The Dominoes Are Falling

Friday, 12 February 2021
Melbourne, Australia
By James Woodburn

[2 min read]

If you recognise the subject line of today’s Insider it’s probably because you’re one of Ryan Dinse’s Crypto Flip Trader subscribers.

I’ve unashamedly accosted the title of Ryan’s weekly report he sent yesterday.

But I did so for a reason. A couple weeks ago he and I had a fascinating conversation in the wake of the GameStop story (GameStop stock has since fallen 80% by the way).

Well, there was big news this week that required a further conversation. That’s what I have for you below.

But first, the big news…

It was 12:15am on Tuesday morning. My phone dinged.

It was Ryan:


Port Phillip Publishing

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The news had just broken that Elon Musk, founder and CEO of Tesla motors, had moved 9% of Tesla’s cash holdings into Bitcoin [BTC], with plans to accept the token as payment.

We can’t be sure, but Ryan reckons he was among the first to see this news in his Twitter feed as in that second there were no retweets or likes.

That didn’t last long though.

The spread on social media networks went berserk, and so did the price of bitcoin.

It went from around US$40,000…to near US$50,000 at the time of writing (god knows what it is by the time you read this).

But forget about the price move for a moment. This news was significant for another reason. It paves the way for other massive companies and corporations to follow suit.

It’s the speeding up of the technology adoption curve we spoke about a couple of weeks ago.

Sure enough the news reports are coming in…

Mastercard has now come out and officially said it is following in Tesla’s footsteps to both support bitcoin and utilise it.

This is just three months after rival PayPal said it would add select cryptocurrencies to its platform.

According to tech news site 9to5, the next big development would be a company like Apple making a move into bitcoin.

From the piece:

There is certainly risk with investing in Bitcoin, but there’s also a very big potential upside. Apple of all companies has the ability to tolerate risk, and even putting just 1% of its cash on hand would amount to a $2 billion investment into Bitcoin. Notably, analysis from Ark Investments sees Bitcoin growing to $70,000 per coin if US companies put 1% into it, and $400,000 a coin if companies put 10% into the cryptocurrency.

The bull case here is that investing cash on hand into Bitcoin is a way to preserve/grow cash (BTC has over a 100% growth a year at this point) while the USD is losing value over time. In turn, that preserves shareholder wealth. That line of thinking is based on Bitcoin having a known, limited supply of 21 million coins and the basic principles of supply and demand (if people and companies keep investing in it).

We’ll see what (if anything) Apple does, but not long after our chat yesterday Ryan sent me a story from CoinDesk.

It revealed that Europe’s largest telecom, Deutsche Telekom AG, is now one of the main data providers to Chainlink — which is crypto technology that underpins peer-to-peer finance. What’s called ‘decentralised finance, or ‘DeFi’.

Not just that, a prominent subsidiary of that business has begun ‘staking’ its cash holdings.

You can read the full (technical) story here if you’d like to. 

Now, staking basically means you hold crypto with a special type of blockchain and you earn more of that crypto for holding it there. It’s akin to a crypto dividend.

I’m not going to go into that today, it’s more complex than I can explain here, and it’s not my point.

My point is, this utility has gone beyond just parking cash in bitcoin.

They are actively participating in the crypto system.

As Ryan told me, this should be huge news. The only reason why it isn’t is because the vast majority of people don’t grasp what’s happening.

Anyway, you can see why I wanted to catch up with Ryan again.

Check out our chat here, and I hope you find it interesting and informative.

In fact, let me know what you think here: letters@portphillipinsider.com.

The inbox has gone quietly lately. Let’s change that!

Have a great weekend.

Cheers,
Woody