Making Massive Returns With This Undervalued Derivative

Have you seen Amanda Bynes's new look? Have you joined Canadian Olympian Alysha Newman’s OnlyFans page after she twerked following her bronze medal-clinching performance? Are you losing sleep in anticipation of Beetlejuice 2 launching in theaters next month? With so much excitement happening around the globe, it’s sometimes hard to remember we need money to live.

And I’m probably a lot like you. I’d much rather focus on daily political poll numbers flip-flopping, hourly updates about the Middle East, and whether Brandon Aiyuk will be a San Francisco 49er next year than how I’m going to afford rent, bills, an occasional vacation, and the possibility of artificial intelligence not moving fast enough to save my children from getting an ‘advanced (AKA expensive)’ education.

But sometimes, I see opportunities I can’t pass up. No, I’m not talking about the free French Fries on Friday in the McDonald’s mobile app or my complimentary drink at Starbucks on my birthday. I’m referring to chances to make big returns in one of the most undervalued asset classes.

Before you hop into the next article about our esteemed political candidates, the impending collapse of (state your financial market here), or how big of a douche J.D. Vance or Elon Musk is, I have a big ask for you to read and consider my newest speculative leverage investment. Then, please tell me what you think by giving the article a thumbs up or writing how dumb you think I am in the responses.

Leveraging the Most Undervalued Asset

I am a proud Bitcoin fanboy if you've never read my articles. I will break down my Bitcoin thesis in less than 1 paragraph. However, before I break down my thesis, only consider reading further if you agree with the following statements:

• “I believe in mathematics.”

• “I don’t have absolute faith that governments and central banks are completely working in my best interest.”

According to math, central banks and governments are printing money (fiat currency)/stimulus at an alarming rate. As fiat currency supply increases, non-fait assets will perform better in a monetary debasement environment. Not all assets will perform equally. Bitcoin should perform well because of its extremely low maximum supply (with a 21 million hard cap on the total number of Bitcoins), its increasing adoption rate (multiple new BTC ETFs are breaking records this year), and Bitcoin’s financial outperformance as price gains work in a positive feedback loop. For example, the price of Bitcoin has gone up, and more people want to own it. The price increases, and more and more people want to own it. In some circles, this is called ‘Fear of missing out.’

If I’m bullish on Bitcoin and I’ve recently seen its price drop 35% from its recent peaks, it distracts me from the important news and gets the gears in my brain moving independently. I know this may scare some people. It’s usually smarter and safer to follow and regurgitate what everyone else is saying. After all, everyone with a large audience usually doesn’t have their interest in mind. Their altruism is how they gather such massive followings.

What My Gears Are Telling Me

Here’s what I know:

• I’m bullish on Bitcoin

• Bitcoin’s price has been beaten up. However, I’m not alarmed because markets typically need to tank for the Fed to take action and print money or lower interest rates.

• I wouldn't say I like fees and opening myself up to liquidations where I can lose all my money. Earlier this week, $1B in liquidations hit the crypto market. I don’t want to pad the whale wallets and destroy my investment capital with liquidity events. I also don’t want to feel pressure from borrowing fees or margin interest.

• Bitcoin will go up, and I want to magnify my gains if this happens. I understand this requires more risk than simply holding Bitcoin, so I will only apply a specific portion of my portfolio to this speculative investment.

Bitcoin Ordinals- How to Leverage Bitcoin Without Fees

Besides holding Bitcoin, the Bitcoin ecosystem is still relatively small. It’s much larger than it was last in the last bull market, with offerings such as Ordinals, BRC-20 tokens, Runes, and Layer 2s combined with decentralized finance (such as Merlin, Build on Bitcoin, and BounceBit). But I won’t get into all the minutia of these different offerings as I’ve chosen Ordinals as my preferred Bitcoin leverage option.

What are Ordinals?

Simply put, Ordinals are NFTs living on Bitcoin. Ordinals launched around January 2023, with thousands of collections and over 60 million inscriptions (the technical name for an Ordinal).

You may be thinking, “Scott, NFTs are dead. They had their run in the last bull cycle. Memecoins are the new narrative to attract liquidity into the crypto markets.” At this point, I’d probably agree with you. However, Bitcoin’s version of memecoins called Runes isn’t as liquid as memecoins on Solana or Ethereum. Meanwhile, some Ordinals collections have built communities over the past two years. And, unlike memecoins, Ordinals have a different cultural significance as they are art and serve as more expression than (arguably brilliant) memecoins, ‘Ginnan The Cat,’ ‘Yawn,’ or ‘Water Token.’

More importantly, since their inception, Ordinals have dramatically outperformed after Bitcoin has big price movements. Look at the sales activity for Ordinals on marketplaces since the beginning of 2023.

I circled periods when the sales volume measured in dollars spiked higher. Now, look at this graph below, where I’ve circled periods when Bitcoin’s price has spiked higher since the beginning of 2023.

Looking closely at the periods, you will notice that Ordinals sales volume increases during or shortly after Bitcoin price increases. In other words, when Bitcoin increased, ordinary values increased much more.

What is great is that Ordinals get priced in Bitcoin valuations. For example, consider a $60,000 Bitcoin price and an Ordinal (which I am buying) trading for 0.083 BTC worth $5,000. Imagine the value of Bitcoin increasing to $100,000—meanwhile, the Ordinal increases in value to 0.25 BTC. You can now sell the Ordinal for $25,000 worth of Bitcoin, a 500% gain compared with the 67% gain in owning BTC.

How Do You Know the Ordinal will increase 3X when Bitcoin Increases 1.67X?

I don’t know the exact amount any Ordinal will increase. They could all go to 0 BTC. However, when I return to the gears in my brain, I have a thesis on why one particular collection will dramatically outpace Bitcoin’s gains.

I have given much thought and research to the collection I have chosen. Here are some of the attributes I am looking for:

• An established collection with a large community and active team.

• High distribution and high sales volume, so my investment is as liquid as possible.

• There is a strong upside opportunity for when Ordinals return to prominence.

Based on this criteria, I’m investing in the Bitcoin Puppets, a blue-chip collection. Bitcoin Puppets are selling on Magic Eden for 0.083 BTC ($5,000) today: https://magiceden.io/ordinals/marketplace/bitcoin-puppets. It’s a 10,000-piece collection with 6,600 unique addresses holding them.

The Bitcoin Puppets Twitter has over 30,000 followers: https://x.com/lepuppeteerfou, 6,400 Discord members: https://discord.com/invite/F2BBWn2mzP, and an active team that consistently posts and updates their socials.

More importantly, Bitcoin Puppets have constantly been in the top 10 trending Ordinal projects on MagicEden since January. Therefore, everyone in the Ordinal space knows about this project and has repeatedly seen it at the top of the most valuable chart. At their peak in April 2024, Bitcoin Puppets peaked at 0.469 Bitcoin, 565% higher than today’s floor price.

Key Takeaways

I’ve had significant success with Ordinals, primarily by getting in early and receiving valuable airdrops. I’ve watched the space grow from nothing to collections, commanding hundreds of millions in market cap. I believe Ordinals are more organic than Ethereum and Solana NFTs because they don’t have royalties on the secondary market, meaning teams can’t just sit idle and collect fees endlessly. They have to keep building and working if they want to make money.

Further, I believe miners have a significant interest in Ordinals, earning 6,888 BTC in fees from Ordinals. This equates to $409M worth of Bitcoin. If they are smart, they can pump $10M into this relatively low-liquid market and earn significant profits on both the Ordinals and the fees associated with pumping the market.

I am very excited about the multiplier effect on Ordinals. It gives me levered exposure to Bitcoin without paying high fees or worrying about getting liquidated. If I have to, I can take a loan on my Bitcoin Puppets at https://app.liquidium.fi/borrow.

Finally, most influencers have completely missed the boat on Ordinals. While everyone is talking up Solana or their favorite memecoin(s) or shitcoins, Ordinals have a grassroots following. The Ordinals market is dead today, and the expansion of the BRC-20s and Runes distributed much of the liquidity in the space. However, I am betting it will bounce back strongly. And, based on Bitcoin Puppets' tremendous bounce from the recent turmoil, I am confident this is where I want my leverage to be.

If you like the content of this article, please clap to get it in front of more readers. Also, I wrote more details on how to open an Ordinals Wallet in this old post: https://aggressivecrypto.beehiiv.com/p/minted-3-different-ordinals-free-can. The link to the Hiro wallet now points to Leather, which is legitimate. They just changed their name.

Any questions, thoughts, or comments? Please add them in the response section. Thank you for reading.

I own Bitcoin, Bitcoin Puppets, and Bitcoin ETFs. This information should not be taken as investment advice. I am no more qualified to give financial advice than to do the Macarena at the Olympic closing ceremonies. Digital assets like crypto, Ordinals, and NFTs involve risk, so you should always perform due diligence before investing.

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