Fundamentals Report #67

12/13/19 | Issue #67 | Block 607,981 | Disclaimer
~153 Days Until Halvening
.772 on the Mayer Multiple

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TOP STORIES

Open Social Media Standard

Twitter’s Jack Dorsey posted a tweet thread about their new project to create an “open and decentralized standard for social media.” Of course, the bitcoin space and others have been working on this problem for years, so it’s no surprise that the bitcoin maximalist Jack is interested in this. I also think he’s genuinely against the censorship that he’s forced to do on Twitter. We’ll need to watch this to see how it develops.

The Fed Keeps Rates Stable

I’ll quote from the Bitcoin Pulse member newsletter on this subject.

“They are performing a magic trick on the market right in front of everyone’s eyes. Repos, the underpinning of the financial markets, are on fire. The market is essentially frozen without the Fed’s constant increases in liquidity. … Why lower [rates] now when you can just pump $100 billion plus into the market every month and everyone looks the other way?”

Everything seems to be pointing to the goal of getting Trump reelected. The Fed remains steady on the surface where everyone is looking, but gives the market a huge dose of heroin behind the curtain in the repo markets. Tariffs were about to cripple China, things were getting worse and perhaps approaching a breaking point, but to push the crisis off Trump caves and signs phase 1. Those are my thoughts on this. If you’d like more let me know.

IMF Begins Asking Countries About Their Bitcoin Mining Revenue

This was an interesting story that we never would have seen in years past. The IMF is “advising” Georgia they declare income from Bitcoin mining in their trade balance data. The IMF is treating bitcoin like an export which they want included on official statistics. 

OPEC Adds to Production Cuts

It’s one of my theses that oil prices will drop over the next few years or decades. However, in the last two years, OPEC and its allies have been cutting production targets to support the price of oil. This is a great article that details the pickle that OPEC is in, including “peak oil demand” (replacing the concern of peak oil supply from 10 years ago).

More Bitcoin specific news in the sections below ↓


Weekly BMI |   2 : Bullish

Over the last few days we’ve seen price action smooth out considerably, for example we haven’t seen the Bart patterns popping up everywhere. I think signals exhaustion, even on the part of market making bots. Sellers and retail traders are bored and walked away. No one is left except stackers and a few professional traders.

I don’t see a dramatic sell off in the near future, unless there’s a horrible macro crisis kicking off. Price will break resistance when no one is watching.

The second chart below shows the record high long positioning on Bitfinex. There’s a low likelihood of a long squeeze here IMO, because it seems to be market makers hedging. But eyes open on this.

(More detailed technical analysis on the member newsletter)

bitcoin price chart with channel and pivots
bitcoin long trade chart showing an all time high

LIGHTNING / SIDECHAINS / DEVELOPMENTS

Very cool new lightning wallet called Nayuta. They have some very cool features I hope become standard in the future, like integration with your BTCPayServer and a Bitcoin Full Node option.

bitcoin lightning wallet nayuta

Estimating Number of Lightning Nodes

I did some research and calculations on the number of lightning nodes out there at this time. There is no source to get these numbers because nodes can run in private and public stats are only as good as what that particular node can see.

I looked at Android wallets, iOS wallets, and hardware setups. These numbers won’t be perfect, because power users will have multiple wallets and not all mobile wallets are lightning nodes, but many are. For those reasons I use a very large and crude adjustment factor of 50%. Below you can see my numbers. I estimate there’s currently 91,000 Lightning nodes as opposed to the 10,000 in the public stats.

spreadsheet image of lightning network node count on the bitcoin network

Sidechains

The Liquid sidechain project made an announcement this week that the BTSE exchange will be using Liquid to launch it’s own exchange token. The main difference between Ethereum-based ICOs and Liquid-based ICOs is, the former has to make trade-offs to maintain the distributed consensus and native token’s value. We’ve seen hard fork upgrades to accommodate tether, cryptokitties, DAOs, etc, and that is only for a $16 billion network. It is not possible to do that on a $600 billion network. A base layer must prioritize its token. Liquid is more centralized and nimble in this regard, because it doesn’t have to make trade-offs to maintain a robust distributed consensus.

The Rootstock (RSK) sidechain is getting a clone of MakerDAO and DAI called “Money on Chain”. It’s kind of funny. RSK is an underutilized platform which needs projects like this. It remains to be seen if this can work and how it will affect RSK and Bitcoin, but it highlights a very important point, these DeFi things are clone able. In fact, a semi-decentralized stablecoin will likely work better at smaller scale, because once it gets too big, it attracts attention from regulators, hackers, and governance trolls.


MISCELLANEOUS

meme showing ethereum getting the smart contract idea from bitcoin then turning around and claiming it as their idea

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