BTC To The Rescue | The Daily Peel | 3/2/22

Easy W for oil traders and a fat L for equity holders yesterday. That’s been the story for the past few weeks, and yesterday wasn’t very different. As a result, the Dow shed 1.76% while the Nasdaq dropped 1.59% and the S&P lost 1.55%.

Let’s get into it.

• Is Airbnb the coolest, least evil tech company ever?
• A WSJ deep dive into how f*cked the Russian economy is
• A not-so-deep dive into how sanctions could add costs for U.S. consumers
• NYT's live coverage of the Ukraine crisis (strong bookmark candidate)
• Apple choosing Ukraine over money                                                                      

Oil Spill — A major oil spill is incoming, but otters and penguins don’t have much to worry about this time. Rather than BP unloading 210mn barrels into the Gulf of Mexico, Joe Biden and the IEA are spilling 60mn barrels into the oil market.

By now, if you haven’t seen at least a dozen rundowns on why oil prices have skyrocketed of late, you might want to get your eyes checked. This is one of few, if not the only, commodity that affects everyone, from Saudi billionaires to Jane Street’s best oil trader to a 16-year old who just got his driver’s license. And it’s that broad impact that makes this move by Joey B and the IEA crucial, both economically and politically.

Approximately 50% of the 60mn barrels will come from the U.S. Strategic Petroleum Reserve, while the other half will come from a combination of other IEA nations. Dumping this amount of oil on markets is expected to ease prices, at least a little bit, which shouldn’t be too hard with crude trading at a 7-year high of $105/bbl.

Buuuttt… the thing is, 60mn barrels isn’t a whole lot. Global markets eat up >91mn barrels per day, so dumping a supply roughly equivalent to 2/3 of that daily demand is unlikely to have a huge effect (and it hasn’t, by yesterday’s close at least). So, hate to break the news, but it’s gonna take a lot to get those pump prices down.

One thing Americans hate more than the metric system is high gas prices, and politicians know this all too well. With midterms coming up in November of this year, Democrats in control of the Presidency and House of Representatives desperately need pump prices reduced by election day. I guess we’ll just have to see about that.

BTC to the Rescue — Like when one door closes and another one opens, when one currency collapses, another one skyrockets… apparently.

Given that it wasn’t more than a week ago that we ranted about how BTC and equities are actually correlated and about how BTC is just as susceptible to inflation as any other risky asset, we deserve to get bullied for that. Markets poured cold water on that take real quick this week.

In just the past 24hrs alone, BTC has surged 12.4%, while ETH has seen a gain of 10.6%. It took well over a decade for the S&P to gain 10% from its dot-com bubble highs, and BTC is putting up numbers like that in the same time it takes for the new Wordle to come out.

What is going on? While the jury is still out on just how correlated/uncorrelated/inflation-protected/non-inflation-protected BTC and other digital assets are, one thing they’re damn good for is war.

Digital currencies carry the risk/luxury (depending on how you look at it) of not being controlled by a single government entity. That means that no central bank can freeze BTC, so citizens fleeing Ukraine and other regions are going full BTC maximalist on us.

And it makes sense. Another thing BTC and digital currencies are undeniably amazing for is the ease of movement. So when it comes to wartime, it makes sense that people want to load up.

Sidenote: what a trade! Depending on timing, the funds put into BTC over the last 7-days could be up as much as 30%. That’ll be a nice surprise for struggling Ukrainian citizens trying to save their cash.