{"id":41640,"date":"2025-02-04T16:12:40","date_gmt":"2025-02-04T16:12:40","guid":{"rendered":"https:\/\/mycryptomania.com\/?p=41640"},"modified":"2025-02-04T16:12:40","modified_gmt":"2025-02-04T16:12:40","slug":"make-it-capital-edition-45","status":"publish","type":"post","link":"https:\/\/mycryptomania.com\/?p=41640","title":{"rendered":"Make-it Capital Edition #45"},"content":{"rendered":"

THE WORLD AS WE SAW IT IN JANUARY\u00a02025<\/strong><\/p>\n

The World of Cryptocurrencies<\/strong><\/p>\n

The first few weeks of the year often give us a picture of how investors see the opportunities for at least the first quarter and even the whole year and with many assets rising albeit in a volatile manner, we feel inclined to join the optimists for\u00a02025.<\/p>\n

President Trump <\/strong>took office with the promise to build up a strategic supply of Bitcoin<\/strong>. Will it be a reserve <\/strong>or a stockpile <\/strong>though? The word reserve versus stockpile has been interchanged over the past few months, but there are some important differences. \u201cFrom my understanding a stockpile would mean that the government would hold onto the crypto they have accumulated from various cases whereas a reserve would ultimately be what the Treasury Department determines to purchase and hold<\/em>,\u201d says Rebecca Rettig<\/strong>, chief legal officer at Jito Labs<\/strong>. The government holds a variety of cryptocurrencies, most notably Bitcoin, but also USDT, USDC and UNI, totaling over $21 billion, according to Arkham Intelligence<\/strong>. A first step could be to transfer the 215,000 Bitcoin seized by the Department of Justice <\/strong>and the U.S. Marshals Service<\/strong> to the U.S. Treasury\u2019s balance sheet. In January 2025, it was mentioned by Bitwise <\/strong>that the US government controlled approximately $20.3 billion <\/strong>across 8 different chains, with Bitcoin representing around 98% of these holdings. Senator Cynthia Lummis <\/strong>has already introduced the Bitcoin Act<\/strong>, which provides for the purchase of another 1 million Bitcoin. RFK Jr.<\/strong> even went so far as to propose 4 million Bitcoin. However, should the US actively purchase Bitcoin building a strategic reserve, it would have to do this over months if not years. Otherwise, such action would trigger price pressure, and the US would cause itself to\u00a0overpay.<\/p>\n

Further, these developments aren\u2019t just happening at the federal level. The state of Pennsylvania <\/strong>has already introduced legislation for a state Bitcoin reserve fund. More recently, New Hampshire, North Dakota<\/strong>, Oklahoma, Utah, Wyoming <\/strong>and Massachusetts <\/strong>have followed suit or are at least seriously considering it. An industry organization that works with states on this type of legislation stated earlier this month that it is currently working with 14 different states<\/strong> on similar legislation. There are even initial discussions about the potential of U.S. Treasury BitBonds<\/strong>. The concept is similar to a traditional government bond, except that a small percentage of the bond purchase would be used to buy bitcoin. At maturity, this bitcoin would be returned to the bondholder along with the face value of the bond. This construct would add an exciting growth component to an otherwise simple, boring income investment. Even better, a small stake in Bitcoin provides a strong hedge against inflation and any devaluation of the US\u00a0dollar.<\/p>\n

In the past, two major obstacles have hindered the adoption of Bitcoin in corporations<\/strong>: Firstly, reputational risk and secondly, unfavorable accounting regulations. Both have changed dramatically in recent months. That\u2019s why Matt Hougan<\/strong>, CIO at Bitwise<\/strong>, has made the bold prediction that hundreds of companies will buy Bitcoin as a treasury asset in the next 12 to 18 months. But back to the two historical barriers to\u00a0entry.<\/p>\n

First, there is less reputational risk<\/strong>. Until recently, companies had significant hurdles to overcome if they wanted to invest in Bitcoin. CEOs and boards were concerned about shareholder lawsuits, regulatory investigations and negative media coverage. However, with the increasing acceptance of Bitcoin at the institutional and governmental level, these fears are dissipating. Post-election, Bitcoin has seen growing bipartisan support in Washington, making it increasingly \u201ccommonplace\u200a\u2014\u200aand even popular\u200a\u2014\u200ato own Bitcoin<\/em>,\u201d according to\u00a0Hougan.<\/p>\n

And second, the Financial Accounting Standards Board<\/strong> (FASB<\/em>) has introduced a new guidance, ASU 2023\u201308<\/strong>, that fundamentally changes the accounting for Bitcoin<\/strong>. Previously, companies had to recognize Bitcoin as an intangible asset<\/strong>, which forced them to write down the value when prices fell, but prevented an upward adjustment when prices rose. Under the new rule, Bitcoin can now be valued at market value<\/strong>, allowing companies to recognize gains when the price rises. This change removes a significant disincentive and is expected to lead to exponential growth in companies\u2019 Bitcoin holdings. Only about 450 new bitcoins are mined every day, and with institutional bitcoin purchases already outstripping the supply of newly mined BTC this year, things could get very crazy very quickly. Buckle\u00a0up.<\/p>\n

Which companies <\/strong>stand out for integrating Bitcoin into their corporate strategies, whether as a treasury reserve or through direct involvement in cryptocurrency mining or services? In first place is MicroStrategy<\/strong>, which holds by far the largest amount of Bitcoin among listed companies with 402,100 BTC. In second and third place are Marathon Digital<\/strong> with 34,959 BTC and Riot Platforms <\/strong>with 11,425 BTC. They are followed by Tesla Inc<\/strong>. with 9,720 BTC, Coinbase Global <\/strong>with 9,480 BTC, CleanSpark <\/strong>with 9,297 BTC, Hut 8 Mining<\/strong> with 9,110 BTC and finally Jack Dorsey\u2019s Block Inc.<\/strong> with 8,363 BTC. The movement is also spreading around the world. The Indian <\/strong>company Jetking Infotrain<\/strong> is the first public company in the country to own Bitcoin. The Japanese <\/strong>company Metaplanet <\/strong>raises $62 million to expand its Bitcoin holdings. In China<\/strong>, there is a growing number of Bitcoin holding companies, such as Cango Inc<\/strong>, Boyaa Interactive<\/strong> and Nano Labs<\/strong>. In South America<\/strong>, prominent crypto-friendly companies include Mercado Libre<\/strong>, Banco do Brasil<\/strong> and Nubank<\/strong>, in which, interestingly, Bitcoin critic Warren Buffett <\/strong>is a major shareholder. Hunter Horsley<\/strong>, CEO of Bitwise<\/strong>, expects this trend to continue this year: \u201cCorporations buying Bitcoin is going to be a major theme of 2025<\/em>.\u201d All in all, the website Bitcoin Treasuries<\/strong> lists 157 companies having acquired Bitcoin as part of their strategic reserves.<\/p>\n

And last but not least, what is the stance of the Wall Street giants<\/strong> in this? For years, crypto companies have been complaining about the difficulties of setting up and maintaining bank accounts in the USA and globally. The issue became particularly heated after the FTX <\/strong>collapse, when several government agencies\u200a\u2014\u200aincluding the Office of the Comptroller of the Currency<\/strong> and the Federal Reserve<\/strong>\u200a\u2014\u200awarned of the \u201ccrypto-asset risks<\/em>\u201d for banks. In 2023, after anecdotal evidence of bankrupt crypto companies emerged, Castle Island Ventures<\/strong> co-founder Nic Carter<\/strong> coined the term \u201cOperation Choke Point 2.0<\/em><\/strong>\u201d to describe the alleged coordinated effort by regulators to squeeze crypto-related companies out of the legacy banking system. (The term is a reference to the <\/em>Obama<\/em><\/strong>-era \u201c<\/em>Operation Choke Point<\/em><\/strong>\u201d, a US Department of Justice initiative aimed at restricting banking services to industries deemed high-risk for fraud and money laundering, including payday lenders and arms dealers<\/em>).<\/p>\n

The Trump administration has taken a much friendlier stance towards the crypto industry and could signal a shift in how banks work with the crypto industry in the future. Newly appointed FDIC <\/strong>Chairman Travis Hill<\/strong> has said that the agency should clarify how banks work with cryptocurrencies. In this regard, Bank of America<\/strong> CEO Brian Moynihan<\/strong> shared, \u201cIf the rules come in and make it a real thing that you can do business with, then the banking system will crack down. We already have hundreds of patents on blockchain, we know how to enter the field<\/em>\u201d. This sentiment is echoed by Goldman Sachs<\/strong> CEO David Michael Solomon<\/strong>, who signaled that the Wall Street giant will get involved in cryptocurrencies if regulations change in the US. \u201cIf the regulatory structure changes, we would look at that, but right now we\u2019re not allowed to<\/em>\u201d. Not to be outdone, the CEO of Morgan Stanley<\/strong>, Ted Pick<\/strong>, said that his bank wants to work with US regulators to see if it can participate more in the crypto markets: \u201cFor us, it\u2019s about whether we can be a transaction partner as a highly regulated financial institution<\/em>.\u201d<\/p>\n

Wall Street\u2019s joint wish seems already to be coming true as just recently, the US Securities and Exchange Commission<\/strong> (SEC<\/em>) repealed the controversial SAB 121<\/strong> accounting rule that prevented banks from offering custody services for digital assets. This news signals a shift in the SEC\u2019s approach to crypto assets regulation under Commissioner Hester Peirce<\/strong>, who now heads the agency\u2019s newly formed crypto task force. \u201cBye, bye SAB 121! It was no fun<\/em>,\u201d was her official reaction on X. We are clearly entering a new era of regulation.<\/p>\n

Spot Bitcoin exchange-traded fund (ETF<\/em>) issuer Franklin Templeton<\/strong> expects more countries <\/strong>to adopt strategic Bitcoin reserves in 2025, according to the company\u2019s digital assets outlook. \u201cBitcoin will solidify its position as a global financial asset acting as a digital store of value, accelerated by sovereign and institutional adoption. We expect to see strategic BTC reserves added by several nations<\/em>.\u201d While the ETF issuer did not specify which countries may adopt Bitcoin reserves, Franklin Templeton expects a \u201cshift from speculation to utility<\/em>\u201d in 2025. The company said crypto\u2019s foundational technologies will become an integral part of global financial systems this\u00a0year.<\/p>\n

And according to the Fidelity Digital Assets 2025<\/strong> report (to which I will leave a safe link at the end<\/em>), world leaders are warming to the cryptocurrency after the US announced its intention to adopt Bitcoin, and interest from institutional investors is growing. \u201cWe anticipate more nation states, central banks, sovereign wealth funds and government treasuries will look to establish strategic positions in Bitcoin<\/em>\u201d. Crypto-interested countries could model their plans to build Bitcoin reserves on the policies of pro-Bitcoin states such as Bhutan <\/strong>and El Salvador<\/strong>, where government officials have already made sizable gains. Nations currently discussing this are: Brazil<\/strong>, Russia<\/strong>, Germany<\/strong>, Hong Kong<\/strong>, Poland<\/strong>, Japan<\/strong>, India<\/strong>, the Czech Republic<\/strong> and even Switzerland<\/strong>.<\/p>\n

It has become a bit quiet around RWAs <\/strong>or tokenized assets<\/strong>. Reason enough to point out the potential. The World Economic Forum<\/strong> estimates that tokenized assets will account for around 10% of global GDP, or around $10 trillion, by 2030. Although billions of shares of publicly traded companies are traded daily on stock markets, Advisorpedia <\/strong>estimates that only 13% of US companies with annual revenues of more than $100 million are publicly traded. This means that there is more than 6.7 times as much wealth in private companies as in public ones. According to Siblis Research<\/strong>, American public companies are worth $55 trillion. So private companies could be worth more than $368 trillion if they were traded in the same way as public companies. It\u2019s impossible to estimate how much of that value could one day be tokenized and traded on the blockchain\u2026 but there is a trillion or even quadrillion dollar global potential.<\/p>\n

The World of Commodities<\/strong><\/p>\n

The gold<\/strong> price in USD has experienced strong fluctuations since Donald Trump<\/strong>\u2019s election victory on November 8, 2024 these swings were influenced by several factors. Firstly, an important reason for the initial fall in the gold price to a low of $2,565 on November 15, 2024, was the strengthening of the US dollar<\/strong>. Trump\u2019s victory was seen as a possible consequence of policies that could increase inflation <\/strong>and the budget deficit,<\/strong> which traditionally supports a stronger dollar. A stronger dollar makes gold, which is priced in dollars, more expensive for foreign investors, which lowers demand and therefore the price. Secondly, the market reacted to Trump\u2019s economic policies, which include tax cuts<\/strong> and tariffs<\/strong>. Initially, these measures could lead to investors switching from safe-haven assets such as gold to equities in anticipation of economic growth. The expectation that these measures could lead to higher bond <\/strong>yields also reduces the attractiveness of gold, which does not yield interest.<\/p>\n

However, this has changed recently as gold prices have now reached new highs. What has happened in such a short period of time? Well, for one the dollar strength has shifted into a weakness creating a tailwind for gold prices in USD. Also, gold prices used to follow the bond market, but when bonds fell, i.e. yields increased despite the Fed cutting rates, gold proved resilient. It seems that gold now offers protection from a deteriorating bond market. If bonds are the benchmark, gold is not just in a bull market, it is in a super bull market. The 20-year US bond<\/strong> has fallen up to 18% since September 2024 and gold has cushioned much of that. Investors can now get 4.5% for cash in the bank or almost 5% for a long bond. Yet they are voluntarily foregoing the interest offered because they believe the cost of borrowing will continue to rise and interest rates are not high enough to offset the capital losses from bonds over the long term. To obtain a clearer picture of what is happening, we should ask ourselves, what ended the gold super-boom of the 1970s<\/strong>? The answer is a peak in interest rates and bond yields. When interest rates peaked, the gold euphoria was over because the peak in interest rates signaled that the system was back under control after a period of inflation, deficits and disorder. The time to sell gold<\/strong> is when we can be sure that the authorities are back in control, whenever that may be. That does not seem to be the case\u00a0now.<\/p>\n

To summarize, Trump\u2019s election initially led to a sharp fall in gold prices due to a stronger dollar and market optimism. The long-term outlook for gold includes considerations of inflation, the impact of fiscal policy and ongoing global uncertainties that support higher gold prices. However, these factors will depend on how Trump\u2019s policies develop and how they impact the broader economic landscape.<\/p>\n

Let\u2019s take a closer look at the gold-silver ratio<\/strong> (GSR<\/em>), which on January 31 stood at 88. In a 50-year regression, where the GSR increases by 0.6% each year, the midpoint of the range is 78. If you assume a constant, that would be 65, which means silver is relatively cheap right now (it has also outperformed gold in January<\/em>).<\/p>\n

Both gold and silver were historically used in trade. Throughout antiquity, the GSR was pretty much the same at 8:1. By the time of Hammurabi <\/strong>in ancient Babylon<\/strong>, the ratio was 6:1, and in ancient Egypt <\/strong>it fluctuated wildly, ranging from 13:1 to 2:1. In Rome<\/strong>, it was around 12:1 (although Roman emperors routinely manipulated the ratio to suit their needs<\/em>). In the United States<\/strong>, the GSR was set at 15:1 in 1792. And in the 20th century, it averaged 50:1, but because gold is still considered a safe haven, the ratio often rises dramatically in times of crisis, panic and economic downturn. Just before the Second World War<\/strong>, when Hitler <\/strong>invaded Poland<\/strong>, the GSR reached 98:1. In January 1991, when the first Gulf War <\/strong>began, the ratio reached 100:1. The historical average of the GSR has changed over time. Since the 1970s, when the gold standard was abandoned, the long-term average has been around the above mentioned 65:1. To reach the long-term average of 65:1, and assuming the other part of the equation remains stable, gold would either have to fall to $1.881 or silver would have to rise to $43. The truth will probably lie somewhere in the\u00a0middle.<\/p>\n

What about Dr. Copper<\/strong>? Notwithstanding his obvious bias, Robert Wares<\/strong>, President and CEO of Osisko Metals<\/strong>, sees a very strong copper market ahead. He foresees demand growth meeting limited supply. \u201cThe growth will come primarily from increased demand from the power grids<\/em>,\u201d he says. \u201cIf we want to decarbonize the planet, whether it\u2019s in transportation, power generation or energy storage, it just requires copper. And the independent analysts are pretty much in agreement that production will need to double to meet demand by 2050. Doubling global production from just under 30 million tons to 60 million tons by 2050 is virtually impossible.<\/em>\u201d Wares agrees with the assessment that the world will run into a global copper supply deficit in 2025, which he believes will last for at least five years driving up the price for copper in\u00a0USD.<\/p>\n

Why isn\u2019t the oil <\/strong>price falling? This is an important question for the markets and the global economy. The price has remained in a narrow range in recent months. This suggests that supply and demand are in balance. If that is the case, what needs to happen for a breakout to occur? Let\u2019s look at what the key factors are. On the downside, the value of the Chinese <\/strong>bond market is rising sharply. This is a clear signal that the risk of deflation is very real. If the Chinese economy is struggling, it\u2019s not good for oil demand growth. Moreover, the UK<\/strong>, France <\/strong>and Germany <\/strong>are all in recession while the US <\/strong>is still setting new production records, adding supply to the global oil\u00a0market.<\/p>\n

On the bullish side, Saudi Arabia<\/strong> is continuing to curtail its supply. The country has kept its production at around 9 million barrels in the last six months (compared to 11 million barrels in\u00a02022<\/em>).<\/p>\n

The times when the price moves in a narrow band, as it is now, do not last. They usually end with strong breakouts. The catalyst for a breakout to the downside <\/strong>could be a significant decline in global growth expectations led by deflationary pressures in China as alluded to above. That could lead to a breakout below $70. I believe that in this case there would also be a major supply reaction. The profitability of many producing areas would be threatened by a sub $70 oil price, so action would be taken quickly to limit the\u00a0decline.<\/p>\n

The catalyst for an upward breakout<\/strong> could be a significant new source of global liquidity from central banks. The threats to growth posed by higher interest rates and austerity measures are well known and as interest rates have already been cut, there is scope for additional measures to stimulate growth. That would be bullish for the oil\u00a0price.<\/p>\n

What about natural gas<\/strong>? After having risen some 53% year-over-year, Ukraine <\/strong>officially stopped the transit of Russian <\/strong>natural gas to several European countries on January 01. This ended a five-year agreement and closed a chapter in Russia\u2019s decades-long dominance of the European energy markets. As Europe turns away from Russian gas, the US <\/strong>is becoming the key player in filling the supply gap. US LNG <\/strong>exports to Europe have already increased in recent years, and this transition presents an even greater opportunity for American energy producers. The growth of US energy exports depends on significant investment in infrastructure. According to a report by ICF<\/strong>, commissioned by the American Petroleum Institute<\/strong> (API<\/em>), US oil and gas infrastructure development is expected to remain robust through 2035, with total capital expenditures (CAPEX<\/em>) ranging from $1.06 trillion to $1.34 trillion between 2017 and 2035 averaging $56 to $71 billion per\u00a0year.<\/p>\n

The three strongest commodities in January were US eggs (+22%), coffee (+21%), and potatoes (+16%); the weakest were orange juice (-15%), barley (-13%), and gallium\u00a0(-13%).<\/p>\n

The Rest\u00a0\u2026<\/strong><\/p>\n

According to the sentiment survey conducted by the American Association of Individual Investors<\/strong> (AAII<\/em>) at the beginning of December 2024, 48% of respondents were bullish. This proportion has been at the upper end of the scale in recent years. In recent weeks, however, this sentiment has fallen to its lowest level since November 2023 (25%<\/em>). Why is that? Stocks are down 4\u20135%, which isn\u2019t earth-shattering, you might think. But it seems that the clocks, and therefore the markets, are ticking differently these days. People seem to react first and analyze later, if at all. So stocks have hardly sold off, but the extremely negative sentiment shows us that the worst is probably behind us. The AAII sentiment survey shows that most retail investors who could bet on falling prices have already done so. When there is no one left to sell, the fall in prices will end. Stocks have already recovered most of their losses. And considering how few bulls there are today, we\u2019re likely to see new all-time highs again\u00a0soon.<\/p>\n

On December 31, the five largest stocks in the S&P 500\u200a<\/strong>\u2014\u200aApple<\/strong>, Nvidia<\/strong>, Microsoft<\/strong>, Amazon <\/strong>and Alphabet\u200a<\/strong>\u2014\u200aaccounted for 29% of the total market capitalization of the S&P 500 Index. According to stock market data firm Barchart<\/strong>, this is the highest concentration of the top five stocks in the S&P 500 since 1964, when AT&T<\/strong>, Exxon<\/strong>, General Motors<\/strong>, IBM <\/strong>and Texaco <\/strong>accounted for more than 27% of the index. Such a high concentration makes the S&P 500 very susceptible to drastic downward swings despite the above-mentioned sentiment among small investors and the thus reduced selling pressure.<\/p>\n

The American financier and bank executive Kevin Warsh<\/strong> published an essay in the Wall Street Journal <\/strong>on January 16 in which he assesses the true causes of inflation<\/strong>. While the Powell-led Fed<\/strong> blames inflation on various causes, from the pandemic <\/strong>to clogged supply chains<\/strong> to the war in Ukraine<\/strong>, Warsh points out that inflation was caused by the printing and spending of trillions of dollars <\/strong>that led to a huge increase in consumer prices during the pandemic, a phenomenon that followed a sharp rise in financial asset prices. According to the author, the Trump administration \u201cis inheriting a fiscal and monetary mess<\/em>\u201d Federal government spending is 52% higher than in 2019 and the annual budget deficit is $850 billion higher than in January 2020. The national debt is 50% higher than five years ago and debt servicing costs have almost tripled at $3 billion per day. During this period, the Fed\u2019s balance sheet has expanded by 65% and the US monetary base, which includes bank reserves and currency in circulation, has increased by 63%. Meanwhile, the US economy has only grown by a fraction of the debt during this period. No wonder, then, that the stock markets have reached record highs by every conceivable valuation measure (Price-to-Earnings Ratio (P\/E),<\/em> Price-to-Sales Ratio, Shiller CAPE, <\/em>and even the Buffett indicator<\/em><\/strong>). When central banks devalue their currencies by printing seemingly endless amounts of paper money, the assets denominated in these currencies appear to be worth more in nominal terms, which economists call a \u201cmoney illusion<\/em><\/strong>\u201d Well, as Friedrich Nietzsche<\/strong> said: \u201cSometimes people don\u2019t want to hear the truth because they don\u2019t want their illusions to be destroyed<\/em>.\u201d Unfortunately, there will be a rude awakening at some point. Stay vigilant. It was none other than Thomas Jefferson <\/strong>who said: \u201cTo preserve our independence, we must not let our rulers load us with perpetual debt<\/em>.\u201d<\/p>\n

A brief note on above mentioned Buffett indicator<\/strong>. It compares the total value of the US stock market to GDP<\/strong> and is reported to be at 208%<\/strong>. This value indicates the US stock market to be grossly overvalued <\/strong>relative to GDP. If you look at long-term data and when the ratio came in at 50\u201375%, it would be considered undervalued and a buying opportunity. Fair value was between 75 -90% and the market was considered slightly overvalued at 90 -115%. 208% is playing in a new league. Over time, particularly in recent decades, there has been a trend where the indicator has been above these historical averages, leading to debates about what constitutes \u201cnormal\u201d valuation in the modern economy. This upward trend could be influenced by factors such as increasing globalization, greater efficiency and therefore profitability, technological advances and changes in the measurement of GDP relative to market capitalization. Nevertheless, there is no harm in being aware of the current historical outlier. After all, according to Francis Bacon<\/strong>, \u201cknowledge is\u00a0power<\/em>.\u201d<\/p>\n

Since we are talking about outliers, we need to draw attention to debt levels, too. Since 1960, Congress <\/strong>has raised the debt ceiling<\/strong> 78 times. That\u2019s an average of 1.2 times per year over that period. And that\u2019s under both parties\u200a\u2014\u200a49 times under Republican presidents and 29 times under Democratic ones. When the debt ceiling is inevitably raised, the government has to raise money on the debt markets. It sells government bonds that pay interest, creating more debt. And so it goes on. Federal spending has followed the rise in the debt ceiling. Total government spending in 1960 amounted to $77 billion. In 2024, they came in at $6.8 trillion. The Congressional Budget Office<\/strong> (CBO<\/em>) projects it\u2019ll rise to more than $10 trillion by 2035. The better news is that revenues will also rise, but not at the same pace. The CBO projects that revenues will be $8 trillion in 2035, up from $4.9 trillion in 2024. If spending rises faster than revenues, that means ever higher deficits\u00a0though.<\/p>\n

It is time to take a fresh look at the BRICS<\/strong> (Brazil<\/em><\/strong>, <\/em>Russia<\/em><\/strong>, <\/em>India<\/em><\/strong>, <\/em>China<\/em><\/strong>, <\/em>South Africa<\/em><\/strong>). In particular, how they compare with the G7<\/strong>. Their sphere of influence is clearly growing: last year, five new members (UAE<\/em><\/strong>, <\/em>Iran<\/em><\/strong>, <\/em>Egypt<\/em><\/strong>, <\/em>Ethiopia<\/em><\/strong>, <\/em>Indonesia<\/em><\/strong>) and eight new \u201cpartner countries\u201d one level below full membership joined. These partner countries include Belarus<\/strong>, Bolivia<\/strong>, Cuba<\/strong>, Kazakhstan<\/strong>, Malaysia<\/strong>, Thailand<\/strong>, Uganda <\/strong>and Uzbekistan<\/strong>. Saudi Arabia<\/strong> and Argentina <\/strong>have been invited to join, but Saudi Arabia has not yet responded, while Argentina has flatly refused to join. With its ten members, the new BRICS account for 29% of global GDP ($33.5 trillion<\/em>), still a far cry from the G7\u2019s share of 45% or $51.5 trillion (all data is sourced from the International Monetary Fund and was last updated in October 2024<\/em>). There is also talk of the BRICS countries adopting a common currency<\/strong> for trade and abandoning the US dollar<\/strong>. Abandoning the US dollar would have the major advantage of circumventing the financial sanctions <\/strong>that currently restrict global trade with at least two countries in the bloc\u200a\u2014\u200aRussia <\/strong>and Iran<\/strong>. However, a new BRICS currency is unlikely due to the very different economic structures of the countries involved. On the other hand, trade within the bloc could increasingly be conducted in national currencies. For example, India <\/strong>has already used its currency (rupees<\/em>) to buy crude oil from the UAE<\/strong>. The world seems to split into two\u00a0halves.<\/p>\n

The largest companies, however, still all stem from the G7 or Saudi-Arabia which as we have learned has not responded to the BRICS invite just yet. In particular, these are the six most profitable companies<\/strong> in their respective sectors in terms of profit after tax. At the top of the world ranking is Saudi Aramco<\/strong> with a net profit of $120.7 billion in the energy sector. The most profitable technology company was Apple <\/strong>with net profits of $97 billion. In the financial sector, Warren Buffett\u2019s Berkshire Hathaway<\/strong> leads with a net profit of $96.2 billion. In healthcare, Johnson & Johnson<\/strong> is ahead with $35.2 billion, while Toyota <\/strong>leads the automotive sector with $34.2 billion. Finally, Amazon <\/strong>leads the retail segment with profits at $30.4 billion being twice as profitable as Wal-Mart<\/strong> at $15.5\u00a0billion.<\/p>\n

The cards in the global economy are constantly being reshuffled. Of the ten companies with the highest market capitalization in the world in 2005, only one is still on this list today\u200a\u2014\u200aMicrosoft<\/strong>. This is due to the fact that large companies are becoming too administrative and are therefore no longer able to recognize innovation trends in good time. At the same time, the sectors that are growing at an above-average rate are constantly changing. You have to remain open, agile and unbiased to stay on top of this exponentially changing world. Here is a quote from an unknown author: \u201cIn this ever-changing world the most successful are not those with the strongest armor, but those who can move quickest with the least baggage.\u201d<\/em><\/p>\n

Due to its enormous importance on the world economy, we cannot leave this month\u2019s \u201cThe Rest<\/em>\u201d segment without touching ground on China <\/strong>again. The Middle Kingdom\u2019s trade surplus is huge and economic growth is expanding at around 4.6% year-on-year. So why is investor sentiment so gloomy? Well, yields on Chinese government bonds<\/strong> are falling faster and faster. This reflects the outsized demand for bonds with diminishing guaranteed yields, and this kind of demand means that investors and traders have clear reasons to prefer bonds over stocks or real estate<\/strong>. The real estate market remains under pressure. Property <\/strong>prices in China\u2019s tier 1 cities have fallen month on month since July 2023. That means the price has fallen every month for nineteen consecutive months evaporating about $18 trillion in purchasing power. No wonder sentiment is so\u00a0poor.<\/p>\n

The unpleasant fact is that the unraveling of the real estate bubble has clear parallels with what happened in Japan <\/strong>between the peak in 1989 and today. With a consumer price index<\/strong> of 0.3% year-on-year, the economy is clearly in danger of falling into outright deflation<\/strong>. The real estate market has been the main target for investment flows for 40 years, so the current stress is weighing on consumer sentiment. Under normal circumstances, it would be a cause for celebration if the consumer price index was so low and the economy was growing at over 4%. So, the fact that the government is considering providing $280 billion in stimulus <\/strong>funds (the second highest amount after the COVID stimulus program<\/em>) is a better indicator of how the economy is doing. China is likely to launch the new round of stimulus measures by March this year once it has Trump\u2019s full tariff plans in sight. Australian bank Macquarie Group <\/strong>estimates that China will need at least $800 billion in new stimulus to boost domestic demand and sufficiently offset the impact of new tariffs. We can therefore assume that China will launch a new stimulus package worth at least $1 trillion. Here is Napoleon Bonaparte<\/strong>: \u201cLet China sleep, for when she wakes, she will shake the world.<\/em>\u201d Well, she clearly is not sleeping anymore, perhaps just taking a\u00a0nap.<\/p>\n

MAKE-IT CAPITAL FUND (the\u00a0Fund)<\/strong><\/p>\n

As a unique hedge fund for a comprehensive blockchain \/ cryptocurrency portfolio, the Fund allows investors to participate in the full spectrum of distributed ledger \/ crypto assets with just one investment.The Fund aims to reduce inherent risk and volatility without compromising performance by applying its proprietary 5-pillar strategy.The Fund is operated by Make-It Singapore and managed by Make-It New\u00a0Zealand.The Fund is fully transparent and always trades at the exact\u00a0NAV.<\/p>\n

The Fund had another strong month. However, Ethereum <\/strong>is still lagging behind Bitcoin<\/strong>, putting a small dent in our overall performance relative to Bitcoin. However, recent developments initiated by Vitalik Buterin <\/strong>impacting the reorganization of the Ethereum Foundation to strengthen ETH\u2019s position as the leading smart contract base and DeFi hub already seem to be having a positive impact on investor sentiment. Trump\u2019s World Liberty Financial<\/strong> bought another $10 million worth of ETH yesterday bringing his total to $225 million\u00a0\u2026 We are staying the\u00a0course.<\/p>\n

The CEO of BlackRock<\/strong>, Larry Fink<\/strong>, has suggested that the price of Bitcoin could rise to $700,000 if sovereign wealth funds <\/strong>(SWFs<\/em>) allocate 2 to 5% of their portfolios to the cryptocurrency. And Fink is only talking about SWFs, not public and private companies or even states and nations. In his speech at the World Economic Forum<\/strong> in Davos, Fink highlighted Bitcoin as an instrument that can be used to allay concerns about the devaluation of currencies and political instability. \u201cIf you\u2019re frightened about debasement or local political instability, you have an international instrument called Bitcoin to overcome those fears,<\/em>\u201d Fink said. \u201cWe could see $500K, $600K, or $700K per Bitcoin.<\/em>\u201d Additionally, Arkham Intelligence<\/strong> reported that BlackRock acquired $661 million worth of Bitcoin on Jan. 21, making it its largest purchase in 2025. Currently, BlackRock\u2019s iShares Bitcoin Trust<\/strong> (IBIT<\/em>) holds 575,605 BTC worth around $60 billion. The creator of Gmail<\/strong>, Paul Buchheit<\/strong> hit the nail on the head: \u201cBitcoin may be the TCP\/IP of\u00a0money<\/em>.\u201d<\/p>\n

Dan Morehead<\/strong>, CEO of Pantera Capital Management<\/strong>, joins Larry Fink\u2019s prediction as he also believes that BTC will surpass the $700,000 mark before April 2028 due to historical trends and the re-election of the very crypto-friendly Donald Trump. \u201cBitcoin is still squeezing up like a watermelon seed. Blockchain\u2019s 15-year regulatory headwinds are now turning into tailwinds.<\/em>\u201d<\/p>\n

There have been so many positive developments since the new administration took power in the US. Many of them are clearly crypto-friendly and signal a radical swing towards a pro-innovation stance in the development of the digital assets industry. Your fund managers have never been more excited about blockchain technology, cryptocurrencies and other digital assets than right now. There is so much to look forward to this\u00a0year.<\/p>\n

Thank you for your time and attention<\/p>\n

Sincerely,<\/p>\n

Philipp L.P. von\u00a0Gottberg<\/p>\n

PS: Here is the promised link to the Fidelity Digital Assets 2025\u00a0report:<\/em><\/p>\n

https:\/\/fwc.widen.net\/s\/zbhjbmppgq\/fda-2025-look-ahead-repor…<\/a><\/p>\n

Make-it Capital Edition #45<\/a> was originally published in Coinmonks<\/a> on Medium, where people are continuing the conversation by highlighting and responding to this story.<\/p>","protected":false},"excerpt":{"rendered":"

THE WORLD AS WE SAW IT IN JANUARY\u00a02025 The World of Cryptocurrencies The first few weeks of the year often give us a picture of how investors see the opportunities for at least the first quarter and even the whole year and with many assets rising albeit in a volatile manner, we feel inclined to […]<\/p>\n","protected":false},"author":0,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2],"tags":[],"class_list":["post-41640","post","type-post","status-publish","format-standard","hentry","category-interesting"],"_links":{"self":[{"href":"https:\/\/mycryptomania.com\/index.php?rest_route=\/wp\/v2\/posts\/41640"}],"collection":[{"href":"https:\/\/mycryptomania.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mycryptomania.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"replies":[{"embeddable":true,"href":"https:\/\/mycryptomania.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=41640"}],"version-history":[{"count":0,"href":"https:\/\/mycryptomania.com\/index.php?rest_route=\/wp\/v2\/posts\/41640\/revisions"}],"wp:attachment":[{"href":"https:\/\/mycryptomania.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=41640"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mycryptomania.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=41640"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mycryptomania.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=41640"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}