Ion Strategies. Bitcoin + Pragmatism.
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The markets are showing who is out of touch with reality and who is really with it. You can show all the data, logic, and history, yet privilege still blinds.
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We are wrapping up the first paragraph now.
Accumulate more BTC while you can. The discount window is closing.
Imagine waking up one day to media reporting that foreign nations are no longer transacting in the dollar due to the extreme U.S. debt load. Foreign banks and governments are no longer interested in buying UST because they know the debasement cycle will far exceed the interest earned on holding the debt. Foreign trade fragments and polarizes with brokerage occurring in hard commodity assets and local currencies.
US banks are frozen overnight to prevent collapse. Immediate, strict capital controls are implemented and the government assures everyone that things will be ok. But things aren't ok. Stock markets decline from uncertainty, spending and money velocity halts, debt markets seize. People are nervous, confusion is rampant. Within days, the public figures out that dollars are becoming inaccessible as credit is obliterated out of financial markets. People watch their retirement accounts decline by double digits for consecutive days. Trust and confidence is destroyed within one week.
While retail bank accounts are frozen, the government stuffs the large financial institutions with cash in an effort to stave off a systemic bank failure. People realize at this point that if capital unfreezes, the currency is becoming worthless at an alarming rate.
So what do people do? Naturally, they search for the most practical and reliable alternative money system. They will trade small goods in small quantities, but as goods disappear from shelves, they need a way to derive price signals outside of a rapidly depreciating fiat currency. Gold and metals are not widely distributed and cannot be verified easily.
At this point, people realize that bitcoin possesses the fundamentals of gold but is more accessible, distributed, and offers a tranparent global pricing ledger that can easily integrate into everyday life. Within weeks, people prefer bitcoin over everything else, modifying business operations with minor changes and less inconvenience compared to other alternatives. Markets start to price things in sats, media educates on bitcoin payment practices, and life moves on. Yes, financial accounts are destroyed due to credit failure, but at least the essentials can be established before rebuilding.
Bread is 5 sats
Gas is 50 sats
New car is 50,000 sats
Pricing feels familiar.
If you own 1 BTC, you have 100,000,000 sats. You realize that people are begging you to borrow your bitcoin. You establish a rate for lending out and choose the people you believe in most to repay. Money places new focus on efficiency and productivity instead of mediocrity.
And this is how the new era begins...
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Current thesis for BTC price action:
Today, Bessent announced two important things:
1) "D Day" for Iran and their trading partners, threatening sanctions and cutting off anyone doing business with Iran from the dollar system.
2) Declared that the government TGA account, which can be refilled twice up to $2T more deficit spending to reach the $5T annual ceiling, will use up to $1T for US bond buybacks.
While terrible for our country, I think this is hugely bullish for BTC price.
-The bond buybacks are already highly inflationary due to the liquidity injection into the markets, and the extent of the buybacks is unprecedented. This was the thesis adjustment I posted about last week.
-I think the D Day sanctions will produce the opposite effect of what Bessent is trying to accomplish. Imo, it seems out of touch with how other countries are viewing our system and this will scare them away from the dollar, isolating us instead of strongarming others into submission.
Three key points of reason here. First, the Biden sanctions on Russia in 2022 put the world on alert that their bond investments can be compromised, which significantly damaged trust in the US. These type of sanctions are now driving distaste and apathy instead of fear.
Second, Canada, which used to be one of our closest allies, is distancing itself from us with their recent new set of retaliatory tariffs against us. This is clear evidence that even our closest allies are unfavorable to Trump.
Third, the 2023 banking dilemma actually drove BTC price up as people fled the dollar out of fear. If this thesis is correct and foreign sovereigns start selling dollars and bonds, they will seek alternatives and BTC should produce a similar breakout in price.
Thus, the inflationary effects of bond buybacks combined with an exit of US dollar system could create enormous upside for BTC.
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While the BTC chart technicals suggest a low near the $48k range, I flipped hyper bullish the moment the Treasury bond announcement released last Wednesday and traded the move perfectly. Still remaining long here, reasoning below.
There are a lot of sellers caught off guard here, as I'm already seeing so much disbelief from those got squeezed on the short side. Shorts keep piling in and anyone selling spot is distributing into stronger hands at this point. There are also still a significant amount of short positions from earlier this year that are considering covering as key levels get pierced. This move then pushes options into gamma to the upside.
The move is clearly showing that there were many eyes watching how low BTC would fall, waiting to bid. Since the move occurred, they don't want to be left out and pile in quickly.
This is why having a systematic approach that combines fundamentals, technicals, and tone is a winning strategy. This is what we do at Ion.
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Think we're about to see multiple legs on btc where shorts continually get squeezed out. Probably driven in part by the MSTR sell low buy high strategy.
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Interesting development released on the heels of the Fed announcing a pause to the reserve management program.
Looks like they are pausing short term cycling and going into the long end instead. Yield curve control is starting to accelerate. Bearish economy but bullish hard assets - gold and btc should get a bid. I still think stocks are highly overvalued and we will see a rotation back into btc.
home.treasury.gov/news/press…
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Bitcoin's foundational base is clearly under attack with the cold card incident and now trezor.
The playbook seems obvious - root out as must self-custodied btc so the regulated entities can take it.
Self-custody is of highest importance. It is the ultimate expression of property rights, freedom, and liberty.
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My current thesis for the Yen currency issues:
1) US intervenes and buys yen, starting with a selloff of other foreign currencies held in reserve.
-Risk assets continue selloff, gold might draw down slightly, btc as well, bond yields push higher.
2) US intervenes again with a currency swap line or a bailout package several weeks or months down the line.
-Risk assets melt up on debasement trade, gold and btc break up, bond yields push even higher.
3) US Fed then has to use stabilization funds to buy back US bonds to push yields back down.
-Risk assets continue to melt up on debasement trade.
Nobody wants bonds. Dollar about to get crushed. We're shifting into nice window to bid BTC.
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Really looking forward to speaking at the Midwest Bitcoin Summit this September in Columbus. It's great to see Ohio pushing forward on the Bitcoin front!
Speaker lineup is quite stacked - definitely worth checking it out.
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Know that I am a natural bull, but more so a pragmatist.
I would give it 4 years or less before capital controls are set in place to prevent sales or exits from equities and bonds. Foreign governments are not going to bail the US out of another big print, signaled by gold once again becoming the leading reserve asset in foreign central banks. There are two options in this scenario: (1) face a depression through either a collapse in valuations or hyperinflation, same result, or (2) impose capital controls in the markets to close off the exit ramps. Neither scenario is productive.
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Becoming very clear that everything that's happening in Iran is about gaining power over China via Hormuz control. Iran is just the means. Lots of macro data and game theory logic for confluence.
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Honestly, I do hope Warsh makes things super tight. I would rather deal with a recession now than kick the can again for my kids to deal with. The longer we prolong the inevitable, the more painful the fall.
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