ByteTree sold its blockchain equities positions in the second quarter and purchased Berkshire Hathaway stocks and other value stocks, as founder Charlie Morris warned the AI-driven semiconductor rally mirrors the 1999 bubble. Morris stated it was 'a matter of time before the bubble bursts,' noting the semiconductor index gained $10 trillion in market value over the past year to reach $16 trillion. The firm positions Bitcoin alongside gold and value stocks as hard assets that outperform during inflationary periods, while the current macroeconomic environment of rising real rates has historically corresponded with Bitcoin's largest drawdowns of 73.8% in 2018 and 64.3% in 2022.
ByteTree Shifts Portfolio From Blockchain Equities to Value Stocks in Q2
ByteTree's Whisky portfolio sold its blockchain equities investments in the second quarter, switching to Berkshire Hathaway (BRK-A) and other value names. The semiconductor index added $10 trillion in market cap over the past year to reach $16 trillion, equal to the entire EuroStoxx 600, according to the firm's second-quarter investor letter published on Sunday. The firm's Money Map concept positions Bitcoin (BTC) alongside gold and value stocks as hard assets that outperform during inflationary periods, whereas shares and bonds perform best when inflation is contained.
Rising Real Yields Drive Bitcoin Decline Amid Macroeconomic Pressure
Bitcoin's slump is being driven by higher real yields, ByteTree claimed, citing a macro environment that corresponded with the cryptocurrency's two biggest contemporary drawdowns. Bitcoin declined 73.8% in 2018 and 64.3% in 2022 during periods of rising real rates. Bitcoin's ByteTrend score is at zero after the price struck a fresh low, with the price falling below its 200-week moving average, reducing the weekly score to 1. Bitcoin's price rose over 0.1% to $62,730 in the last 24 hours. The price is 1.5 standard deviations below trend, and Bitcoin had provided a 42% internal rate of return on a trend basis from the high in 2017, considerably above the 27% delivered by the Magnificent Seven tech equities.
'The current Bitcoin bear is long in the tooth, and the best news I can deliver is that real rates won't rise forever,' ByteTree founder Charlie Morris wrote in the note, co-authored with analyst Shehriyar Ali. 'Sooner or later, they'll turn. If they don't, it won't just be Bitcoin that feels the pinch.'
Bitcoin Network Shows Strong Fundamentals Despite Price Weakness
The pressure appears to be coming from flows rather than fundamentals, ByteTree claimed. On-chain transaction value surpassed $13.5 billion a week, five times 2022 levels, while daily trade volumes of over $35 billion compete with Nvidia (NVDA) and surpass Tesla (TSLA). On Stocktwits, retail sentiment around Bitcoin improved to 'bullish' from the 'neutral' zone, while chatter dropped to 'low' levels from 'normal' levels over the past day.
FAQ
What did ByteTree do with its blockchain equities in the second quarter?
ByteTree's Whisky portfolio sold its blockchain equities positions in the second quarter and purchased Berkshire Hathaway stocks and other value stocks.
Why did Bitcoin decline 73.8% in 2018 and 64.3% in 2022?
Bitcoin's declines in 2018 and 2022 were driven by rising real rates, according to ByteTree's analysis of the macroeconomic environment during those periods.
How do Bitcoin's on-chain metrics compare to 2022 levels?
On-chain transaction value surpassed $13.5 billion a week, five times 2022 levels, while daily trade volumes of over $35 billion compete with Nvidia and surpass Tesla.
