Fundamentals Report 11/22/2019 – #64

11/22/19  |  Issue #64  |  Block 604,938  |  Disclaimer
~173 Days Until Halvening

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TOP STORIES

The government competition for “blockchain” and stablecoins is heating up. It’s almost surreal to watch. We will be able to see them figure out real-time what bitcoiners have known for 7 or 8 years and what “enterprise blockchain” has figured out over the last 2 years, that “you don’t need a blockchain for that.”

China
We all know about China’s recent glowing remarks on blockchain. Three connected news items happened this week 1) further pronouncements were handed down, 2) a small crackdown took place, and 3) some Binance raid rumors. All-in-all it amounts to very little if any fundamental change for Bitcoin itself.

On the macro side, I believe China is in the worst financial shape of any major economy at this time. Their love affair with blockchain should be strong but brief.

US
In a letter this week, Chairman Powell made a few comments on their digital dollar efforts saying, “The Federal Reserve is not currently developing a U.S. dollar central bank digital currency (CBDC), but continues to carefully evaluate the costs and benefits of issuing a general purpose CBDC, defined as a new type of Federal Reserve liability that could be held directly by households and businesses.” 

Europe
The European Commission and the European Investment Fund are launching a new €400 million VC fund adding to their existing approximately €600 million spent this year.


PRICE

Weekly BMI |  2 : Bullish 

What a sell off! Did you buy the dip?

The price sold all the way down the bottom of the channel in spectacular fashion. The worst is over for now. My previous call for $6800 unfortunately came back to bite me in the butt. In early Oct I was speaking a lot about “One more sell-off guys, we’re almost there.” I thought the 40% signaled the end. I was wrong.

Is this the final sell-off? Nothing is certain. But there is quite a bit of bearishness in the market right now. It’s not supposed to be easy to stay engaged. Bitcoin will shake you out unless you take a long term life changing angle to understanding the future we can make with bitcoin.

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MINING

Something snapped in the mining sector on the 19th, two days before the recent 48 hour mass sell off. A surge in “first spend” transactions – the first movement of newly mined coins. In the chart below you can see a large spike in the 7-day average from 13k to 16k. By my calculations, to change the 7-day average by 3,000 on Nov 19th, there must have bee 21,000 coins dumped in a day.

For context, there’s ~1800 coins mined per day or 12,600 per week. The 12-week average of first spends is 13,354, or -750 per week.

First spend data comes from ByteTree.

The difficulty adjusted up by less than 1% yesterday, however, early estimates for the next adjustment in approximately two weeks is expected to be negative.


ALTCOINS

As we draw to the end of the year, and after our worse week of the year so far for the bitcoin price, I wanted to include our comparative altcoin chart. It’s been relatively steady since Aug, but I’m expecting more bearish altcoin movement into year end.


MISCELLANEOUS

Here is an image of a longer term picture of the “first spend” or first movement of the newly minted coins shown in the mining section. The number of potential coins that could be dumped will be cut in half in approximately six months when the halving occurs.