← Coin Stories with Natalie Brunell
Coin Stories with Natalie Brunell
News Block: Vanguard Unlocks Bitcoin, NVIDIA CEO Praises Energy Money, Fink Talks Sovereign Flows, Strategy Banks a $1.4B Reserve
00:10:23
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Welcome to the Coinstories News block. Powered exclusively by LEDN. I'm Natalie Brunel and in about 10 minutes or less I'll provide you with insightful updates on Bitcoin, financial markets and the global economy. Everything you need to know in one block. Let's go.
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All right. Although Bitcoin's price action has been a little disappointing as of late, it's hard not to be bullish given the developments we're seeing on a weekly basis. Once One of the biggest stories this past week is Vanguard finally bending the knee to Bitcoin, announcing that it will list spot Bitcoin ETFs on its platform. The second largest asset manager in the world had previously taken a philosophical stance against bitcoin when the ETFs first launched in January 2024, restricting its 50 million customers from buying them on its platform. The firm's reasoning behind the decision can basically be summarized as the this is for your protection. At that time then, CEO Tim Buckley famously said that Vanguard didn't believe Bitcoin belonged in a long term portfolio of someone saving for their retirement. Fast forward to today and Buckley is no longer with the company. BlackRock's IBIT is now its most profitable ETF and Bitcoin has more than doubled in price. This serves as a case study in how individuals and institutions that embrace Bitcoin first gain a competitive advantage because it's simply superior monetary technology. But it's never too late to change your mind. In fact, decisions like this should be celebrated. So welcome to the party Vanguard. We're happy to have you back. When Vanguard first banned the ETFs we wrote in the news block quote as the saying goes, everyone gets Bitcoin at the price they deserve. Vanguard will come around eventually as Bitcoin's performance and value proposition will be impossible to ignore. And that held up pretty well. Following this move, tens of millions more people can now get exposure to Bitcoin than just a week ago. And it's not just Vanguard that's having a change of heart. This past week we also heard from bank of America, which announced that it will begin allowing its wealth advisors to recommend allocations to Bitcoin in client portfolios starting in January. Before this latest announcement, the firm's policy for its more than 15,000 wealth advisors was that they could only recommend Bitcoin to clients who met specific net worth criteria. Now the bank is giving its advisors the green light to allocate up to 4% of their clients portfolios to Bitcoin regardless of their socioeconomic status. This is fantastic news and will only lead to more demand and improved access to bitcoin. It never made sense to have a policy in place where only wealthy clients were being recommended to hold the best performing asset of the last decade. I mean, there's a reason that I titled my book Bitcoin is for Everyone. Bitcoin is for the rich and the poor, for individuals and for institutions. And some of the biggest institutions in the world are sovereign wealth funds. At the New York Times DealBook Summit, BlackRock CEO Larry Fink revealed that sovereign wealth funds have been buying this dip all the way down to around $80,000. Fink went on to say that he has experienced a huge change in his own feelings toward Bitcoin, saying that it is not a trade but a long term investment and it's only becoming more legitimate over time. So if you've been getting nervous during this correction and even thinking about selling, just know that what you're selling, sovereign wealth funds are buying now. One firm that embraced Bitcoin long before the firms I just mentioned is Fidelity, but we rarely hear from its CEO Abigail Johnson on the subject. This past week she reaffirmed both her and Fidelity's belief in bitcoin, calling it the gold standard of the crypto world and saying that it will, quote, play a role in the savings hierarchy of lots of people for a long time. We also heard some rare thoughts on Bitcoin from Nvidia founder Jensen Huang, who echoed a point made by Elon Musk last week. Listen to this.
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Essentially what Bitcoin is doing is taking excess energy, storing it into a new form. It's called currency. And you take that currency and you take it wherever you like. And so you took energy from one place and now you've transported it everywhere.
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Bitcoin is indeed energy money. It makes you kind of wonder if two of the wealthiest men on the planet have been talking about bitcoin. The general theme here is that Bitcoin is changing hearts and minds everywhere, including within some of the most credible and largest financial institutions. And when these institutions pivot, it improves access as well as education around Bitcoin.
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Now what's interesting about the Vanguard news we mentioned off the top is when the former CEO proclaimed that bitcoin didn't belong on the platform, he also said they wouldn't change their minds unless the asset class changes. So apparently it has changed enough for Vanguard to capitulate. And arguably the biggest shift over the last two years has been the regulatory environment. Regulators that once tried to wall the industry off are now slowly but surely starting to integrate it. And we saw more of that momentum this past week when the CFTC took a major step forward. The CFTC just did something that would have been unthinkable a few years ago. It opened the door for spot Bitcoin to trade on CFTC registered exchanges. Until now, if someone wanted deep liquidity or leverage on Bitcoin, most of that activity occurred on offshore exchanges with opaque balance sheets, weak safeguards, and in some cases, outright fraud. Ftx, anyone? US Regulators were primarily focused on cleaning up after the explosions rather than supervising the market in real time. And this development changes that. The CFTC has now blessed spot bitcoin trading under the same regulatory structure it already uses for US Futures and options markets. So instead of having to trade spot bitcoin in one place and derivatives in another, investors will be able to trade all of them under one roof, with margin rules and customer protections baked in. CFTC chair Caroline Pham called this a historic milestone and explicitly framed it as part of making America the crypto capital of the world. And for bitcoin more broadly, it's another sign of the industry maturing. The CFTC isn't trying to wish this market away anymore. It's pulling it inside the existing US Market structure and saying, if you're going to trade spot bitcoin with leverage, you're going to do it under the same rule book as everything else. It's just one more clear signal that the bitcoin market is growing up. But with all of that said, I do want to return to what I always say. Be careful using leverage. I personally would avoid it, unless you're a professional trader. All right, let's wrap up this news block with a few more developments on the corporate adoption front. Two public bitcoin companies announced they're going live this week. Anthony Pompliano's Pro Cap Financial, which holds nearly 5,000 bitcoin, and Jack Maller's 21 Capital, which holds more than 43,000 bitcoin. It's taken nearly half a year for these transactions to close and for these companies to finally go public, but the day has arrived, we'll now have two more large public corporations accumulating Bitcoin and building Bitcoin financial services and products for the masses. So a big congratulations to everyone at the Pro cap financial and 21 capital teams. And of course, we can't talk about corporate Bitcoin adoption without mentioning strategy. Michael Saylor and the team made waves last last week when they announced the creation of a 1.4 billion dollar cash reserve. You heard that right, not Bitcoin, US dollars. So why would they do this? Strategy has been coming under some fire from ratings agencies and critics who worry about their ability to service nearly $800 million a year in dividend payments for their various preferred equity offerings. S and P Global even wrote that it would consider upgrading Strategy's credit rating if the company could improve its dollar liquidity and demonstrate strong access to capital markets even during stress event. Strategy is clearly listening because this move tackles both concerns simultaneously. The fact that they were able to raise $1.4 billion in a single week with Bitcoin down around 30% from its all time highs, shows just how much liquidity they can tap even during times of market stress. When you break down the numbers, Strategy now has one of the most robust balance sheets in the world and should have no problem funding these dividends. They've built a cash reserve that could cover their dividend payments for 21 months, and they have plans to extend that coverage to 24 months. Another notable aspect of this announcement is that Strategy confirmed they would consider selling some Bitcoin as a last resort to service the dividend payments. Now that is a shift in tone, but given their cash position and other options such as selling Bitcoin derivatives, I think the odds that they ever do that are very, very low. And honestly, what's the point of having a massive balance sheet that gives you all this resilience if you'd never be able to use it in a genuine stress scenario? And just to leave you with some perspective on the size of Strategy's Bitcoin treasury relative to those dividend obligations, right now it's Bitcoin holdings alone could cover those dividends for 74 years. If Bitcoin went up 0% a year from here, and if Bitcoin goes up only 1.4% a year, strategy could pay its dividend payments forever. So I don't know about you, but with all these positive developments happening in the space, I feel very confident Bitcoin is going to go up much more than 1.4% a year from here on out.
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That's it for the news block? Your weekly Bitcoin and economic news update. Powered exclusively by ledn. I'm Natalie Brunel. Make sure you're subscribed to Coin Story so you never miss an episode. This show is for educational purposes and should not be construed as investment advice. Until next time, keep stacking.