Bostoncoin update Sept-Oct 2023
Sometimes you gotta buck the trend and switch things up, to keep things fresh. September has traditionally been seen as a bad month for stock markets, particularly in the USA, where most Septembers end up red. There are many reasons for this, including market psychology, and people coming back to work after summer break, but a lot of it may be entirely psychosomatic.
Why is September often red?
- Some investors exit their market positions to lock in tax gains/losses for the year.
- September can be a superstition or a self-fulfilling prophecy, as investors sell because the markets may possibly drop; and markets drop because investors sell. Over the last hundred years, the S&P500 has averaged (-1.1%) returns in September – the worst month of the twelve.
In the past century, markets have decreased in price 56% of the time in September. (It’s the only month that’s more than 50% likely to see a drop in price)
Crypto markets have long been correlated with tech stocks, but are increasingly breaking the trend and becoming their own asset class. Despite the on-again-off-again correlation, BTC has had a red September in 2017, 2018, 2019, 2020, 2021 and 2022…
History can revert as well as repeat
But wait, when you think the pattern is entrenched, Bitcoin jumps out over the top and scores a new groove.
Bitcoin finished September 2023 with around 4% gain, way more than its average. Although there have been more red Septembers than green ones, in the past, when BTC has had a green September, it has been green for the next three months. We do not know if history will repeat, but we can hope for some happy patterns.
Give thanks for Türkiye
Türkiye (the country formerly known as Turkey) was once the worldwide Ottoman Empire, which lasted almost 600 years, with power and territory stretching into Asia, Europe, Arabia and Africa.
Türkiye is now home to 85 million citizens, the infamous OOPART temple Gobekil Tepe (older than Stonehenge, older than the Great Pyramids, and possibly the world’s first temple). Türkiye is unfortunately also famous for being plagued by eye-watering inflation (insert joke about how inflation “gobbles” the Turkish Lira!)
In the last year, inflation in Türkiye has exceeded 50%, which means two things for residents:
- everything costs 50% more than it did last year, and
- if you’re Turkish, your cash is worth 50% less.
Ever-adaptable, people in Türkiye have been flocking (couldn’t help it; sorry) to cryptocurrency as a hedge against inflation. Türkiye now has one of the highest crypto adoption rates in the world: according to Kucoin exchange data, over 52% of Turks own crypto.
Despite the inherent yo-yo volatility of crypto markets, good coins tend to increase in value, especially against a fiat currency which is always headed down.
Lesson: if you are unhappy with government policy, you don’t need to stage an insurrection or march in protest; you only need to stay home and buy crypto.
STOP PRESS: Just desserts or Turkish Delight? A Turkish crypto thief who stole around $2 billion has been sentenced to 11 000 years in prison. Turkish courts do not mess around. If you added up the span of every empire in the history of the world, this scammer would be in prison for longer than all of them combined.
England’s new gadget for bonds; government bonds
In England (another country that used to have a worldwide empire), one of the world’s oldest stock exchanges is turning to futuristic blockchain technology. The London Stock Exchange (LSE) is experimenting with blockchain to trade traditional financial assets such as gold and government bonds.
LSE Head of Capital Markets Murray Ross said, “The idea is to use digital technology to make a process that is slicker, smoother, cheaper and more transparent . . . and to have it regulated.”
We hope that the LSE has a big red phone on their desk where they can call US regulators and tell them the good news: having a financial system that is faster, cheaper, transparent and regulated, is good for everyone.
The saviour of the world?
El Salvador, once home to the mighty Aztec and Olmec peoples, stepped into the future in 2021 when it became the first country in the world to embrace cryptocurrency as a national currency. El Salvador has now doubled down on its investment, and they are starting with the children.
Not only is the government continually buying Bitcoin for national investment, El Salvador is introducing Bitcoin education into schools. Around 25 000 students have already learned about Bitcoin in the classroom, with thousands more to come next year.
Other Latin American countries have expressed interest in rolling out crypto education, and Cuba recently advised its own expression of interest. We can only hope that the education for a new millennium rolls out worldwide. How would your life have been different if you had learned about investing, way back in grade school?
Crypto in the Land of Fire and Ice
Iceland, for those in the know, is an ironically green nation, whilst Greenland is paradoxically covered in ice. But it’s not just the Icelandic countryside that is green: the Nordic island has abundant green geothermal renewable power, largely due to its plethora of volcanos, geysers, hot springs, lava fields, glaciers and waterfalls.
Iceland is one of the very few countries that has more energy than its residents require. This drives the price of electricity down and makes Iceland an attractive place to start Bitcoin mining. (It is also an attractive place to visit: quickly search for images of Iceland to see if you would like to book a trip!)
The electricity generated from natural sources in Iceland cannot be sure to run at the same level constantly and is known as “non-guaranteed power” (NGP). Businesses, hospitals, schools and governments do not want to pay for NGP electricity that could shut down during a storm or peak demand period, so the NGP power was often unused or wasted.
However, Bitcoin miners are OK with periodic shutdowns, if it means drastically lowering their expenses. Iceland gets to make more money, crypto miners get cheap power, and there is no environmental cost. It is a triple-win.
Welcome to the Divided States
Perhaps it may be better to think of the USA as a diverse landmass, rather than a united nation. Many people point to “Africa” on a map without realising there are actually 54 countries on the land mass, all with their own cultures, customs and currencies.
Whilst the USA seems to be a nation that revolves around Washington DC, most people are unaware that the District of Columbia is a territory, not a state. DC is not part of any state in the USA, has zero representatives in the Senate and has no voting rights.
The modern USA is a melting pot of people with their own languages, communities, and cultures, far removed from what the original pilgrims envisaged. Almost 25% of the USA does not speak English, with Spanish being the lingua franca in southern and western states, and another 40+ languages scattered around in small enclaves. Hey, even the famous “Lady Liberty” statue is a French interpretation of a Roman goddess, and was originally a statue of a Muslim woman, depicting Egypt bringing light to Asia.
The US Securities and Exchange Commission (SEC), based in Washington DC, has been lambasting cryptocurrency for a long time, making spurious claims that crypto is terrible for the environment, a risk to national security or is akin to criminal money-laundering (note: these claims are provably false).
Meanwhile, several states have embraced cryptocurrency, including California, Florida and New York. A literal government department, the Department of Motor Vehicles (DMV) in Colorado will even allow you to pay for your vehicle registration, license renewal and other purchases using cryptocurrency.
Lesson: when the regulator is wrong, the right thing to do is to ignore the regulator.
Another exec has left Binance, making four in the last couple of months. Mayur Kamat, who had worked at Google and Microsoft, was responsible for doubling the number of users on Binance during 2022. Binance CEO Changpeng Zhao (“CZ”) admits that complying with arbitrary SEC regulations has been difficult, but says that company turnover is “normal” and nothing to worry about. Watch this space: if turnover increases, this could be a bad sign for the world’s largest crypto exchange. Hopefully the new hires will bring more stability.
In its on-again off-again journey with crypto bans, a court in China has recognised the unique qualities of Bitcoin. The Shanghai court has stated that Bitcoin has unique and non-replicable properties as a commodity and can be legally classified as personal property like gold. This classification means that even if other cryptos are subject to bans, the right to hold Bitcoin is protected by Chinese law. Nice!
There has been minimal price movement since last month as markets moved up on news of the Blackrock spot BTC ETF application, then markets moved back down with SEC stalling the application, and there was a whole lotta nothing going on. We are confident in the long-term approval of crypto ETFs, as there are now almost a dozen different ETF applicants, and several members of Congress have petitioned the SEC to approve the applicants before the USA misses out on innovation.
For now, we wait for the incoming tide of institutional adoption. Tell your friends to climb aboard; remember what happened to gold prices when spot ETFs were approved for gold? Will crypto echo this juggernaut?
As at Sept 30 2023
BOS NAV AUD 54.7330558
BOS Price AUD 60.2063614
BOS NAV USD 37.7016316
BOS Price USD 41.4717948
DART NAV AUD 83.2757134
DART Price AUD 91.6032848
DART NAV USD 53.6275764
DART Price USD 58.990334