The Fundamentals Report #70 – 1/3/2020

01/03/20 | Issue #70 | Block 611,159 | Disclaimer
~130 Days Until Halving
.790 on the Mayer Multiple


TOP STORIES

Proof of Keys

“Every January 3rd the Bitcoin community HODLers of Last Resort participate in a Proof of Keys celebration by demanding and taking possession of all bitcoins held by trusted third parties on their behalf.

“By demanding and taking possession of their assets, individuals will learn real fast with blockchain proof whether they are part of the elite HODLers or not. Proof of Keys is the annual HODLer initiation.”


PRICE

Weekly BMI |  1 : Slightly bullish 

The last few weeks have been flat for price movement. We did make a marginal lower low on 18 Dec, but it quickly reversed right back into the area where we’ve been for weeks.

Over the last 24 hours or so, we had a nice little fake out swing in price. I went to bed with many people returning bearish at $6900 and woke up to a large green candle all hitting $7400. As I’ve been saying, I don’t expect a large sell off or jump. The blue box in the chart is our consolidation range, which we will eventually break out bullish. It’s likely to continue boring sideways to slightly up over the next month.


MINING & DEVELOPMENT

The difficulty adjustment on New Year’s Day of +6.57% was the largest since September. As you can see on the top third of the below chart, the hash rate has been flat for a couple of months only recently breaking out to new ATHs. The halvening is getting very close at only 130 days away, so miners are probably starting their hoarding cycle now if they haven’t already.

I think of it as the price needs to double from the last miner capitulation and the halvening to keep profitability the same. That’s a tall order. Of course, there are efficiency gains to be factored in, but it’s a rough estimate.

The second chart below shows the percentage of transactions that are using segwit addresses. It has recently started growing once again, which bodes well for efficient use of block space and managing fees.


ALTCOINS

Ethereum is a basket case. They just completed their second centralized upgrade with 2500 Infura nodes in a month where they pushed back their designed Ice Age that slows blocks exponentially to motivate people to stick with the Ethereum Foundation. They pushed it back 2 years worth of blocks, and in doing so, increased the inflation rate.

Also during this hard fork upgrade, the popular Parity wallet came under attack. It was a devastatingly simple and effective attack that went unpatched for 12 hours or so. But it doesn’t matter, Parity had already announced they would be stopping support for their client soon. Now the only major client on the Ethereum network is Geth from the Ethereum Foundation and Vitalik.


MACRO

Great article from Michael Krieger at LibertyBlitz (a bitcoiner). He detailed the very rapid rise of the 2nd Amendment Sanctuary movement in the US and how it gives us a glimpse at the rising tide of localism in the 2020’s. This so closely mirrors my views it scary. He also got into bitcoin at the same time as I did, in very similar ways. It’s uncanny. Of course, bitcoin fits right in here along with guns for self-defense.

“It’s also crucial to see this in a much larger context. As the populace (across ideological lines), grows increasingly disillusioned with their complete lack of agency within our imperial oligarchy, engaged citizens will naturally shift focus toward the local level in pursuit of alternative avenues for change. Firearms is just one issue, but there are many more and the list is seemingly endless.

“In general, we need to stop believing in the fantasy that topdown change from Washington D.C. will magically fix the problems of such a geographically and politically diverse nation. It’s lazy, unrealistic, and more often than not dangerous. Change needs to start at home, and people will turn to localism out of necessity. More in Part 2.”


MISCELLANEOUS

Will this become the longest period without an ATH in bitcoin history? The halvening is at the 870 day mark, meaning we have 300 days after the halvening to make an ATH. I’m betting we do that easily.

Thanks Bitcoiners,

A