Kelly Evans: The Bitcoin Chase Is on

CNBC

So many things are different about the breakout in Bitcoin this time around.  

You know what I'm not seeing? Any articles about its creator, Satoshi Nakamoto. Anyone tweeting about the latest Bitcoin "breakeven" mining costs. I'm not even seeing any big think pieces or endless PR pitches about how the blockchain will change everything. No one's talking about blockchain, period! 

All the smart people used to chuckle at Bitcoin but say, man, but this blockchain thing is the real story. Actually, it wasn't. The tell was when Blythe Masters stepped down as CEO of Digital Asset at the end of 2018. (Masters is the finance rockstar credited with inventing the credit-default swap.) "Masters was the public face of the 'blockchain, not Bitcoin' philosophy," Bloomberg wrote at the time. As of last year, she was working with Motive Partners, an investment firm that "has nothing to do with blockchain," per the Financial Times.  

None of that matters now. The story is simply "everyone's buying Bitcoin, so you might as well buy some too." We talked yesterday about the huge pool of institutional capital that's starting to flood into the cryptocurrency. Bill Miller--who's having another huge year--emailed a few additional points about just how much demand could outstrip supply. There are an estimated 47 million millionaires globally, he notes, "so if each millionaire only wanted to own one Bitcoin, they could not," given Bitcoin's fixed cap of 21 million coins.  

Also, Miller adds, it's thought that 95% of the current supply is owned by retail aficionados who have low turnover, leaving a very small slice of the pie available for the growing hordes who want to own some. Add it all up and it's no wonder that Bitcoin not only burst through $20,000 yesterday, but has surged above $23,000 today. Scott Minerd of Guggenheim is now saying it could hit $400,000. Sure, why not?  

I also think traders who do get their hands on it want to goose this thing to the moon right now in order to show some impressive year-end "alpha." Hence today's subject line; it's the same one  from last Thursday, except that time it was about the IPO chase into DoorDash and Airbnb. The chase is on for everything right now. The Momentum ETF hit a new all-time high yesterday, Stifel notes. This headline sums it all up: "J.P. Morgan creates a 'YOLO' trade to bet on Ark ETFs." Ark being the Cathie Wood firm that is all-in on Tesla, speaking of momentum. Now you can own structured products leveraged on top of that!  

So what happens when we turn the calendar to 2021? Maybe a healthy reset, a blow-off top. The vaccine brings back normalcy, the 10-year goes above 1%, the dollar maybe even strengthens, the high-fliers all come down to earth. Or since everyone seems to be expecting this, maybe not.  

Maybe Satoshi reveals himself, says "to heck with this whole fixed 21-million supply thing," and Bitcoin implodes in spectacular fashion. Because that's about the only thing I could see collapsing its enthusiasm bubble right now. 

See you at 1 p.m! 

Kelly

Twitter: @KellyCNBC

Instagram: @realkellyevans

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