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So, on this next chart, we're heading into crypto. Uh and we'll loop back to AI at the very end. Uh crypto, here I think the disconnect, and this is also from Big Ideas, uh is, "Hey, look at what the gold price has done in the last few years, and look at what's happened to Bitcoin." Uh now, this is a log chart, so um you can see uh gold has had a massive move to the upside.
Uh this chart ends in at the end of 25, and of course, uh I think last night we got down to roughly $60,000 in in Bitcoin. So, really cut in half since its peak in October. What is going on here? Isn't Bitcoin supposed to be digital gold? If it's digital gold, why isn't it behaving like gold? Uh and uh uh a couple of points to make here.
If you do the correlation between Bitcoin and gold, their returns, uh since 2019, and and I put this in uh my New Year's letter. You can see the matrix there, if you'd like. Um the correlation has been 0.14. Uh one is perfect correlation. Uh and here we are at 0.14. Very low. Almost no correlation. Uh so, that is very important to understand.
Um what you can also see here, though, is gold tends to precede a big move in Bit- in Bitcoin. Uh you can see the circles there, and we'd have a gigantic circle around what has happened recently. Um And and so maybe that will happen again. Uh we actually think it will. I cannot tell you how many bear stories I've heard about Bitcoin uh in in the last few weeks.
Uh last few months. Um and just go on to X and you'll find all kinds of reasons why you must sell Bitcoin. And these are the the periods that are kind of interesting. Uh we post our trading at the end of every day and you'll say you'll see that we had been nibbling at our our crypto exposed stocks. We didn't know how far this was going to go and maybe it's not over.
Not promising that, but um uh there was so much negative sentiment that uh I I felt, "Okay, you know, we need to leg in and lean into this. If our research is correct uh that this um this Bitcoin is three revolutions in one. It's a global digital, private, very important, rules-based, even more important, monetary system.
Uh and that's a very big idea. Um The second revolution is it is a technology. It's a a new technology. It's uh it's really adding another layer, I would say, to the internet so that we have um native currencies native to the internet uh that will be able to handle uh agentic commerce uh and uh other other such agentic movements taking place out there.
Uh that's a very big idea. And then uh and it won't be, of course, just Bitcoin. It'll be Ether, importantly Ether. Uh Solana, maybe hyperliquid, we shall see. Um but what's interesting about this period is the big three have been identified. Uh and those are Bitcoin, ether, and Solana. You know, the worry historically has been how many of these things are there going to be?
Is this going to be a very fragmented situation? Uh and we're learning uh we we're learning who the big winners are are going to be. Who the big winners are. Uh and I think that's a a very important. And then the third revolution is this is a new asset class. Bitcoin is leading the way. It is the most secure of all the crypto currencies out there.
Backed by the largest computer network in the world. Uh and so really an anchor to um an asset allocator looking to move into this new world. And why wouldn't an asset allocator do that? Well, if we're right and well, the it's a fact that at least over the last 5 years the correlations have been uh the correlation has been as low as 0.14.
Um the key to successful diversification um for asset allocators is um adding new assets with very low correlation to all of the other assets in the ecosystem. Uh and uh this one qualifies. Uh why do they want that? It is because with that low correlation introducing it um risk-adjusted returns go up over time.
Uh and so I do think institutions are serious about this new asset class. They may have been reticent uh, to move in because they were hearing about the four-year cycle, the four-year cycle. And lo and behold, and uh, I'll I'll hats off to Chris Burniske, who uh, has been uh, very right in in calling for whether it's the four-year cycle or whatever, uh, just this downdraft.
Um, and so, it's close to it's closing in on the low point that many uh, technical analysts are suggesting um, uh, as the place where it should stop. Uh, these the these are very volatile moments uh, at at at or near the bottom. Um, but uh, we usually do look back and say, "Wow, I wish I had caught that low, this V-shaped recovery." Um, uh, well, has been quite significant.
Not promising, uh, uh, I want to make I want to make sure that there are no promises here, uh, but it does seem like the stars are aligning.
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