The Fundamentals Report #73 – 1/24/2020

Block 614,366
Days Until Halving: ~108
Mayer Multiple: 0.948
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This week’s podcast:


TOP STORIES

The blockchain narrative is crumbling slowly but steadily, which we detail in TOP STORIES. More on the Taproot upgrade in the DEVELOPMENT section.

3 More Execs Leave Swiss Stock Exchange’s $100M Blockchain Project

The hype around “blockchain” is starting to give way to reality. This particular story about “SDX, the blockchain-based digital asset trading venue owned by Swiss stock exchange operator SIX Group” is the just the latest. THREE executives have left the project that dwarfs the rest of their business. The parent company SIX only made $41 million in revenue in 2018, and they’ve spent $100 million on this wild goose chase for the magical “blockchain”. A little blockchain twerp, Sauter, is blaming “big mother” for changing the vision of their project. Wow.

“Obviously, besides the technology, if you change into more of a big-company approach, you have a much bigger overhead in terms of reporting, in terms of risk involvement, in terms of all the corporate departments that want to have an additional report,” he said.

This Sauter guy’s “vision” is a great example of blockchain believers in general. They oversold the magic of blockchain and then when they are pulled back from endless research and building worthless crap, they quit and say “not my vision.” We are going to see more and more of this, blockchain idiots moving on because they ran out of time and money.

Hyperledger to Explore How Blockchain Can Help World Meet Climate Goals

Hyperledger, also known as where technology goes to die, thinks they will help the world with “climate goals.” Another laughable story about the magical power of blockchain to transform the world. Hyperledger went to Davos, which was overrun by climate pushers, to say blockchain can help with that, too.

“DLTs are central to the creation of a global and open climate accounting system that helps integrate all actors and actions under the same planetary goal,” according to Hyperledger’s website.

People can’t be this gullible can they? I’ve said that we will be able to watch the next generation of bureaucrat noobs learn right in front of our eyes. This DLT blockchain hoax is going to waste BILLIONS of dollars. I can tell you that if they were spending bitcoin these lies would be much more closely scrutinized.

EOS Suffered a Huge DAPP User Drop Out, Latest Report Finds

This story really flew under the radar. In November EOS launched EIDOS (IDK what it is, and don’t care, something centralized and scammy). Coinciding with this event, 80% of their supposed Dapp users disappeared. This story from Bitcoinist puts forward the theory that they moved en masse, overnight apparently to a new platform called “Wax.” I find that very hard to believe.

The article gives some more dubious stats like total volume at $5 billion and total yearly users at 3.7 million! (what planet are they on?) And that 97% of all EOS dapps had active users.

So what’s going on here? Pretty simple, they’re all fake. The number of users dropped from 80,000 DAU to 15,000. It is obvious to me there was only ever 15,000 users at most. A lot of those are probably still fake. They had the upgrade and either forgot to update their bots, or decided it was too expensive to keep them going.

This episode exposes the actual state of dapps. No one cares. The games on there are silly, the tokens are centralized and forced as part of the game, and the gambling is okay probably, but nothing special, you can play those games anywhere even lightning (disclaimer I haven’t played any of these games, like everyone else). Dapps are a subset of the whole blockchain narrative collapse. Teams are starting to run out of 2017 money. Most platforms will go by the wayside.


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PRICE

Weekly BMI | -1 : Slightly bearish

Price movement has been just as expected. Last week, on this report, I called for retracement and we got it. In issue #28 of our member newsletter on Jan 22nd, I called for a break down from the 4hr 50 EMA and test of the weekly 20 MA, which also played out almost perfectly. The area between $9000 and $9500 is going to offer significant resistance which we don’t expect to be broken in the next week or two.

The price tested support nicely over the last 48 hours, but it should continue in a downward posture for the next few days at least. A test of the channel and daily 50 EMA is likely around the $8000 handle. Volume hasn’t been horrible, but should be at least double these levels to signal a continuation higher.

As detailed below, some uncertainty has been added into the market with the Taproot upgrade, and until we get a clear strategy for deployment I don’t think the price will be able to break the overhead resistance.

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bitcoin price chart with moving averages

DEVELOPMENT

Taproot

Pieter Wuille announced yesterday that the Schnorr/Taproot proposal was published as BIPs 340, 341, and 342.

I want to head off the criticism that ‘bitcoin’s consensus is based on social consensus’ right now. This is a soft fork, meaning it is compatible with existing consensus rules. There is no change to be avoided here. You don’t want to upgrade, don’t upgrade. Pretend it’s not happening. Mute the word “Taproot” on twitter.

Secondly, there is no word on deployment strategy, whether it will follow BIP 8 (flag day) or BIP 9 (signaling percentage), or other. A lot of segwit’s controversy came directly from the BIP 9 activation perimeters, of 95% block signaling. BIP 9 changes the incentive structure in bitcoin ever-so slightly, and it took the UASF’s addition of a flag day to realign its natural incentives to activate segwit. It would be tragic if BIP 9 is chosen again. They might go a hybrid route, 50% signaling with a flag day or something, on a shorter time scale, like 4-6 months. Segwit was 12 months and restricted re-proposal if it failed to activate. For right now, BIP 341 (Taproot) has “TODO” in the deployment section.

Bottom line, this is not a “test” of bitcoin’s ungovernance model. That is ridiculous and should be rejected. There is no official governance in bitcoin, it is anarchic hierarchy and meritocracy.

Detailed TAPROOT article from Aaron Van Wirdum at Bitcoin Magazine.


MACRO

Gold-backed Tether

Tether launched a gold-backed tether. In cooperation with TG Commodities Limited, one ERC20 or Tron based token will represent 1 troy ounce. This is the Austrian Economist’s dream. The most trusted stablecoin provider in the world, tested for several years against adversarial conditions, is launching a gold-backed crypto.

I expect this to get major attention this year and be mentioned along with CBDC’s, but it will only strengthen bitcoin’s advantage. Gold-backed currency has inherent counterparty risk and will highlight bitcoin’s superiority on this front. Slowly but surely, people will absorb bitcoin’s value prop, whether they want to or not.

US says First Amendment doesn’t apply to foreign nationals like Assange

In a chilling development, the US claims it has the authority to go after any journalist, anywhere in the world, for saying things against the US, because they don’t have 1st Amendment protections. This won’t stand up to scrutiny. If it does, we are all in very big trouble.

Once again, the government changes the rules whenever they damn-well please.


MISCELLANEOUS

Here is an updated chart from CoinMetrics.io showing the unrealized gains/losses based on price and when the UXTOs last moved. There are some strong hands holding onto $15k+ bitcoin who haven’t moved their coins since their purchase.

bitcoin estimated cost basis distribution January 2020

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