Bitcoin Gets Ready for a New Type of Hedge

Bitcoin is another, with an even more inelastic supply.

This has been boldly stated by the likes of Paul Tudor Jones, Michael Saylor, Jack Dorsey and others, who have included bitcoin in their portfolios and treasuries, betting on its future value as a debasement hedge.

Third, the bitcoin price is defying gravity at a particularly confusing time, adding election outcomes and political uncertainty to the potential narratives that the market loves to grasp at.

CHAIN LINKS. Veteran investor Bill Miller, the chief investment officer of Miller Value Partners, revealed in an interview on CNBC this week that his MVP1 hedge fund had half of its investments in bitcoin.

TAKEAWAY: Yet another respected name cites inflation concerns as one of the reasons professional investors should be looking at bitcoin.

Another factor can be seen in Miller's statement that the risks of bitcoin going to zero are "Lower than they've ever been before." He's talking about asymmetric risk: the probability that bitcoin will go to $0 is much less than the probability it will provide a return of 200% or more.

As if proof were needed that this bitcoin rally is very different from the last one in 2017, the last time the BTC price was above $15,000, Google searches for "Bitcoin" were also soaring.

Square reported $1.63 billion of revenue and $32 million of gross profit from the Cash App bitcoin service in 2020 Q3, according to an investor letter published this week.

TAKEAWAY: Sales of bitcoin in Cash App earn Square a little under 2% in profit, which is a very thin margin compared to Square's overall business, which runs at much higher margins.

In a post, the company said it was working on improving existing bitcoin custody and execution services, and building new products.