Ace Ender

BTC & BTCTC Investor | Former US Naval Officer, Deloitte Consultant, and Federal Government Budget Analyst | MS in Finance from Georgetown University

[Ace Ender @orangeyield]

The only way to become wealthy with Bitcoin:

1) Create value and get paid in fiat.

2) Spend less fiat than you make.

3) Patiently convert saved fiat to Bitcoin through automated DCA.

4) Smash buy Bitcoin at 200 week moving average with any excess fiat.

5) Smash buy well run, well positioned Bitcoin Treasuries Companies at low mNAVs in your retirement accounts.

6) Repeat steps 1 through 5 for two cycles without trading, leveraging, losing, or becoming a forced seller of your Bitcoin.

7) Retire wealthy.

[Ace Ender @orangeyield]

Why do so many influencers recommend HODLing Bitcoin when cycles are so predictable and easy to trade?

Literally all you have to do is buy at the 200 week moving average and then sell when as it approaches the power law mean, and vastly outperform holding without withstanding 50% plus drawdowns.

I get having a certain sized stack at all time for sovereignty, but discouraging people from taking profit is damaging advice.

[Ace Ender @orangeyield]

Why do so many influencers recommend HODLing Bitcoin when cycles are so predictable and easy to trade?

Literally all you have to do is buy at the 200 week moving average and then sell when as it approaches the power law mean, and vastly outperform holding without withstanding 50% plus drawdowns.

I get having a certain sized stack at all time for sovereignty, but discouraging people from taking profit is damaging advice.

[Ace Ender @orangeyield]

@stephanlivera @DividendBreeder Not saying people haven’t made money with Bitcoin. I’m saying it’s nowhere close to being money for the masses, where they can confidently enter and exit across timeframes. And if that’s the case, it will run into a wall of adoption, and the network could struggle to grow.

[Ace Ender @orangeyield]

@stephanlivera @DividendBreeder BTC will not scale if it only works for those that DCA over the course of half a decade. Effective money needs to be able to work across timeframes, with people being able to enter and exit with an expectation that their purchasing power will be maintained.

[Lee Kuan Yimby @LeeKuanYimby]

If you have a refrigerator with food, you are rich enough to be afraid of socialism.

[Kevin Wimer @kevinace]

https://t.co/YGKEnA2Hvp

[Ace Ender @orangeyield]

@chcbearsfan @ZynxBTC Agreed. The model is simple. Stick to the plan, and don’t let ego/boredom lead to distractions.

[Ace Ender @orangeyield]

@ZynxBTC Having multiple ways to leverage the balance sheet may make sense if they think they can only scale the prefs so much, but I can’t imagine a scenario where there’d be a better use of the balance sheet thank to back prefs. At least, not for a while, unless I’m missing something.

[Ace Ender @orangeyield]

@Quinceyjakarii For 99% of people, this is the only way.

[Ace Ender @orangeyield]

The only way to become wealthy with Bitcoin:

1) Create value and get paid in fiat.

2) Spend less fiat than you make.

3) Patiently convert saved fiat to Bitcoin through automated DCA.

4) Smash buy Bitcoin at 200 week moving average with any excess fiat.

5) Smash buy well run, well positioned Bitcoin Treasuries Companies at low mNAVs in your retirement accounts.

6) Repeat steps 1 through 5 for two cycles without trading, leveraging, losing, or becoming a forced seller of your Bitcoin.

7) Retire wealthy.

[Romeo⚡️🟧 @RomeoInvest]

Money is a tool, not the goal.
The goal is freedom.

Freedom is owning your time.
Freedom is living life on your own terms.
Freedom is waking up with peace of mind.
Freedom is having choices, not obligations.
Freedom is being present with the people you love.

True wealth isn't about having more.
It's about needing less and living more.

[Ace Ender @orangeyield]

@AdamBLiv Great write up and perspective Adam. CEBE, or net Bitcoin per share, is just one metric for one point in time. It’s useful, but only tells one part of the story. BTCTC valuation continues to evolve.

[Adam Livingston @AdamBLiv]

Gross vs. Net Metrics Thoughts

We need to start with two definitions.

Ex ante economic value: PRESENT economic value of a contractual claim, given the possible future outcomes, their probabilities, timing, and risks.

Ex post: What does the contractual waterfall actually distribute once a specified event like a liquidation occurs?

A liquidation preference on a perpetual preferred equity establishes a contractual priority ex ante, but it specifies a settlement entitlement that applies ex post, so by definition it is conditional on the relevant event and available assets.

The mistake I see being made often is treating that contingent settlement amount as though it necessarily equals the claim's present economic value in a going concern. I've made the same mistake.

A perpetual preferred with a $100 liquidation preference has its present value defined by its dividends, redemption provisions, investor protections, probability of liquidation.

Ex ante economic value and an eventual ex post payout can coincide numerically, but they are not conceptually identical, and there is no accounting identity that guarantees their equality.

If CEBE subtracts a hypothetical future liquidation settlement amount and then declares the remainder to be what common shareholders economically own today, it then crosses from describing a contractual settlement convention into making an ex ante economic assertion, but the event (liquidation) hasn't occurred yet. That assertion requires a valuation argument.

Common shareholders are continuously exposed to changes in the economic value of their residual claim on a going concern. That value incorporates the possible consequences of liquidation, but it is not determined solely by a hypothetical liquidation waterfall. The possibility of that event, and the contractual rights that become enforceable under it, influence the economic value of the securities today.

Ex ante. Ex post. The former necessarily considers the possibility of the latter. The latter does not independently determine the former.

Today's market valuation of an equity is observable, while intrinsic economic value remains an estimate. And an actual liquidation may become highly probable, making the waterfall increasingly relevant to present prices.

Therefore, subtracting full liquidation preferences from mark-to-market Bitcoin assets can establish a liquidation-preference-adjusted residual, but it cannot independently establish what common shareholders economically own in a going concern.

You can make a mathematical counterexample to the universal proposition that liquidation-preference-adjusted backing establishes the ex ante economic value belonging to common shareholders.

Consider two hypothetical companies with identical assets, identical common share counts, and perpetual preferred securities carrying identical $100 liquidation preferences.

The only difference is their dividend obligations.

Preferred A pays $8 annually. Preferred B pays $12 annually.

Assume a constant 5% required return, no liquidation or redemption, and sufficient cash flows to fund both securities indefinitely.

The present economic values of the preferred claims are:

Preferred A: $8 / 0.05 = $160.
Preferred B: $12 / 0.05 = $240.

Suppose each company has $350 of assets, comprising $100 of Bitcoin and $250 of cash earning 5%, with the Bitcoin ultimately distributable to common shareholders. The cash interest fully funds either preferred dividend.

Under these assumptions, the respective economic values attributable to common shareholders are $190 and $110.

Yet a metric deducting the identical $100 liquidation preference from identical $350 asset balances reports the same $250 residual for both companies.

Identical liquidation preferences. Identical assets. Identical liquidation-adjusted residuals. Different economic values belonging to common shareholders.

That is a mathematical counterexample to the proposition that liquidation-preference-adjusted backing, by itself, identifies the ex ante economic value of common equity.

And the distinction extends to Bitcoin price exposure.

Suppose a company issues perpetual preferred at par and purchases Bitcoin with the proceeds.

At issuance, the additional Bitcoin assets are exactly offset by the additional liquidation preference. CEBE can remain unchanged.

But the company now holds more Bitcoin against a fixed-dollar senior deduction.

If the Bitcoin price subsequently rises, the additional Bitcoin appreciates while that contractual deduction remains fixed. The dollar sensitivity of the calculated residual to Bitcoin's price has increased, even though CEBE was unchanged at issuance.

This is not necessarily a prediction of the common stock's market beta. Actual common equity sensitivity depends on the economic behavior of the senior claims and the enterprise. But it demonstrates that an unchanged net coverage snapshot does not establish unchanged Bitcoin price exposure.

An important qualification is that CEBE doesn't mathematically assert that ex ante and ex post economic values are identical. But when CEBE is presented as what common shareholders economically "own" today, it implicitly treats a contingent liquidation entitlement as though its full settlement amount is the appropriate deduction from present economic value.

The ex post waterfall is one possible outcome incorporated into ex ante valuation. It is not a substitute for ex ante valuation.

I like CEBE. I think it's a useful tool for comparing liquidation-preference-adjusted Bitcoin backing across companies, and net metrics have an important place alongside gross metrics.

My criticism is specifically about using these measurements to describe what common shareholders economically "own" or are "exposed to" in a going concern. Those claims require accounting for the present economic value of the contractual rights throughout the capital structure.

Ex ante economic value incorporates the possibility of ex post liquidation. The liquidation waterfall alone cannot establish that present value.

That distinction matters when interpreting what these metrics actually measure.

[Saifedean Ammous @saifedean]

This isn't an opinion; it's an indispensable technical fact. If bitcoin doesn't go up in value it can't work because nobody wants to willingly hold a money that drops in value, and even more importantly, we can only increase its liquidity, market cap, scalability and moneyness by increasing its price, since the supply is fixed. At a price of $1 bitcoin is a $20m joke among nerds online, practically useless for everyone as there's no liquidity. At a price of $10m bitcoin is the biggest money on earth, and necessary for everyone. If you want bitcoin to work you need NGU. Virtue-signaling "tech, not price" is as silly as saying you like car technology but don't care if the car moves.

[Ace Ender @orangeyield]

@ActuallyClimber @ForrestHODL Is that why you sold it at the bottom while it was in the 70s?

[Jon Willbanks (e/acc) @jonwillbanks]

For anyone paying attention during the @Metaplanet 10th Series scandal — when that tide went out, it quickly became obvious who the bad faith actors were. @ZynxBTC and @RoaringRagnar were not among them.

These guys were directly responsible for returning nine figures of value to shareholders. They did so in the face of intransigent leadership who had constructed an elaborate but probably-legal scam to siphon twenty cents on the dollar of common-stock funded Bitcoin accretion into their own pockets — and didn’t even seem sorry they got caught. There’s zero chance this partial restitution would have happened without the sunlight of their investigative journalism or public pressure.

Metaplanet’s dead-in-the-water performance since then belongs to a now-reclusive management team who seem uninterested in engaging shareholders or restoring broken trust, and who’ve thus far failed to execute for nearly a year (remember Mars and Mercury?). Even if they finally launch their $SLE / $SUPA pref, it will arrive in a crowded and competitive market, and they will have missed the prime stacking opportunity of this bear market.

Meanwhile, @Strive has lapped them with $SATA and $SATS, @Smartweb has sprinted from the starting gate with $MORE, and @Saylor chewed glass to battle test the digital credit thesis for the whole industry. So if $MTPLF shareholders want NGU, I suggest holding their derelict management team accountable rather than scapegoating the former bulls who stumbled into their closet of skeletons.

Haters gonna hate — but those of us who saw how Zynx, Ragnar, early alarm-ringer @orangeyield, and forensic investigator @thebtcpharaoh conducted themselves know the positive impact they had for Metaplanet shareholders and the entire Bitcoin treasury sector. The lasting impact of that message reaches far beyond any single company, and it matters.

Careful who you trust out there.

Accounts who whitewash, scapegoat, or gaslight real shareholder activism in the face of egregious fiduciary breach do not respect you, and certainly don’t have your best interests at heart.

To Zynx and Ragnar — thank you for your leadership and courage. 🫡🧡