Best Twitter threads of the day – May 9th

The next #Bitcoin halving is in less than a year.

My base case: the 2024 halving could send Bitcoin's price 4-8x higher.

Here's what you need to know… (Thread ?) pic.twitter.com/lUAHSrFnGh

— Jesse Myers (Croesus ?) (@Croesus_BTC) May 8, 2023

This is Bitcoin's issuance schedule.

The day Bitcoin launched in Jan 2009… there were 0 Bitcoin in existence. Eventually, there will be a hardcapped, absolute maximum of 21M Bitcoin.

Coins are issued with each new block "mined"

This "block subsidy" decreases every 4 years pic.twitter.com/AgQwTTk0T8

— Jesse Myers (Croesus ?) (@Croesus_BTC) May 8, 2023

These moments in time when Bitcoin issuance decreases by 50% are "halvings"

This is written in stone in the Bitcoin protocol and can never be changed.

Here is the relevant bit of code – Bitcoin's entire monetary policy. pic.twitter.com/3JzQVJt7bU

— Jesse Myers (Croesus ?) (@Croesus_BTC) May 8, 2023

Bitcoin has had 3 halvings in its 14-year existence. In 11.5 months, the next halving will arrive.

BTC issued per block will go 6.25 –> 3.125.

Bitcoin's annual supply inflation will drop from ~1.8% to ~0.9%, making it a "harder" asset than gold (1.5-2% annual supply growth). pic.twitter.com/5POGTgDn6W

— Jesse Myers (Croesus ?) (@Croesus_BTC) May 8, 2023

Currently, 900 BTC are issued every day to Bitcoin miners. At ~$30k/BTC, that's $27m/day, or $900M every month.

This goes into the market to meet incoming demand, which is ~$900M/month right now. Price goes sideways.

But April 2024, the halving will precipitate a supply shock pic.twitter.com/iSCwtztoPR

— Jesse Myers (Croesus ?) (@Croesus_BTC) May 8, 2023

With not enough new supply to meet demand, price equilibrium can only be restored by:
-Demand suddenly dropping (no reason to happen)
-Supply creation increasing (literally can't happen with Bitcoin)
-Price going up ?

Here's the result of the last 3 halvings: pic.twitter.com/HIoMUjRrdw

— Jesse Myers (Croesus ?) (@Croesus_BTC) May 8, 2023

The same mechanics will play out again, once the 840,000th block is added to the #Bitcoin blockchain in April 2024.

It's just supply & demand.

But how high could Bitcoin's price go as a result of the 2024 halving? It's helpful to take stock of past halvings' stats: pic.twitter.com/JVh0BrKHt4

— Jesse Myers (Croesus ?) (@Croesus_BTC) May 8, 2023

Bitcoin has a way of proving everyone's predictions wrong (certainly true with me). However, my rough analysis for 2024-25:

-Bitcoin's price likely peaks 12-18 months after the April 2024 halving
-Price peak could be between $120k and $240k

Not so crazy on the price chart: pic.twitter.com/3pRGlhMQTV

— Jesse Myers (Croesus ?) (@Croesus_BTC) May 8, 2023

In this week's free edition of "Once-in-a-Species"…

Find out:
-Why the halving's mechanics are guaranteed
-Why I believe the Bitcoin price will go to $120k-$240k
-What to expect beyond thathttps://t.co/T241Pzc3XC

— Jesse Myers (Croesus ?) (@Croesus_BTC) May 9, 2023

1/ DCG Update:

One of two things would happen today.

a) Either a $200 MM wire would be sent from DCG to subsidiary Genesis.

b) Or there would be a DCG blog update.

Today, we got the latter.

This all but confirms there will be no payment of the $630 MM this week. https://t.co/CyGfZvyVY8

— Ram Ahluwalia, higher for longer crypto CFA (@ramahluwalia) May 9, 2023

2/ Here is the statement from DCG. The parties are entering mediation.

At the same time seek to refinance the intercompany loans. pic.twitter.com/DJVAh2X05c

— Ram Ahluwalia, higher for longer crypto CFA (@ramahluwalia) May 9, 2023

3/ Both sides are digging in. The prior statement from DCG is below.

This is DCG saying 'Bro, we agreed to heavy terms, why move the goal posts?'

The UCC is saying they don't trust DCG and have uncovered new information that warrants a new deal. pic.twitter.com/IHW6xcVG02

— Ram Ahluwalia, higher for longer crypto CFA (@ramahluwalia) May 9, 2023

4/ Note: These very same loans were refinanced in the "pre-petititon transactions" with the same parties in the month leading to Genesis Ch 11.

This is what is one source of angst for the creditors (e.g., the refinancing with the sub was not arms length). [ Leto Declaration ]

— Ram Ahluwalia, higher for longer crypto CFA (@ramahluwalia) May 9, 2023

5/ At the same time, makes you wonder – why would DCG refinance with Genesis on loan terms it could not meet?

Or was there another assumption they were relying upon (e.g., external debt refinancing?) and the pre-petition transactions were a bridge?

— Ram Ahluwalia, higher for longer crypto CFA (@ramahluwalia) May 9, 2023

6/ Looking back, there's no question in my mind that one of Barry's regret was having DCG step in and assume the $1.1 Bn defaulted 3AC loan obligation.

The decision to 'rescue' Genesis put DCG's balance sheet at risk. A desire to preserve DCG's reputation forced the 3AC swap.

— Ram Ahluwalia, higher for longer crypto CFA (@ramahluwalia) May 9, 2023

7/ Had DCG simply let Genesis enter Ch 11 Bankruptcy, DCG's financial health and balance sheet would be strong today.

DCG would have been able to cordon off its liabilities. (Note: This is also before FTX fraud.)

This is another one of the many 'lessons learned' from this saga.

— Ram Ahluwalia, higher for longer crypto CFA (@ramahluwalia) May 9, 2023

8/ As I noted on the @laurashin podcast, the Game Theory around this situation is leading to bad outcomes.

There is asymmetric information (e.g., DCG bal sheet) combined with the lack of trust (e.g., perception of no fair dealing).

So we are landing in a lose-lose quadrant.

— Ram Ahluwalia, higher for longer crypto CFA (@ramahluwalia) May 9, 2023

9/ What's next?

30-day mediation.

After that, we may see a new legal proceeding against DCG.

The first sentence in the tweet below would receive attention – is Barry disputing the loans exist while also seeking to refinance them? It's puzzling. pic.twitter.com/9K3NbhMq9f

— Ram Ahluwalia, higher for longer crypto CFA (@ramahluwalia) May 9, 2023

10/ Note: We have not heard of Genesis management. They know the history. Depositions in a DCG suit could reveal that.

We also remain in the dark on the Cleary Gottlieb report – which is late.

Many untold stories in the DCG-Genesis-Gemini saga yet to be revealed.

— Ram Ahluwalia, higher for longer crypto CFA (@ramahluwalia) May 9, 2023