last month about US politics, so we’ll save that subject for after Trump’s inauguration once we get a better sense of how he’ll govern. The fact that he has named a crypto tsar, former PayPal COO David Sacks, says a lot about his intentions. We will be keeping a close eye on regulatory developments, and the establishment of a strategic bitcoin reserve. Bitcoiners are starting the year with a lot to be optimistic about, so our word of caution is to remind you that nothing ever works out as perfectly as we can imagine, and Rome wasn’t built in a day. Keep that in mind and size your position for volatility because nobody knows how bumpy the ride might be even if we are headed in the right general direction.

Finally, we’d like to start the year with some words of wisdom we’ve gathered from our conversations with many wonderful Bitcoiners. We are grateful to know you, and hope this list inspires us in the year ahead.

10 Rules for Bitcoin Investing

1. Zoom out. Focus on the long-term.
2. Embrace volatility. It is the price of opportunity. Don’t feel rushed.
3. Don’t be a fiat thinker. Cantillon privilege benefits the few. Bitcoin benefits everyone.
4. Think exponentially. Bitcoin is a non-linear asset. Build for the future.
5. Diversify your risk. Bitcoin is the first new diversifier in our lifetimes. A small allocation improves risk-adjusted returns. Find balance.
6. Bitcoin is not a zero-sum game. For Bitcoin to win, other assets don’t have to lose. Embrace prosperity.
7. Buy cheap insurance. Bitcoin is a credit default swap on fiat currencies. Be your own central banker.
8. Be hopeful. Cryptographic property takes power from governments and returns it to the people. Bitcoin is hope.
9. Lower your time preference. Plan for the future. Save for your kids.
10. Get off zero.

 

Happy new year once again. Let’s get at it!

 

– Elliot Johnson CIO, COO Evolve ETFs

 

Shutterstock Credit: Godlikeart

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