Alright so first of all, I am adjusting up my bitcoin allocation from previous month’s 15%, up to 20% now.

It’s a huge adjustment so I want to spend a post to jot down my thought process and my strategy for this move.

The U.S. Bitcoin Strategic Reserve

So one of the biggest event that I think happened for bitcoin, probably in history, is that the U.S. has announced the Strategic Bitcoin Reserve this month.

Although supposedly that has been “priced in” since Trump’s election, I think it hasn’t been “properly” priced in yet.

Also bitcoin actually dropped since the announcement because they aren’t buying new bitcoins with taxpayer money, and would only buy with “budget neutral” ways.

I have been trying to read the lines though, and it would seem that with people like David Sacks, Howard Lutnick, and Scott Bessent in charge, they are going to be very motivated to find these “ways” to buy bitcoin for the U.S.

And I think beside the fact that they would personally benefit from a stronger bitcoin, they also sincerely believe that having bitcoin is good for the U.S. (which it probably is).

Seems like the market is in disbelief about the fact that the U.S. will make purchases, so it should be a good time to get in now.

And in any case, just the fact that the U.S. has written on paper, black and white, saying that bitcoin IS an asset, that will probably exclude existential risks from bitcoin moving forward, even if they don’t ever buy a single bitcoin.

If they sell that might be bad but they already said they wouldn’t. In the next administration who knows but at least there is a long time before that.

Also there was some uncertainty around how the reserve would be structured, whether shitcoins would be included. Now they have established that bitcoin is indeed special and the reserve is bitcoin specific, which is great news for bitcoin.

The move towards bank-issued Stable Coin

Another thing the administration is pushing very hard is to dominate digital currency with US stable coins.

Which makes sense since the stable coins would be backed by USD and this would increase the demand for fiat USD.

It’s not 100% clear what that might do to bitcoin, but I think it should have quite a positive impact.

I imagine that, the biggest catalyst would be the fact that so much capital would have moved onto the blockchain, and the swap between crypto currencies is so simple, versus the complexity to move fiat USD into bitcoin.

So that would probably solidify bitcoin’s place as the “digital gold” for when people need to de-risk. If bitcoins movement start to decouple from US stocks especially tech stocks, that would lower my portfolio volatility quite a bit and make it easier for me to hold more down the road. We will see though how that might unfold.

The GameStop move

So this didn’t seem so big to me when I heard it, but after hearing some narrative I am gotten more bullish on this news.

The fact is right now CEOs would be scared to put sideline cash of the company into bitcoin. If they take a loss on it, it would look bad.

But if more and more companies are doing that, and bitcoin keeps moving up, then the narrative might shift to – “Mr CEO, why didn’t you buy some bitcoins with all that sideline cash?”

Of course not every company will or need to go all in like MSTR.

But if 1% of all corporate sideline capital gets put into bitcoin, that would already increase the market cap by billions.

The Bitcoin Financial System

So this is not new and might be quite a bit down the road, but this is the future I think I can see for bitcoin.

A new financial system can be created where bitcoin’s adoption is already strong enough that, the volatility have lowered, and also people aren’t concerned about the volatility.

Also layer 2 technology matures and there are many practical applications built on top.

Bitcoin lending would become possible, and the capital can move frictionlessly across anywhere in the world, even to those with no banking privileges.

MSTR can become the first bitcoin bank with their reserve, and everyday bitcoin holders can get yield on their bitcoins with deposits etc.

Practicality and use cases will drive more demand and adoption, sucking out capital from USD fiat, other fiat, gold, and other markets.

My Strategy

So I think bitcoin has a very real potential to 10x in the next 10 years, and the downside risks have become smaller especially with the recent events.

However, it is still at least today, seen as a risk-asset and correlates very strongly with US stocks, especially tech stocks.

Therefore if I want to increase exposure to bitcoin without adding too much volatility to the overall portfolio, I would need to take most of that out from other risky assets.

I originally had ~3% N225 japanese stocks last month, which I have gotten rid of entirely now … that moves like tech stock for the most part so eliminating that reduce volatility exposure.

Also I had positioned 38% for USD stock last month and I’ll be reducing that to 35%.

With those reduction, I think upping bitcoin from 15% to 20% shouldn’t make the portfolio too wild. It will probably increase volatility by a little since bitcoin is volatile in nature and I also have MSTR in the mix.

In any case I will keep a strong dose of gold in the portfolio to minimize the vol, and gold at least lately have actually move in opposite direction as bitcoin and tech stock so that really helps.