Ft. Log Scale: Institutional Client Adoption - FED 83

In this episode of Bitcoin Magazine’s Fed Watch podcast, CK and I had the opportunity to sit down and have an epic conversation with Log Scale of twitter, and host of The Bitcoin Spot series of Twitter Spaces, and new YouTube channel. This episode is a big white pill for those down about the recent price dip and who think of the US as an evil empire. We get into many aspects of institutional client money coming into bitcoin this year, and why the US is likely to be one of the most friendly bitcoin jurisdictions in the future.

Fed Watch is a podcast for people interested in central bank current events. Bitcoin will consume central banks one day, understanding and documenting how that is happening is what we are about here at Fed Watch.

A Valuation Model for Bitocin 

Log Scale had a very interesting Twitter thread several weeks ago. The first part of this episode is him laying out the arguments he made there. Corporate treasuries diversifying into bitcoin has been a major source of optimism in bitcoin over the last year or two, but Log says they are only 2% of all investable wealth in the world. Signs are starting to shift toward the other $500 trillion are looking at bitcoin, too.

You can find estimates for total investable wealth from several sources. Log cites Credit Suisse in this episode and McKinsey in his tweet thread. Both have a multi-hundred trillion dollar estimate.

Of course, every dollar that is used to buy bitcoin is not going to have a 1:1 effect on the bitcoin market cap. The multiplier is not a steady variable, the Bank of America has estimated it at 107x, but in his conservative valuation model, Log uses 3x. Now, what his model needs is an estimate for the amount of money that will come into bitcoin.

For this he draws from the very well-respected Ric Edelman’s 2022 predictions for bitcoin. He is “Edelman, one of the most prominent thought leaders in the investment advisory field and founder of Edelman Financial Engines.” Nearly all of his 2021 predictions proved correct, and this year he has some big ones. He says that by the end of the year, 1) 1/3rd of Americans will own bitcoin, and 2) financial advisors will be recommending between 3-5% allocation to bitcoin.

With those numbers, Log’s valuation model is just a matter of plugging in the numbers, yielding a result that the bitcoin market cap could increase by $11 trillion this year.

Gensler and Why the US will be Friendly to Bitcoin

The next part of the podcast might be controversial. We spend some time discussing Gary Gensler and possible reasons behind his appointment as Chairman of th