Horizon Kinetics Founders Letter 2025

2025-01-30 08:30:00 ET

Summary

• Bitcoin achieved institutional acceptance in 2024, with over $110 billion in Bitcoin ETFs, led by the iShares Bitcoin ETF with $55 billion in AUM.
• The next phase for cryptocurrency involves developing a lending market and natural interest rates, potentially increasing demand and impacting fiat currencies.
• Modern computing's energy and water requirements are critical, with traditional power sources posing challenges and alternatives like wind and solar needing supplementation.
• Horizon portfolios focus on energy and water resources, anticipating shifts in investment capital due to resource constraints and inflationary pressures.

Dear Clients and Friends:

The year 2024 was quite extraordinary, with Bitcoin ( BTC-USD ) achieving institutional acceptance as the SEC gave permission to launch a variety of Bitcoin ETFs. There are now at least $110 billion of assets in these funds, led by the iShares Bitcoin ETF ( IBIT ). With over $55 billion in AUM, it is the 32nd-largest ETF in the United States. All of this has happened in only 12 months-the speed of acceptance is without historical precedent.

This is also extraordinary because Bitcoin, as well as cryptocurrency more generally, is an entirely new asset class. The last entirely new asset class in the U.S. was options, which began trading in 1973 with the formation of the CBOE (Chicago Board Options Exchange). Options are still largely the domain of specialized trades, although the CBOE estimates daily volume across all options markets at about 57 million contracts daily. ¹ The time required to attain this volume has been 51 years.

According to the CBOE, the total notional matched volume of equities, expressed in dollars per day, is now approximately $550 billion. ² By comparison, the 24-hour dollar-based volume of Bitcoin is now over $28 billion, a figure derived from the blockchain. ³ However, this is only one manner of calculating Bitcoin volume....

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