“And Yet, Bitcoin Lives On” - A Short Investors Summary of Bitcoin

BRISBANE, September 13, 2021 -- In sync with Bitcoin passing 700,000 blocks, Monochrome Asset Management delved into some of the key moments for investors that have defined the nascent asset’s evolution from niche cryptography project to flourishing digital store of value.

Bitcoin's first block, known as the genesis block, transmitted on 3 January, 2009 at 12:54:25 (GMT +10). Contained within this foundation entry on the digital ledger was a simple cryptically encoded message, once decoded reading "The Times 03/Jan/2009 Chancellor on brink of second bailout for banks". The encoded message provided a real-world date reference - Bitcoin now had a verifiable beginning, while the content of the reference itself was symbolic of what the project aimed to address.

Cryptography enthusiast Laszlo Hanyecz completes the first recorded Bitcoin transaction for goods with a fellow enthusiast, Jeremy Sturdivant, exchanging 10,000 bitcoin with an accepted market value of $41 USD for 2 Papa John's pizzas.

Having passed the proof of concept phase, bitcoin would begin a sharp climb in value, making the $41 USD worth of bitcoin exchanged retroactively worth $2,300 USD by year's end.

October 2, 2013, notorious online marketplace Silk Road is seized by authorities and shut-down. One of the key channels facilitating bitcoin usage at the time, this event led to a 50% crash in the price of bitcoin within the day.

Mt. Gox, formerly the world's largest bitcoin exchange, files for bankruptcy after revelations it had potentially lost upwards of 850,000 bitcoins following breaches of the exchanges internal systems. Following this event, centralised, custodial exchanges enter the frame as key barriers to institutional investment.

JP Morgan CEO Jamie Dimon is speaking at the 2015 Fortune Global Forum when he is pressed to comment on the fledgling asset known as bitcoin. Responding, Dimon remarks that the market demand for virtual currencies is not large and that “No government will ever support a virtual currency that goes around borders and doesn’t have the same controls. It’s not going to happen.”

Two years on from the Mt. Gox bankruptcy, bitcoin records year-on-year growth in excess of 100%, rising above the $900 USD mark for the first time following the event. Japan passes legislation recognising bitcoin and other digital currencies as money in an effort to facilitate growth of what was beginning to be known as the FinTech industry.

JP Morgan CEO Jamie Dimon addresses rising interest in bitcoin stating “Bitcoin is a fraud”.

Fueled by retail speculation, bitcoin would soar to an all-time-high in excess of $19,000 USD to finish off the year. “There’s just not that institutional investor comfort yet.” said Emad Mostaque, co-chief investment officer of Capricorn Fund Managers.

2018 represented an effective winter for the industry, with prices of many other fledgling digital assets dropping up to 80% or capitulating entirely. Unlike a number of other self-professed competitors, bitcoin stabilised just above $3,000 USD.

Bitcoin underwent its third “halving”, with block 629,999 containing an encoded homage to the first newspaper reference - “NYTimes 09/Apr/2020 With $2.3T Injection, Fed's Plan Far Exceeds 2008 Rescue”.

Over the next 7 months, bitcoin would surge from $8,500 USD to well beyond its previous all time high, reaching $29,000 USD by year's end, with long-time institutional investors such as Paul Tudor Jones emerging to highlight the asset’s value as a means of diversification.

In a May 2020 letter to investors, Jones announced that Tudor BVI had acquired a low single digit percentage allocation of bitcoin. In a later interview with CNBC, Jones would expand, suggesting Wall Street was potentially witnessing the historic “birthing of a store of value”.

“Every day that goes by that bitcoin survives, the trust in it will go up,” he added.

August 11, 2020; NASDAQ-listed firm MicroStrategy would announce a landmark acquisition of 21,454 bitcoin at an average purchase price of $11,650 USD per bitcoin for a total in excess of $250 million USD. As a result, fund managers such as Vanguard and BlackRock were now indirectly exposed to bitcoin via MicroStrategy’s institutional holdings.

In just 12 years, Bitcoin became the fastest asset in history to breach a $1 trillion USD market cap, becoming the 8th most valuable asset in the world as it reached a unit price of $54,000 USD per bitcoin. 8 days prior, BNY Mellon announced it would begin financing bitcoin services.

On February 18, 2021, the Ontario Securities Commission green-lit the world’s first bitcoin ETF, Purpose Bitcoin ETF, under the ticker BTCC. With such a move, Canada emerged as the lead nation for facilitating the institutional adoption of digital assets.

In a June 14, 2021 CNBC interview, Paul Tudor Jones provided an update on his thoughts surrounding the market "The only thing that I know for certain is I want to have 5% in gold, 5% in bitcoin, 5% in cash, 5% in commodities,"

Following on the heels of BNY Mellon, Morgan Stanley and Goldman Sachs, JP Morgan would "quietly" unveil investor access to a number of digital asset funds in July.

El Salvador became the first country in the world to legally adopt bitcoin as legal tender.

With consistent purchases since initial announcement, MicroStrategy holds 114,042 bitcoins at an average purchase price of $27,713 USD as of September 13, 2021.

Laszlo Hanyecz’ 2 pizzas have a historic cost upwards of $450,000,000 USD as of September 13, 2021.

Institutional interest is ramping up with major players such as Tesla, PayPal and Square seeking to capture initiative. Traditional financial giants like JP Morgan and BNY Mellon have also begun making major inroads into the industry.

Monochrome Asset Management marked the 700,000th Bitcoin block with a front-page feature on The Australian. With a newspaper print reference to the original encoded message, Bitcoin continues to live on, more than 12 years since its inception.

“And yet, Bitcoin lives on.”

The content, presentations and discussion topics covered in this material are intended for licensed financial advisers and institutional clients only and are not intended for use by retail clients. No representation, warranty or undertaking is given or made in relation to the accuracy or completeness of the information presented. Except for any liability which cannot be excluded, Monochrome, its directors, officers, employees and agents disclaim all liability for any error or inaccuracy in this material or any loss or damage suffered by any person as a consequence of relying upon it. Monochrome advises that the views expressed in this material are not necessarily those of Monochrome or of any organisation Monochrome is associated with. Monochrome does not purport to provide legal or other expert advice in this material and if any such advice is required, you should obtain the services of a suitably qualified professional.