Bitcoin Price and Fundamentals Analysis – 10/5/2018 – E135

Top storyline: Price pressing resistance, Bitcoin has become a stablecoin, bits versus sats, Ethereum mining, Consent vs Consensus, and Gab

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PRICES
  • Price: $6554
  • 1 finney: $0.66
  • $1: 15000 sats
  • Daily 200 SMA: $7301
  • Mayer Multiple: 0.89

Commentary

Bitcoin is becoming the newest stablecoin to be released. It’s been sticking around $6500 for two of three weeks now. Plus or minus a $100 on that. Right now we are sitting at $6555. That makes 1 finney about $0.66 or $1 about 15000 sats.

If you guys are new to bitcoin, or new to the show, I have been riding this finney train hard. It’s been about a year or so since, Richard Heart, good old Richard Heart, he was the first one to give it the name of unit bias, that really stuck in people’s minds. Then I came up with the finney, which is half of the decimal places, four decimals in, and 4 decimal places from the right. Now, it’s becoming more of a discussion topic. A lot of people, you’ll hear them talk about satoshis, or sats. That is the smallest denomination of bitcoin. I think everything in the future will be denominated in satoshis, like wallets and merchants and so forth, I’m going to guess, like 5 – 10 years down the road. I’m fine with that. There’s been a few people in the last week that have been like, “please, stop using finneys, bits, millibits, etc.” Ok, whatever, I’m not in control of what people use. I’m in control of what I use and finney’s is kind of a cool stopgap measure, a slang term. Nothing more “official” than that. I don’t want wallets to denominate in finneys or anything like that. There will be slang terms in bitcoin, like there’s lots of slang terms for money in english, and I’m sure every other language. I think that there will be that in bitcoin. I think that’s good for bitcoin. Certain groups will gravitate toward certain slang terms, or have their own slang terms. So to me finney is just a slang term, and I hope it does catch on, because it’s pretty cool.

The 200 day MA is $7301 and the Mayer Multiple is 0.89. It’s been hanging around here for a couple of weeks now, and that’s fine. It’s not like bitcoin is dying or anything. It’s just the opposite.Things are getting incredibly hyped up. I saw a tweet the other day about all the infrastructure getting built. I replied that back in 2012-2013 if we could see all the infrastructure getting built up right now, it’s huge. So we are just consolidating on the price. Bitcoin is not dying at all. It’s probably the furthest from dying that it’s ever been. And when you talk about the Lindy Effect, it’s the furthest from going away. The Lindy Effect is the longer something is around, the longer it takes to go away.

There’s fewer and fewer bitcoins to go around. Just think about 2 years ago, when you were thinking about buying a bitcoin for $500, and now you’re thinking about buying 5 mil sats for $500. Bitcoin is becoming much more scarce, because people’s cash balances are expanding. So there’s much less out there on the market at any given price. At $500, there’s much less bitcoin our there for $500. It’s becoming much more scarce.

FUTURES
  • Okex Futures: (Dec) $6624 | spread -$25
  • CME Futures: Oct $6615 | Nov $6575 | open interest 2,713 / 13,565 btc
  • Bitmex Futures: Dec $6603

Commentary

The report has a cool futures chart, that you can get in the report every week. Jeff, my co-host on our Patreon series Bitcoin is Freedom, helps with the report every week. He’s in charge of placing all the charts and helping keep track of all the metrics and things. So yeah it’s awesome, plug plug plug. Again, all of them are in discount. Institutional investors are less bearish. There was a report out by Fundstrat, it’s for Fundstat only clients, but they shared it on twitter, so I’m going to share it in my show notes. Really good stuff. The institutional investors are bullish, they think the bottom is in for the most part, and so does most of Bitcoin Twitter. You know, I’m a contrarian, but everyone out there talking with a large following, like Tone Vays or Whale Pool or Telegram groups, are still bearish. I’m the only one that has been calling consolidation since March or April. There’s now a few of us out there that are talking consolidation, but most people are still bear, despite what these polls show 44% of people think the bottom is in.

SENTIMENT
  • Longs / Shorts: 26,000 / 30,100 (0.84)

Commentary

That brings me into sentiment here folks. We’ve lost more longs than shorts to bring us below even on this ratio.

MARKET
  • Market Cap: $114B
  • Volatility 30-day: 2.26%

Commentary

Market cap is kind of going away. It’s going to be gone in a couple of years. Some altcoin scammers are still holding on to it. I believe it was ShapeShift that came up with the dominance index on coincap(dot)io. What gets measured gets managed, well, they came up with this because altcoins would have a huge preprint and only sell a few onto the market, so the price would stay elevated. But now we are getting new metrics from people like Nic Carter from coinmetrics.io, he came up with a pretty ingenious one, or helped come up with an ingenious one. THey are taking the price of each utxo where they were last spent. So, it’s a market cap by last spend. It’ll be better. Bitcoin is used a lot more in day to day transactions. Of course, that can be gamed as well. Something like 80-90% of ethereum transactions are through a mixer. So you’d have to figure out a way, it’ll be an arms race, to stay ahead of the scammers. Everything can be gamed. I’ve been saying for a while now that Bitcoin is “dominant”. it’s binary. There is no dominance, like a percentage of the space.

A bigger story here is volatility. If you go to Nic’s site, and look at 30 day volatility, now if you look at that chart, it goes back like four years, you’ll see it was very violent with large swings from very low to very high. This year however, we’ve see steady decline of volatility. It definitely stands out on the chart, a steady downward sloping line since Jan. We are at 2.26%. Whether that is a product of increased liquidity from all the new products like bitcoin futures, I don’t know. We’ve lost about 10% of this volatility in the last week alone. One thing I’ve hear a couple places is some traders in the traditional markets are using bitcoin’s volatility to predict the stock market’s volatility, like the VIX. That’s kind of interesting, and I’ll update you when I get more information.

In this section I usually talk about on chain volume, transaction size, etc, but everything is pretty flat, so I don’t think it’s that interesting this week.

MINING
  • Difficulty: 4.3% See report
  • Mempool: 7d High: 11.7MB | Time: 8hrs to clear
  • Halvening: 84,491 blocks | 555 days | Apr.12.2020

Commentary

We just had a difficulty adjustment of 4.3%, which is in my sweet spot. Every time we have an adjustment below 2% it turns into a swing low. To confirm my hypothesis, it needs to go up in price. Overall, though hashrate is healthy. We’re hearing good news all the time. There is that Bitmain IPO that’s has a lot of news, you guys can look into that, because it’s bad news for Bitmain, but I think neutral news for Bitcoin. It’s not really good when a large player goes down, even if they are bad actors. It’s not good in my opinion. So overall, it neutral as a whole, this Bitmain saga, but was is good is that there’s more competition out there now.

The way I’m going to be reporting the mempool from now on is as a 7 day high and how long it took to clear. So over the last week, we had a high of 11.7 MB. It seems like the highs come on Fridays. That spike took 8 hours to clear. Which is a little longer than normal. There was a secondary spike in the mempool, while the first spike was clearing. So the time to clear completely would have been around 4 hours, but the secondary spike took it out to 8 hours.

Halvening is just around the corner guys. Next spring it’s going to be only a year away. I’m going to keep harping on this, like I harp on being a consolidation, and the unit bias thing. i’m going to keep harping on it, and pretty soon, everyone will be talking about what’s going to happen to the supply, what’s going to happen to the price. It’s coming. Only 555 days away.

Segwit blocks hit a new high. The percentage of segwit transactions is still rising and recently broke 50%. We had another largest block ever mined at 2.26 MB. Remember, segwit was a block size increase.

Empty block percentage on ethereum is becoming noticeable. I link a tweet I made about this in the show notes. The empty block rate on ethereum is going up. It hit 3-4%, mainly from one miner, maybe a few miners. They get a 15% advantage on broadcasting an empty block versus a full block. I had a little tweetstorm about this, this morning.


DEVELOPMENT
  • New release 0.17 – 138 contributors
  • Next major release est: 0.18.0 – Mar 2019

Commentary

New major release of bitcoin core 0.17. It had a record high 138 contributors. These are protocol developers. The best of the best. Other projects like Ethereum and Ripple don’t come close. It’s a virtuous cycle. The more top developers your project has, the more top developers it attracts. The next major release is going to be 0.18 tentatively around March 2019. I’m not worried about only 15% of people upgrading their nodes so far to the bug fix. I’m sure people running versions 0.16+ will be updating soon. In the next month we could even see 40% upgraded. The large economic nodes will update first, and that’s cool. This is a good thing that upgrades are backwards compatible, because older nodes were not affected by this bug.

 


NEWS

I’m taking questions for the next Listener Q&A episode. That should be coming up next week.

Fundstrat Analysis

Samourai wallet gets rid of fiat. Samourai has been the best, the most innovative bitcoin wallet out there by far. If they are a 10 on innovation, there’s no other coin that even registers. Over the last couple of years, other wallets innovated by adding shitcoins. Jaxx wallet, Airbitz (Edge), even blockchain(dot)info added Bcash, Coinbase added altcoins. That was their innovation, adding shitcoins. Samourai add 5 or more new transaction types, that they innovated, that helped users, gave them more privacy, They aren’t perpetuating scams to get revenue! Samourai is doing real work and I hope they get recognition. We included them in a discussion we had on our last members only content on Patreon episode, in a talking about Tallycoin.

If you haven’t looked up Tallyco.in you need to. It’s almost like a gofundme, but for content creators. You can do campaigns and raise money. I haven’t done one yet, but will probably soon. We were talking about how Samourai, or projects like them, could use Tallycoin to vote for different features. I know Samourai isn’t driven by a profit motive, but it could be used by them to get feedback from the community in a Skin-in-the-game kind of way, to see what features are most valuable to users. When Edge and others, see this revenue model that isn’t based on bullshit, they will go that way as well. I wonder what all these shitcoin wallets are going to do with ShapeShift getting taken down. They’ll probably have to come up with some new, and I hope they have a hard time, because they were perpetrators of these scams. They cost a lot of people, a lot of money. The last I heard of Airbitz (Edge) was when Paul Puey was on the WCN saying that bitcoins in the lightning network are altcoins.

I tweeted out a quarterly chart for bitcoin the other day. Because I’ve been saying the Q3 was positive for bitcoin. In that chart you can see that whenever we’ve had two quarters of flat price in bitcoin, it was followed by a bull run. We’ve had 2 relatively flat quarters now, in a row. I’m not saying a bull run is coming tomorrow, but this quarter is going to be a sizable quarter. We do need all the bears to keep calling this a bear market, because they scam all their followers from getting in. Bull runs always creep in the beginning as people wait for the crash.

Janine’s article: Consent and Consensus

This is a continuation of a previous discussion I had on Janine’s tweet response to Vitalik’s tweet where he said, ‘What if we only respected property rights 80% of the time?’ Janine responded, ‘What if we only respected consent 80% of the time?’ Most people don’t equate your own body as private property. But it is. What if we only respected the property rights over your own body, the use of the property of your body, 80% of the time. Come on, that explodes this narrative, or ideology, no private property rights, because then you don’t even have control over your own body. The governments, the central planners, have control over everything. They’ll even be able to define what the 80% is. They’ll say, ‘well, you can have property rights over your body while you’re sleeping. That counts against your 80%.’ They’ll be able to fudge the numbers anyway they want to, and you’ll have no recourse.

But anyway, Janine has this new article out, with that as the jumping off point, where she examines a lot of things going on in the ecosystem. A lot things I’ve never heard about, but that are obviously well known in the space here, and I’m full time in this space. This article supports my opinion that she is top of the top for journalism in the space. She should look into getting onto a popular news outlet and writing investigative support. Check it out.

Gab story

My last story is on Gab. It is a twitter competitor, with more of a freedom bent. They have become a bastion for conservatives, because twitter and other social media is more progressive….


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