Proceeding as Expected, Consolidation to the Right - Bitcoin Pulse #62

ISSUE #62  |   June 14, 2020  |  Ansel Lindner  |  Disclaimer

Hi Bitcoiners,

Thank you for taking the survey. I will continue with the post format for now. The results are as follows:

1. How did you like the Bitcoin Pulse as a post instead of a PDF?
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->  In order: Analysis, Vital Stats, Support my content, Charts, Trend identification

In this issue:

  • Headlines and Must Watch Videos
  • Expanded Vital Stats
  • Daily Chart
  • Market Analysis
  • TD sequential, cloud
  • ETHBTC and ETHUSD
  • Word of the day

The Bitcoin Dictionary is LIVE on Amazon!

Where else to find me : Fed Watch podcast | BTCM Research blog

Headlines and Must Watch Videos

KYCnot.me

A new website that shows places to buy and trade bitcoin ranked by their KYC requirements. This was much needed in the space. Hopefully Bisq and Hodlhodl get more volume, because they are the privacy leaders.

Revisiting Transactional Statistics of High-scalability Blockchain

Researchers from Imperial College London and University College London distributed by Cornell University have published a research paper that confirms what bitcoin maximalists have known deductively for a long time. Namely, that transactions on altcoins are fake, spam, or have zero economic value.

"Our analysis reveals that only a small fraction of the transactions are used for value transfer purposes. In particular, 96% of the transactions on EOSIO were triggered by the airdrop of a currently valueless token; on Tezos, 76% of throughput was used for maintaining consensus; and over 94% of transactions on XRPL carried no economic value."

Swap Me Still

If you aren't reading Jeff Snider's blog, you're missing commentary by the best public Dollar expert in the world. This is his latest post.

"should we possibly be a little concerned that after three months of this “dollar flood” and inflationary “money printing”, the domestic dollar market is so broken that US banks are, through their foreign subs, still bidding for the same high level of last-resort dollars in the most indirect manner available?"

Price:  $9398 (-$82, -0.9%)

Short term outlook:  0 : Neutral


VITAL STATS

Pricing

  • Market cap: $173 B
  • Market cap (AU/oz): 100.1 mil oz
  • Sats/$:  10,631 sats
  • Finney (1/10,000 btc): $0.94

Investment Indicators

  • GBTC Premium: 19%
  • Stock to Flow Multiple (10d): 0.16
  • Mayer Multiple: 1.14
  • ROI 3mo:  83%
  • ROI 12mo: 40%

Front Futures CME

  • Expiry:  26 Jun 2020
  • Open Interest:  8,741 (down 600 from last issue)

Network

  • Network vol 24h: 0.83 mil btc (this is low)
  • Est. Difficulty adj: +16% 1 day
  • Difficulty Last 3 Avg: -4.79%
  • Avg block size (daily): 1.35 MB (maxed out)
  • Avg tx $ value: $16,147 (1.72 btc) (very low)
  • Avg $ fee/tx: $0.71 (0.75 finneys) (quite low)

Stablecoin dominance

  • Tether dominance (vs all altcoins): 10.4% (up from 10.03% last issue)
  • Stablecoin dominance: 12.3% (up from 11.9%)
  • Stablecoin/bitcoin: 6.3% (up from 6.1%)

Correlations (90 day)

  • Gold:  -0.15 (more indirect from -0.06)
  • S&P500:  0.21 (down from 0.27)
  • VIX:  -0.17 (up from -0.21)

Top Forex Crosses

  • DXY:   97.06
  • EURUSD:  1.125
  • USDCNH:  7.07

DAILY CHART

Proceeding as Expected, Consolidation to the Right

Bitcoin bulls were caught slightly unaware with this week's price drop, but readers of this letter were expecting it. The NPC-like droning about "money printing" and "inflation" from bitcoiners is getting tiresome. It's the same thing that was said in 2009, all the way to today. I was part of it, too! But facts are facts, the 10,000% increase in the Fed's balance sheet since 2009 has absolutely not led to runaway inflation. The Fed is using the exact same playbook, we won't get inflation this time either.

Bitcoin will go up in price because its where the economic growth will be! Growth will be here because bitcoin is a crisp, fresh, untainted, hard money economy. That is the angle! The dollar denominated economy's relative stagnation, not an inflationary collapse.

Stocks

The dump in the stock market is not over, but don't be surprised if it's not as bad as many are claiming. The anti-dollar NPCs are livid, screaming that stocks are separated from reality - which they seem to be - but the NPCs don't offer any new insight. They always go back to the saying by Keynes, "the market can stay irrational longer than you can stay solvent." But what if the the irrationality lies with the people saying that for 20 years?

Stocks might be separated from reality, but we should consider that the market is smarter than we are. Perhaps, the mechanisms at play are misunderstood. Perhaps, just like we don't really understand what's happening in the money markets and shadow banking system, we don't understand what is happening in stocks. Perhaps.

I expect stocks to continue higher after a pull back, baffling sound money pundits. I'll be honest, the reason for this apparent overvaluation is unclear. However, it could be that stocks are a savings vehicle now. And by stocks I mean index funds.

We know savings rates have skyrocketed, a trend I expect to also continue, so where do people "save"? Bitcoin? Yes, bitcoin will be bid of course. Gold? Yes. But a large majority of people will by stocks. The key factor is they won't buy bonds at 0%. Most of the demand which normally would go into bonds at 5-10%, will pour into stocks.

This week and next, I expect bitcoin and stocks to find a higher low, and the dollar to rebound.


TD Sequential Weekly 9 Still Valid


50 EMA and 200 SMA

The 50 daily EMA has provided support in this dip, but I don't expect that to hold this week. The 200 SMA is showing a slight turn back to a positive slope signalling medium term bullishness.


ETH update

I have to update you on ETH. The first chart is simply showing ETHBTC pressing up on a line of resistance and the importance of the 50 SMA throughout 2020.

Next, is a look at the weekly cloud, an update from last issue. As you can see, price is having a hard time breaking above the base line, and the cloud is extremely thick and bearish.

On the USD side, the weekly cloud has rejected price. This is a precarious spot for ETH.

If bitcoin and stocks sell off this week, looking to set a higher low, Eth will sell off, too. And could set a new trend for ETH to the downside.


WORD OF THE DAY

Byzantine Fault Tolerance (BFT)  Resistance of a distributed consensus system to a specific type of fault, where components may fail or be malicious and there is imperfect information on whether a component has done so.

Discussion: The term is derived from the Byzantine Generals’ Problem.[1] Generals surrounding a city must come to consensus in order to attack the city or retreat. Communication is accomplished through messengers, but the messengers or the generals themselves may be malicious and attempt to disrupt consensus.

Byzantine faults are the most difficult type of faults for distributed consensus systems to deal with. Solutions existed prior to Bitcoin, usually for closed systems, without free entry and exit of nodes. Bitcoin provides BFT through proof-of-work enabling the network to remain completely open and socially scaleable.

Related: consensus, decentralization

[1] Lamport, Leslie, Robert Shostak, and Marshall Pease. "The Byzantine generals’ problem." ACM Transactions on Programming Languages and Systems (TOPLAS) 4.3 (1982): 382-401.

Where else to find me : Fed Watch podcast | BTCM Research blog

The Bitcoin Dictionary is LIVE on Amazon!

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A

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