Cristian Palusci2023-07-26

Unlocking the Potential: Will Bitcoin's Positive Skewness Yield a New Asymmetric Return?

The breakout of Bitcoin from its range has diminished the previously observed calmness in the ranging market during the past few weeks. As we are aware, BTC tends to make decisive moves only in a few weeks each year, followed by months of accumulation, re-accumulation, or distribution phases. This characteristic essence of BTC has the potential to deliver incredible asymmetric returns over time. In fact, as shown in the attached chart from a BlackRock's 2022 report, the author suggests increasing exposure to Bitcoin for investors looking to optimize their classic 60/40 portfolio, leveraging BTC's significant positive skewness. Furthermore, when considering the failure of lending and exchange platforms that adopted "Rehypothecation" as a business model (or even selling paper BTC), along with the decreasing circulating supply leading to increased illiquidity, as evidenced by declining BTC balances on exchanges (chart 2) approaching the levels seen in early 2018, the impact of Bitcoin's positive skewness promises to provide a potentially asymmetric return that could outshine the 2020 - 2021 bull market rally. In conclusion, we will soon witness phase two of the global race for the acquisition of the remaining Bitcoin supply, and I bet it will become increasingly challenging to purchase 1 BTC for approximately half the average salary of an American.