Overview of this week’s newsletter

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Executive Summary

• Gradually, then suddenly… In this weeks key insight, Jack Dempsey highlights growing institutional and business adoption, led by MicroStrategy, and Wall Street's adaptation, including Bitwise's proposed ETF, which prioritizes Bitcoin holdings over market cap.

Key Headlines:

• Czech National Bank Governor Considers Bitcoin for Reserve Diversification

• IRS Delays Bitcoin Tax Reporting Rules to 2026 – Bitbo

• KULR Allocates $21 Million to Bitcoin as Part of Treasury Strategy

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Key insight

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This week's key insight is written by Jack Dempsey, and highlights a growing trend for both Wall Street and mainstream companies. How will an ETF comprised of companies on a Bitcoin Standard fare?

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Gradually, then suddenly…

There is a new game now being played out on Wall St. that is having a domino-like effect –institutional bitcoin adoption. Ever since investment funds began providing investors exposure to bitcoin with products like GBTC and BITO there has been a gradual warming to the idea of bitcoin as an institutional-grade investable asset.

Four years after MicroStrategy (MSTR) turned up the heat and converted $250 million of their reserve assets into bitcoin and embarked on an aggressive bitcoin standard they have achieved some extraordinary results. A market cap of around $80 billion (80x growth), inclusion in the Nasdaq-100, and over 440,000 bitcoins in their treasury.

They serve as an open-source blueprint for many companies looking to adopt this strategy. Unsurprisingly, their results have sparked a bitcoin arms race for companies who are looking to gain a competitive advantage, intuitively understand the problem bitcoin is solving, and can weather the short-term volatility.

Companies including KULR Technology Group (KULR), Semler Scientific (SMLR), Marathon Digital (MARA), and Rumble (RUM) have all recently announced plans to adopt a bitcoin investment strategy, adding to a rapidly growing list of bitcoin-friendly companies.

These announcements will continue, likely at an increasing rate, and already Wall St. has been forced to adapt to the widespread adoption of bitcoin. An example of this adaptation is the recent filing of the “Bitcoin Standard Corporation ETF” by asset manager Bitwise. Their intention is to aggregate publicly traded companies that hold at least 1,000 bitcoins as a part of their treasury strategy in an ETF and weight them according to their bitcoin holdings rather than their market cap.

This method of weighting is rather unprecedented. For example, as it relates to gold ETFs, these companies focus solely on gold acquisition, investment in mining companies, or a combination of the two. Their core business is gold related and they are valued on their market cap, not the amount of gold they hold (with the exception of gold-backed ETFs).  

In this proposed bitcoin standard ETF, the core business is a non-factor. Only the bitcoin holdings determine the weighting, which represents a major shift in how Wall St. values this asset. Given their current respective bitcoin holdings, MicroStrategy would outweigh Tesla by about 38 to 1 in this ETF all while Tesla has a market capitalization about seventeen times greater than MicroStrategy’s.

Each day it is becoming more apparent that bitcoin is not only here to stay, but will inevitably upend traditional perspectives on money and equity valuations. Bitwise’s ETF proposition is just one of many dominos destined to fall as bitcoin enters the financial mainstream.

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Top News Stories

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Czech National Bank Governor Considers Bitcoin for Reserve Diversification

Czech National Bank Governor Aleš Michl is open to Bitcoin for future reserves but currently prioritizes increasing gold holdings to 5% by 2028.

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IRS Delays Bitcoin Tax Reporting Rules to 2026 – Bitbo

The IRS has postponed its new Bitcoin tax reporting rules to January 1, 2026, granting investors and brokers more time to adapt and avoid the burdens of default FIFO accounting.

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KULR Allocates $21 Million to Bitcoin as Part of Treasury Strategy

KULR invested $21 million in Bitcoin, driving a 90% stock surge after regaining NYSE compliance.

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JAN3 Raises $5M to Advance Aqua Wallet and Bitcoin Adoption

JAN3 raised $5M to enhance its AQUA Wallet and expand Bitcoin adoption in underserved markets.

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Other Noteworthy News

🟢Bitcoin advocate Pierre Poilievre leads as Canada’s next PM on Polymarket but lags on Kalshi

💠Chinese auto-trading platform Cango Inc. now holds 933.8 Bitcoin

📈Bitcoin's network hashrate increased by 56% in 2024, from 512 to 800 exahash per second.

🔷The number of up-to-date merchants accepting BTC cataloged by BTC Map increased 25% in 2024.

🔴MicroStrategy buys another 1,070 bitcoin for $101 million, bringing holdings to 447,470 BTC

📈Nation-States to Drive Bitcoin Growth in 2025: Fidelity

💥Fed Liquidity Could Boost Bitcoin in Early 2025: Arthur Hayes

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Recommended Article

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$19 trillion in transactions settled on the Bitcoin network in 2024

Bitcoin has a current market capitalization of roughly $1.9 trillion and surpassed silver's $1.6 trillion market cap in 2024.

In 2024, Bitcoin settled $19 trillion in transactions, doubled its 2023 volume, and hit a $1.9 trillion market cap. Its hashrate peaked at 1,000 EH/s, with U.S. mining pools leading at over 40%.

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Services index shows big jump in prices for December as companies fear tariffs

The ISM services survey's prices index jumped to 64.4%, an increase of 6.2 points or more than 10%.

This article talks about the U.S. services industry grew in December, with rising prices and tariff concerns. Businesses remain optimistic.

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Recommended Podcasts & Videos

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How Bond Markets are Transforming Bitcoin: Repo Markets, Government Strategy - Nik Bhatia

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Recycling Trade Surpluses Into Bitcoin

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Chart of the Week

With 2024 now behind us, the results speak for themselves: Bitcoin has once again outperformed every major asset class, solidifying its position at the top of the charts.

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“Well, when you buy a house in the Hamptons, you’re buying a scarce piece of property on an elite real estate network. When you buy a Bitcoin, you’re buying a scarce piece of property on a global liquid monetary network. Which is better?”

– Michael Saylor

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