Mad Hedge Bitcoin Letter
September 9, 2021
Fiat Lux
Featured Trade:
(BEST WAY TO EARN PASSIVE INCOME IN CRYPTO)
(CELSIUS NETWORK), (BTC), (ETH), (SNX), (CEL), (LINK), (UNI), (AAVE)
So global yields are in the toilet today?
Savings accounts don’t do what they used to do, do they?
How about we try out a certificate of deposit (CD) to harvest some cash?
Are there simply no other interest-bearing vehicles one can park capital in and gain a healthy return?
I would say you are right, but then I would be the fool here and I am certainly not in that line of work. But there is an elixir to the anathema.
Enter the world of crypto-based yield, the place you end up when you realize the banks stopped trying years ago. There are no logos to worship and no slick pitches to fall for, only the tools that actually make your money move.
This is a landscape of financial mechanisms built on collateralized lending, decentralized liquidity pools, and blockchain driven demand, designed to offer yields traditional banks would not dare whisper about.
A Look Back: The Early 2020s
Back in the early 2020s, centralized crypto lenders promised stable, high-yield returns by lending digital assets to traders and institutions.
The model was clear on paper: depositors supplied assets, borrowers posted collateral, and interest payments cycled back to the depositors.
The appeal was obvious, too. Floating rates far above bank offerings, over-collateralized loans that ostensibly reduced default risk, and automated liquidation engines that protected lenders from sharp drawdowns.
But those years also revealed something deeper: crypto yield wasn’t magic; it was mechanics. And mechanics depend entirely on transparency.
Several major lenders that once rode parabolic growth arcs ultimately shut down or restructured following liquidity stress and market drawdowns.
These events carved a permanent lesson into the industry: when yields come from undisclosed leverage, black-box rehypothecation, or concentrated risk, the music eventually stops.
How Crypto Yield Works (When Done Responsibly)
Today’s more mature landscape emphasizes mechanisms rather than miracles:
- Over-collateralized lending: Borrowers post more collateral than the value of the loan.
- On-chain liquidity pools: Smart contracts handle matching between liquidity providers and traders.
- Staking and validator incentives: Networks reward participants for securing blockchains.
- Real-yield models: Revenue from actual usage (trading fees, borrowing demand, network operations) flows directly to providers.
These systems function best when transparency is verifiable, incentives are aligned, and custody risks are minimized.
They fail when promised APYs float on wishful thinking, opaque balance sheets, or dependence on perpetual bull markets.
The Modern Reality Reveals A Maturing Ecosystem
For years, the traditional banking business has conditioned us naive folk to accept steep fees and no yield earnings on holdings as the status quo.
I will tell you right now that it’s a load of garbage and nobody should accept these pitiful offers from dinosaur banks.
There is so much more out there that we can access now because of crypto.
But as of 2025, the responsible path isn’t chasing a single platform but understanding the underlying engine.
Evaluating any crypto yield opportunity now requires asking questions like:
- What is the source of the yield? (Fees? Borrowing demand? Emissions?)
- How transparent is the collateralization and liquidation framework?
- Is custody centralized or verifiably on-chain?
- What are the failure modes in extreme market conditions?
- How quickly can one withdraw funds?
- Are audits and risk reports published and verifiable?
A Clearer Awakening
You’re not dreaming, crypto yield does exist. But in 2025, the real deal isn’t a single star player but in an entire ecosystem’s hard-earned maturity.
Wake up to a clearer understanding of how crypto yield works, easily convertible into better financial decisions.
Participate not by trusting a brand name, but by understanding the mechanics that make the entire machine run.
If the early 2020s were defined by explosive growth and painful lessons, the mid-2020s are defined by something far more sustainable: clarity.
These days, crypto yield is no longer a deal of a lifetime but a financial primitive. And like any powerful tool, it rewards those who learn how to use it responsibly.
Mad Hedge Bitcoin Letter
September 7, 2021
Fiat Lux
Featured Trade:
(RECORD-BREAKING INFLOWS)
($BTCUSD), ($ETHUSD), (GLD)
When an investor like John Paulson buys gold and throws shade on Bitcoin, you know they know that Bitcoin is in the process of disrupting gold and overtaking the store of value mantle.
Paulson made his most famous anti-crypto comments back in 2021, claiming cryptocurrencies would eventually “go to zero.” Now that Bitcoin has surged above $125,000 in 2025, those remarks have aged about as well as unrefrigerated milk.
And now, just last week, Bitcoin did not breach $50,000 like it did in the early days. It powered through $120,000 and held it, showing the resilience of a wild mongoose that simply refuses to die.
At what lengths will the old guard go to downplay this legitimate asset class?
Hedge fund manager John Paulson made $20 billion predicting the downfall of the U.S. housing market in 2008. So when he predicted years ago that cryptocurrencies would “go to zero,” the question becomes whether he will look foolish if Bitcoin goes to $200,000.
Talk is talk, nothing more than that.
He said back in 2021, “Cryptocurrencies, regardless of where they are trading today, will eventually prove to be worthless. Once the exuberance wears off, or liquidity dries up, they will go to zero. I would not recommend anyone invest in cryptocurrencies.”
Bitcoin launched on January 3, 2009, and he spoke like he had no idea. So did he mean the “exuberance” had already been happening for 12 years at the time, and now 16 years later he is still waiting for it to wear off?
Despite Paulson’s less than ideal stance on crypto, he admitted even then that the short-term volatility of the digital asset made it too risky for him to short or place bets against.
Paulson continued to say, “Ultimately the price fluctuation has to do more with the relative supply of the coins.”
I would correct Paulson by noting that the supply situation is only one of many drivers of higher Bitcoin prices.
The more “experts” who chime in shouting down crypto assets, the worse they look, as new sets of millionaires and billionaires get minted daily.
Retail buyers are thirsting for percentage growth while Bitcoin reigns supreme. It has relatively stable growth, while there is exponential growth happening in Ethereum.
That is what really hooks their eyeballs.
Paulson also neglected to say where retail traders could find yield in this world. He might even recommend loss-making gold trades since he has gotten it completely wrong for more than a decade now.
Paulson’s hard line against crypto stands in stark contrast to many of his hedge fund bros who have embraced Bitcoin and shelved their relentless criticism of it.
The biggest takeaway from Paulson is that he never deployed capital against Bitcoin, meaning he acknowledged that it could go up significantly from where it was back then, and he was scared to lose money by shorting the asset.
I would not advocate holding this asset until death, and even the early adopters trim their Bitcoin positions on huge spikes. This is prudent risk management.
Readers need to remember that these “pros” like Warren Buffet and Paulson missed the boat on Bitcoin, so they are incentivized to criticize the asset by delegitimizing its very existence.
This is a simple and garden variety manipulation tactic that is easy to call out.
Who knows, maybe in 10 years all the crypto trillionaires will start to peddle out the reverse theory that stocks and fixed income are not assets as well. I have seen crazier things in my life.
For some top trading shops, the volatility in the price of crypto is seen as a godsend in order to make a fortune from price arbitrage.
Steve Cohen’s Point72 Asset Management is working on launching crypto-focused trading funds. Israel Englander’s Millennium Management has begun trading crypto derivatives. Traders like Paul Tudor Jones and Alan Howard have also taken stakes in cryptocurrencies.
Including Paulson, all of these traders made fortunes betting on other asset classes. Therefore, it is really not certain if they have spent more than two seconds looking into what crypto is about.
Since then, the avalanche of data points has been snowballing at the right time. Bitcoin broke $125,000, gold’s market value hit roughly $30 trillion, and institutional adoption is at the highest level in Bitcoin’s history.
It has been in the price action that the gyrations of Bitcoin have been smoother lately, and we are not seeing 10 % drawdowns in a day like we did before.
The longer the price action shows continuity, the more investors will feel comfortable placing large amounts into different coins as well as the bellwether Bitcoin.
An avalanche of data points shows more efficacy, higher volume, and broad based adoption as Bitcoin now trades above $120,000.
Granted, it will not be the last time that crypto is talked down, but the problem is every time these guys do it, they look more out of touch by the day.
Paulson made his fortune betting against subprime mortgages at the peak of the 2007 credit bubble, and the evidence is out there that he simply does not understand cryptocurrencies. And that is ok, because after his great call on subprime housing, he rapidly lost a large amount launching a gold fund in 2009.
Since that year, crypto has revealed itself as a better alternative to physical gold, and Paulson simply does not like that. Paulson is hellbent on making this gold trade work. It almost seems like it is a fetish at this point.
People of that stature usually do not like being wrong and throw money at the problem until the variables and price turn in their favor.
But honestly, sour grapes because missing the crypto boat will not make the price of gold go up 10×, 100×, or 1,000×, and that is what crypto is about in the early innings of a 9 inning game.
“Bitcoin is a technological tour de force.” – Said Co-Founder of Microsoft Bill Gates
Mad Hedge Bitcoin Letter
September 2, 2021
Fiat Lux
Featured Trade:
(THE TRUTH ABOUT CRYPTOCURRENCIES AS AN ASSET CLASS)
(BLOK), (MSTR), (HUT)
It's my responsibility to new readers of the Mad Hedge Bitcoin Letter to offer an imminent snapshot of where we are in the crypto universe at this point in time.
It would be negligent if I didn't.
To say that Bitcoin is the only investment in the crypto sphere is also not true. Bitcoin is the biggest and most trusted crypto network, and many have become grotesquely wealthy because of it. Yet there are other altcoins out there.
Knowing what to digest and what to avoid like the plague is where I come in.
Don't get me wrong. I'm still highly bullish on Bitcoin as an asset, but we don't operate in a vacuum.
Many altcoins have been performing alongside Bitcoin in recent months. Bitcoin is up approximately 5% year to date, although it's recently fallen through the $90,000 to $100,000 range.
Ethereum, for instance, is trading around $3,000 to $3,400 in November 2025. This reflects a pullback from earlier highs this year.
The earlier expectation that Ethereum would push past its former May high of approximately $4,200 hasn't materialized as of late 2025. This prediction is now flagged for review.
As one might have assumed, lesser coins with cheaper pricing benefit or suffer from the law of small numbers, with wider gaps in percentage change on up and down days.
It's simply the nature of the beast.
Overall, the second largest cryptocurrency by valuation performing well is a highly bullish signal for Bitcoin itself. It also signals increasing adoption, which is positive for the security and regulation of the broader asset class.
I subscribe to the rising tide lifts all boats theory in cryptocurrencies, because it does more to legitimize the top asset than pull capital away from it.
The most poignant takeaway is that readers can't overlook other cryptocurrencies simply because Bitcoin is the apex warrior.
Returning to the foundations, cryptocurrencies have a reputation for being difficult to understand. Don't be embarrassed if you're befuddled. I felt the same way the first day I tried to understand this material.
A poll earlier this year found that a large share of people who'd heard of cryptocurrencies still had little or no understanding of how they work.
How Do I Buy Bitcoin?
Conventional wisdom has it that the most likely route is a Bitcoin online exchange.
Create an account, then enter a payment method.
Reputable exchanges will require information such as bank account details or a debit or credit card. Proof of identity is required, such as a driver's license, ID, or passport.
After verification, you can purchase Bitcoin by transferring it to a personal hot wallet. Then you can buy and sell the asset.
Remember that these accounts coming directly from Bitcoin brokers aren't insured and aren't secure.
Therefore, a better way to mitigate risk is by going through a Bitcoin ETF on the United States public markets with an official broker registered with the Securities and Exchange Commission, SEC.
Not only do public stocks provide additional security as a Bitcoin trading vehicle, but ETFs aggregate crypto asset tracking data points, which reduces volatility even further.
Unregulated crypto exchanges come with a higher level of operational and systemic risk. Not everyone wants to venture into the arid Wild West without a horse or water.
If you trade with an official brokerage registered with the SEC, your bank deposits are covered by Federal Deposit Insurance Corporation, FDIC, insurance up to $250,000 per account holder. Brokerage crypto assets themselves aren't FDIC insured.
There's also another layer of protection. You're covered by the Securities Investor Protection Corporation, SIPC.
SIPC protects brokerage accounts up to $500,000, including a $250,000 limit for cash intended for securities transactions.
Cash held solely to earn interest isn't protected. SIPC was established by Congress but is funded by its member broker dealers.
In many cases, SIPC protects against unauthorized trading or theft in the account.
My favorite crypto ETF in the earlier years of this publication was the Amplify Transformational Data Sharing ETF (BLOK). It's grown into one of the strongest blockchain related ETFs on the market since its inception.
BLOK is an actively managed ETF that seeks to provide total return by investing at least 80% of its net assets in equity securities of companies actively involved in the development and utilization of blockchain technologies.
BLOK's largest holdings included MicroStrategy Incorporated, now rebranded as Strategy Inc., and the Canadian crypto mining company Hut 8 Mining Corp. I've already circulated a trade alert on Strategy Inc. to new readers and remain highly bullish on the company.
However, this ETF encompasses more than Strategy Inc. It offers broader exposure to firms related to Bitcoin, crypto miners, and software companies heavily involved in crypto.
Hut 8 engages in industrial scale Bitcoin mining operations. It owns and operates dozens of BlockBoxes in Drumheller, Alberta, and Medicine Hat, Alberta.
BlockBoxes are among the most powerful and cost effective Bitcoin mining units available on the market.
BLOK doesn't track Bitcoin one to one, but it mimics Bitcoin's price action relatively closely, with less extreme swings.
Controlling excess volatility is something you should be happy about. BLOK also has an expense ratio of 0.71%, which is reasonable for those who want to buy and hold the ETF rather than actively trade the derivative.
Buying BLOK is still a reliable way to ensure safer trading under the SEC framework, although some investors prefer a higher risk profile and may seek more direct exposure.
The crypto revolution is now well beyond its infancy, but the possibilities remain vast because adoption is still expanding.
However, we can't assume Bitcoin will always lead the charge. Paying attention to developments throughout the industry provides deeper insight into how the bellwether, Bitcoin, is performing and reacting to future challenges as the top asset.
The truth is that several winners will benefit from higher crypto prices, not just Bitcoin. Blockchain technology will also be a major winner from higher crypto prices.
Even if one doesn't want to profit from crypto, this will remain one of the intellectual challenges of a lifetime.
Lastly, I'd like to note the price call made in 2021 that projected Bitcoin at $66,000 by the end of that year. That prediction was surpassed long ago. Bitcoin eventually reached a peak of approximately $126,000 in October 2025.
“Bitcoin will do to banks what email did to the postal industry.” - Said Swedish information technology entrepreneur and founder of the Swedish Pirate Party Rick Falkvinge
