Fundamentals Report 11/15/2019 #63

11/15/19  |  Issue #63  |  Block 603,958 |  Disclaimer
~180 Days Until Halvening

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TOP STORIES

Lightning and Text

I haven’t been this excited about a new app using bitcoin in a long time. Several days ago, Joost Jager released code for an experimental private text app using payments on the LN to carry the data back and forth. Test is such a huge area for future apps, the ramifications of it on LN are hard to grasp at this time. But it’s a very big deal.

I think this is so cool, because it adds huge incentive to the growing list of LN capabilities. To date, it can do micropayments, instant payments, private payments, colored coins (RGB protocol), and now private chat. I’m sure I’m missing a few basic use cases, but the bottom line is it’s slowly becoming hard not to join the LN revolution. 

IBM

IBM dropped a bombshell this week, a report written along with the Official Monetary and Financial Institutions Forum (OMFIF). In the report, they outlined reasons Central Bank Digital Currencies (CBDC) are now a practical proposition. While it is more aimed at corporate coins like Libra, this report does mention “bitcoin” 13 times, stating, “Bitcoin captured the public’s imagination with its nearly anonymous transactions and ability to operate without any trusted intermediaries.”

My question is do they get it? In the above statement, “captured the public’s imagination” is meant to be dismissive of the hard money aspect that makes bitcoin successful. In that very same section, they concentrate on the role of DLT, which is where bitcoin’s appeal is supposed to come from.

“DLT means ledgers can be maintained and updated securely for an entire network of users by the users themselves, rather than a central agency. This gives bitcoin participants the ability to share a ledger that updates each time a transaction occurs through peer-to-peer replication. However, critics point to several technological hurdles that limit DLT adoption in respect of payments systems.”

They don’t quite get it, they’re still obsessed with the red herring of payments, but they’re close. I was surprised that the descriptions of SegWit, sidechains and the Lightning Network were pretty good, but repeatedly dismiss the whole money aspect of bitcoin. They conclude: “Pure, unbacked cryptocurrencies such as bitcoin will remain the minority pursuit of speculators and denizens of the dark web.” 

CME Options

CME will be launching their Bitcoin options in January. I don’t have much to say about this at this time. I just wanted to keep the reader up-to-date on this fairly big development in the market. More to come on this.

Member Podcast episode

This week I dropped an epic rant for Members on Patreon called Ether Monetary Policy Rant


PRICE

Weekly BMI |  2 : Bullish 

The market has been very hard to read this last week. The price has been in a slow motion descent since the end of October, searching for a bounce around the mid-8000’s. A few times traders have been faked out, only for the price to rollover and continue lower.

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We are still paying the price for the epic run from $3100 to $14,000, but buy support has been pretty good, and sellers are becoming exhausted. In the Member Newsletter I said $8400 would hold, but if we do break down to $8000, be prepared for a fast return of volatility!

I’m still bullish. I’m thinking we can get two green weekly candles out of November yet.

bitcoin price chart

MINING

The difficulty adjustment is currently estimated to be an increase between 2.5 and 3.0% when it occurs in approximately 5.5 days. This is a great sign after the last adjustment of -7.1% on November 7th. We will have an updated chart next week.


MACRO

Here is an interesting infographic from VisualCapitalist showing the world’s debt totaling $69 trillion USD. Which country will be the next to experience hyper inflation? Remember, this doesn’t include unfunded liabilities, which would balloon certain countries by more than 500%.


MISCELLANEOUS

This chart by Coinmetrics.io shows a lack of correlation between Bitcoin and Gold, the S&P, the Dollar Index, and the CBOE Volatility Index. In the past, we’ve mentioned that the closest correlation was with European stocks, but that is probably random. Bitcoin is not correlated with any other asset (except altcoins).

bitcoin asset correlation to other assets like stocks and bonds

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