Permanently elevated plateau

I. Bitcoin went up something like 70% against the various fiatsⁱ in the past 30 days.

There's a very good reason for this increase : Bitcoin already has everything else, all it still needs is the size. Consequently rates of growth in the 200% to 500% range per year are to be expected for a decade or two, and consequently 70% growth months aren't going to be exactly rare. There's about 10`000`000% to go until the parity eventⁱⁱ. Before that unwarranted disparity is resolved the surge won't yield, even if there may be plenty of short term reversals.

II. S.MPOE gained 20% on news that it survived through February OpEx.

The concern was perhaps warranted, S.MPOE makes most of its revenue from trading options currently, massive price action may very well mean massive losses. This was not the case, which may have bolstered investor confidence.

The other point to consider is that S.MPOE is close to having paid a full year's worth of dividends. So far it distributed something to the tune of 20`000 BTC. For the full year perhaps a reasonable projection is in the environs of twenty-five thousand. If indeed as I suspect S.MPOE is becoming monetized, then we have some very interesting numbers to work with : 25`000 yearly yield on a 750`000 market cap comes to about 3.33% a year. This would be the Bitcoin-equivalent of the risk-free rateⁱⁱⁱ - notably under the actual Bitcoin inflation for the interval^iv.

The MPBOR has been mostly sliding between 5% and 10% per month^v which, if you sit down and do the math comes to 94.3% for the interval or 106.4% annualized. This would be the equivalent of some basic interest rate, perhaps something like the LIBOR after which it is named (minus of course all the corruption the London system has deservedly come to be associated with).

So here's some basic macroeconomic data for this odd new economy of this strange new country in this brave new world : 3 ⅓% annualized risk-free rate, 30% annualized inflation, 106% annualized baseline interest yields. What does it sound like to you ?

If your answer is "the US right before taking over the world" you've probably been paying attention.

1. It's remarkable how little difference there is among all the world's numerously irrelevant fiat currencies if viewed from Bitcoin. For all the talk of whether the eurozone has problems or the yen is on the out or country credit ratings or whatnot, from over here they all basically blur together into an indistinguishable mass of collapse.

   I guess it's a lot like travelling to the third world - the locals may be distinguishable from one another for their own wives, friends and enemies, but to you they all look exactly the same : like poor people from the third world. Or, if you don't like that analogy, it's a lot like the air velocities of the various bugs on the windshield : even though they no doubt all move at different speeds, from inside the car they all seem to go about equally splat. [↩]

2. That point where the fiat valuation of the total Bitcoin in circulation equals the fiat M3. [↩]
3. The design of S.MPOE makes it so that shareholders only receive part of profits, and are never responsible for losses - you can review the whole structure here. [↩]
4. Yes, Bitcoin may be deflationary eventually, but for now and for a while yet new coins are being minted at a sustained pace. Each block yields 25 new coins (used to be 50 until recently) and there's six blocks every hour on average. If you do the math 2012 Bitcoin inflation comes out to about 30%, probably just a shade under US actual inflation. [↩]
5. Specifically, April 27th, 2012 through May 25th, 2012 - 5.0% ; May 25th, 2012 through June 29th, 2012 - 4.975% ; June 29th, 2012 through July 27th, 2012 - 4.99% ; July 27th, 2012 through August 31st, 2012 - 4.975% ; August 31st, 2012 through September 28th, 2012 - 4.9999% ; September 28th, 2012 through October 26th, 2012 - 5.1% ; October 26th, 2012 through November 30th, 2012 - 9% ; November 30th, 2012 through December 28th, 2012 - 9.9% ; December 28th, 2012 through January 25th, 2013 - 4.99% ; January 26th, 2013 through February 22nd, 2013 - 9.99% ; February 23nd 2013 through March 29th 2013 - 4.8%. [↩]