Bitcoin Price and Fundamentals Analysis – 9/14/2018 – E131

FUTURES – NETWORK STATS – MINING – MARKET SIZE – SOFTWARE – LIGHTNING

Top story line: Bottom price holds, network volumes are down, Lightning bombshell, Bitgo as custodian vs Paxos and Gemini stablecoins

Transcripts inline.


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INTRO

On this episode of Bitcoin & Markets we take a look at the price, the bottom has held, altcoins are bleeding, on chain metrics and statistics not only from bitcoin but around the space, we take a look at stables coins like Tether, Gemini and Paxos, lots of stuff to pack in here. If you’d like to get a full report of everything I cover free to your inbox every Friday, go to bitcoinandmarkets.com/report. If you’d like to support the show with a monthly membership to get ad-free episodes as well as member only content, go to bitcoinandmarkets.com/patreon. Lastly, if you want to get all the show notes and links for information I cover on this episode, go to bitcoinandmarkets.com/e131. Let’s get into it.


PRICES
  • Price: $6451
  • 1 finney: $0.65
  • $1: 1.5453 finneys | 15453 sats
  • Daily 200 SMA: $7626
  • Mayer Multiple: 0.849

Commentary

So, what am I looking at on the charts? In the report you will get a real nice chart. I’m seeing a downward sloping resistance that is a repeated pattern in this consolidation period that we’ve had. We are range bound. I expect us to attack resistance. All the daily indicators and oscillators and this like that, that you’ll see on the chart are pointing up. RSI looks good, the Stoch looks good. The daily indicators are up, as well as the narratives from around the space.

The altcoins have crashed. When it looked like bitcoin might fall off a cliff, and remember I said the thing that was pulling down on the bitcoin price was the popping of the altcoin bubble. We saw a decoupling, an obvious decoupling. I think Ethereum went down 10-15% over a couple days, and bitcoin stayed dead flat. Ripple is down like 94% from it’s All Time High (ATH). If you look at the charts of these things, you’ll see they have a couple of good weeks versus bitcoin where they pump, and then they steadily tread down versus bitcoin over time. So, 95% of days bitcoin outperforms these altcoins, or in ripple’s case, maybe 99% of days, it’s only 1% of where they outperform bitcoin. I looked back at the price history of Ethereum, all the way back to 2016, because it hit its ATH versus bitcoin back in June 2017, I went back a year before that, and if you took out 3 weeks, maybe it was 4 weeks, it had no advantage over bitcoin. So, all this hype around Ethereum is based on 3 weeks of pumping. Ripple is ever worse. There’s just no fundamentals. It’s an obvious pump and dump.

So, all the altcoins are crashing, bitcoin is sideways. They’ll probably get a little relief rally here, but I’d sell all rallies in altcoins. But you have to careful, because some of these things like Ripple can move 50% in a day. So have tight stops. I have no problem with trading, which is different than a lot of the shows that share the same Maximalist side of things. They’ll tell you trading is stupid. I don’t think it’s stupid, but you have to be very smart about it.

Where are we going? I still see the flat bottom of the weekly Kumo cloud up there at $10,000. I think that’s going to be a magnet for the price. By the end of the year, we’ll probably try to get up there.


FUTURES
  • Okex Futures: (Sep) $6386 | spread -$85
  • CME Futures: Sep $6330 | Oct $6380 | open interest 2,858 / 14,290 btc
  • Bitmex Futures: Sep $6430 | Dec $6417
SENTIMENT
  • Longs / Shorts: 25,800 / 36,700 (0.70)

Commentary

This ratio is very suppressed, and we have any dramatic movement in this ratio recently. Short have come down a little bit, but so have the longs. A lot of people are pretty scared in this market. I mean look at the altcoins, they’re crashing. The retail traders out there, that are really signified by this data, they are going to more with the trend, and the trend is very confusing. There has been a lot of capitulation, and bitcoin has started to decouple. The bottom could have been in these altcoins for the time being, because bitcoin wouldn’t budge. I also said on the last show that we might wick down to $6000, and we did. We went down to $6100 and now we are going back up again.

Overall, bitcoin continues in its consolidation. Bitcoin is not an altcoin. The altcoins are not bitcoin. I saw a recent article over there on the Mises institute that said, ‘The whole space is crashing.’ No, altcoins are crashing. That’s how these types of movements manifest themselves, a long bull run, and a short consolidation. 2014-15 was a unique time in bitcoin because of the blow up of MtGox. People will have their lifetime charts of bitcoin, and they’ll draw lines, and they’ll show different relationships to the ATH and stuff, but I don’t buy the MtGox highs, because of the Willybot and the manipulation, and because it was such a high percentage of the market (75%). So, when you look at these past highs and compare it to this last one, and you put a rational high on the MtGox high of $600-700, and then you run the charts, you are going to see a much more parabolic adoption curve to the price. Each cycle gets shorter. Maybe this one stretches out for a year instead of two years from MtGox, but bitcoin is not crashing, it’s holding steady. If bitcoin breaks $6000 then I’ll say it’s in a bear market. But if it drops below $6000 and wicks back up, and is at $7000 a week after that, is that a bear market? I don’t think so.


MARKET
  • Market Cap: $111B
  • Global Bitcoin MC: $198B
  • Maximalist Price: $11,488
  • Volatility 30-day: 2.76%
  • On chain vol (24h): 980,000 btc | $6.4B
  • Avg tx val (24h): 4.15 btc | $26,800 k
  • Median tx Val (24h): 0.052 btc | $334

Commentary

The reason people talk about “blockchain” is because of the last part of that saying. “Blockchain is the technology behind…” what? You never here people say, “blockchain is the technology behind ethereum” or “blockchain is the technology behind ripple” or “blockchain is the technology behind NEO.” No. Blockchain is the technology behind Bitcoin, because this is the Bitcoin space. If bitcoin went down it would delegitimize the entire space. The actual value being created here, is the value in bitcoin. People see bitcoin as creating this cool digitally scarce thing, but they want to go out there and print money. Everyone always wants to print money. If you can you will. That’s why governments shouldn’t control money, because if they can print money, they will. The US is at a $22 tillion debt now or something, absolutely ridiculous.

I had a tweet the other day, where I said, the dollar has lost 98% of its value over the last 100 years, and it’ll lose another 98% in the next couple of decades. So do you want to be holding bitcoin, or do you want to be holding dollars, or in today’s news, stablecoins. I don’t think so.

We are in a little slump in price, so that’s why we are seeing these numbers down.


DEVELOPMENT
  • Current release: 0.16.2 / 0.17 RC3
  • Next major release est: 0.17.0 – Oct, 2018
  • Merged PRs: 37
  • Proposed PRs: 18
  • Closed issues: 9

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LIGHTNING
  • Capacity: 115.79 btc
  • Channels: 12,430
  • Nodes: 3,454

NEWS

Lightning Network is possibly twice as large as we think

I have been 1ml.com for my lighting statistics. I find this the best source. This article states that all the lightning statistics can’t be guaranteed to be correct. It’s now been recommended to run your node in private mode, making them undetectable to other nodes. I talked about this very early on when I had some interaction with a lightning dev on twitter. They said you can have private lightning networks and my gears got turning. There will be many private networks.

Tweet #1: “The price level of all monetary goods is determined by (and only by) reservation demand.”

Yes. The Austrians have a name for this, it’s called demand for cash balances. You can see, even Roger Ver isn’t getting this right according to the Austrians. Demand for cash balances, your hodling demand, that is what drives the price of a money.

Tweet #2: Master vs Slave mentality. I also think of this as altcoiners/scammers always have a victim mentality.

Altcoiners and scammers always play the victim. People like Roger Ver and others are always complaining about things and playing the victim. I’m going to say the same thing about the Freedom Movement, they often play the victim.

There’s three ways to get political change. First, is violent revolution, that is very difficult and risky and I do not recommend that one, it’s not a good thing. Second, is civil disobedience. We see that throughout history, Ghandi and Martin Luther King, Jr. Third, is political action. We see this in the Free State Project and others, they are trying to beat the system at its own game. Within that political spectrum in the third option, you have on one side Anarcho-capitalists and the other Anarcho-socialists. They are two different branches of political action for political change. What the Crypto-anarchists do, the Cypherpunks do, they are in the civil disobedience camp. It’s been much more successful through history for sure. They are building things that enable civil disobedience. That gives these people in this camp a clarity of vision, because they’re not corrupted by the politics. They aren’t swimming in the politics. They are simply building things that enable you to be disobedient to the State. That’s what’s going to win.

The files are out there. What do the judges think they are going to do. There is nothing they can do about it. Building technology that is a force of nature. It’s like gravity. It’s like you are falling very quickly towards the ground, and governments everywhere are going to have to deal with the fact that they are falling. Same with bitcoin. Bitcoin is a fact of nature now. You can’t change it, you can’t fight it in the long run. In the short run you can. Individual files can be taken down, but they can’t stop it.

Regulated stablecoins are the threat, not ETFs and futures.

Two new products from Paxos and Gemini

Gemini’s USDG is completely centralized and censorable. This is my worry.

Bitgo

Two new avenues for government attack, custodians and stablecoins. I’m much more worried about stablecoins. Last year everyone was worried about Tether and the effects it could cause in the market, but now they see these new stablecoins and they are excited. I think this is the dangerous part, even though Gemini and Paxos are doing their coins on top of Ethereum, which is the dumbest thing you could do, the dumbest option available to them.

This also piques in my mind that regulators knew about these two projects months ago, while they were looking at Ethereum as not a security, when it’s obviously a security. There was constant fishy FUD about Tether to try and clear the market for these upcoming stablecoins on Ethereum. I think there’s a conspiracy here, to try and use stablecoins to pick winners and losers and manipulate this market. This is their play, USDG and PAX. These bankers want to be able to print money in the space, and now with these two.

This is their Trojan horse is what I’m saying. The ETF and custodians right now, are a good thing.


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