The Trump Bump: Bitcoin & Natural Gas
Donald Trump’s decisive election victory lays the groundwork for two structural investment opportunities: Bitcoin & natural gas.
In today’s note we’ll outline the macro tailwinds for each and which stocks we believe have attractive leverage & risk/reward to each theme.
Bitcoin - A Fringe Asset No More
Bitcoin and crypto bull markets are unlike any other asset class; the ability to drive market participants into a frenzy is unparalleled.
Grizzle’s big call heading into 2024 (Dec 28, 2023) was that the launch of publicly traded Bitcoin ETFs would lead to a price squeeze in BTC that would take out the previous all-time high of $68K.
Our out of consensus call was that there would be over $50 billion of inflow into the new Bitcoin ETFs in 2024 (based on the adoption rate of Canada); the consensus at the time was $12 billion - this in our view was enough capital to send BTC to all-time highs.
By March 2024 assets under management (AUM) in these ETFs hit $60B and Bitcoin had spiked to $70K.
A Trump presidency has supercharged not only Bitcoin but the wider crypto ecosystem. Subsequent to Trump’s victory retail and institutional investors have added meaningful exposure to BTC via Bitcoin ETFs with assets rising from ~$65B to $90B; which in part has pushed Bitcoin to all time high of $97K.
In early October, Grizzle’s Strategist Chris Wood wrote about the importance of what a Trump win would mean for Bitcoin, particularly around the creation of a Strategic Bitcoin Reserve. Republican Senator Cynthia Lummis’ Bitcoin Act of 2024 would see the government purchase up to 1 million BTC over 5 years and held for 20 years.
We believe retail assets will continue to flow into Bitcoin & crypto through 2025, currently only 16% of adults in the US hold crypto (source: Triple A). We’re entering a period where we could see warp speed adoption at both an institutional investor and government level.
Grizzle has been a longstanding structural bull for both Bitcoin & gold; Chris Wood summed it up clearly in a note from 2019:
It makes sense to own both for those who, like myself, believe the U.S. dollar paper standard is on borrowed time ‒ particularly as both physical gold and Bitcoin are in limited supply
We view a Trump administration as highly accommodative to not only Bitcoin but the broader cryptocurrency ecosystem. There’s one stock we believe has full leverage to both tailwinds and is very attractively valued…
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