Reports

Fundamentals Report #98

July 17, 2020 | Issue #98 | Block 639,661 | Disclaimer

VITAL STATS

Weekly price: $9160 (-$61, -0.66%)
Mayer Multiple: 1.075
Est. Difficulty Adjustment: -3% in 10d
Prev Adj: +9.89%
Sats/$1 USD: 10,917
1 finney: $0.92

Market Commentary

The big story of the week, and maybe the summer so far, is the Twitter hack. I'm sure you have heard the story so we won't recap everything. I must highlight the bitcoin aspect of the whole thing.

This hack asked for bitcoin! Every "blue check-mark" person in the world, and all their followers had a forceful exposure to bitcoin. For some people, it will confirm their bias and convince them it's a den of scammers and theives. But for a sizable percentage of people, this will be a repeated run in with bitcoin, they will be open minded and ask, "how have they not shut this thing down yet?" That will start the rabbit hole.

Almost all bitcoiners will tell you it wasn't their first or even second exposure to bitcoin that made them take note. It's usually their third or fourth time coming across it that makes people look more deeply. Well, the whole world had a massive exposure to the bitcoin mind virus at the same time, and we will surely hear stories in the future, that it was this incident which made the person pay attention.

No press is bad press for bitcoin.

The latest in this story is now that the hacker appears to be a Bitmex trader. You can't make this up. One of the addresses they sent their ill-gotten coins to is associated with Bitmex. This story will perfectly highlight the strengths and weaknesses of bitcoin. It's uncensorable at the protocol level and has mixing strategies this guy failed to use.

Other Top Stories

Institutional
Bitcoin and Ethereum to Debut at the $4.5 Trillion Family Offices Gathering
During this gathering of super-elites there will be a couple presentations about Blockchain. One is titled "Real Revenues and Profits with the Blockchain: How to invest in companies making money now." This is heavily token biased, but the bigger the investor the more likely they are to see the value in bitcoin versus theoretical blockchain businesses.

This is a glimpse of how the parallel bitcoin economy will be bootstrapped. It will be an island of growth potential in the middle of a depressed global economy.

Mining
Fidelity International Doubles Stake in Bitcoin Mining Firm Hut 8
Investment in mining is booming! This might be more bullishness about Hut8 specifically, than about mining in general, but it's big news because it's an example of how mining companies continue to attract investment from very savvy investors. Trouble for Ethereum and Pseudo-finance continues
This week we learned the sole hope of Ethereum, ETH2.0, will likely be delayed until Jan 2021 or later. And this is just for Phase 0 of their plan.

Pseudo-finance folks are sweating. The blacklisting of ethereum addresses by USDC and USDT are making people think twice about using these in Maker and Uniswap for example. What happens if USDC or USDT is frozen in a contract that is vital to these systems?

Coinbase
Coinbase is Selling Analytic Software to the US Secret ServiceThey are selling out customers and only for $49k a year!? This is another reason to #DeleteCoinbase, who will likely comply with any government request/attack on bitcoin in the hopes they can exit scam via an IPO. Let's not forget, it was the Secret Service who executed executive order 6102 to confiscate gold. Last point, when data is purchased, agents can use it in their investigation as evidence without requiring a warrant issued by a judge.

Price

Weekly BMI | 2 : Bullish

On your member newsletter yesterday we walked through several price indicators. We looked at the Ichimoku cloud, exponential moving averages, volume profile and fundamentals. To sum it up in a sentence, this pattern is about to break and many indicators are reset to neutral.

In times like these it's very helpful for fundamentals and the trend to break the tie. Fundamentals are strong, with mining hash rate and difficulty going up, development is steady throughout the stack, and the outside world is increasingly uncertain. The trend is up. Not just since March, and not just in the dollar. Bitcoin is close to ATHs is many other currencies and we entered a bull market in 2019. Against the dollar too, this is the longest we've spent at these top of the $7-10k range since September last year.

Technicals are neutral but fundamentals are bullish. This is a great opportunity for asymmetric returns. Beware of fake outs and be safe. We could see a steep sell off as a fake out this weekend.

Mining

On Monday, July 13th the difficulty adjusted up 9.89% which set an all time high. The next adjustment is estimated to occur in 10 days and be -3%.

Here is a good article from BitOoda sharing their research into the current state of mining. Among some of their interesting analysis is they estimate approximately 50% of the mining capacity is in China, with 14% in the US and 7% in China. They also estimate the median cost to mine a bitcoin, including power and operational costs but not the hardware, is $5000 USD. Check out the article to see their breakdown of the mining hardware in use and their predictions for the industry going forward.

Stablecoins / CBDC / Altcoins

Tether Dominance : 9.5% (-0.1%)

This week glassnode points out their Stablecoin Supply Ratio (SSR), which is the BTC Marketcap / Stablecoin Marketcap, reaching new lows and currently sits at 6.5 cents in stablecoins for every 1 dollar in bitcoin. They claim the SSR is important because it represents the "theoretical readiness of money to flow into BTC."

Our Tether Dominance metric above, which we started including on this letter a couple of months ago, is better because it is properly measured against Altcoins. More on that in a future post.

Macro

There's a new episode of Fed Watch each week on the Bitcoin Magazine podcast feed. It's also on their YT channel with video.

Check out the latest episode about the Digital Yen and the history of the People's Bank of China.

Miscellaneous

PlanB@100trillionUSD updated his S2F cross asset model, pictured below, and included Gold yearly for the last 10 years.

GET THE BITCOIN DICTIONARY!

Demystify Bitcoin Jargon. Years of knowledge about bitcoin, blockchain, and cryptocurrency in 80 easy-to-read pages.
Over 180 Bitcoin related terms, concepts, and idioms.
This work exposes the reader to a diverse set of disciplines needed to understand Bitcoin. Economics, cryptography, mathematics, computer science, political science, and game theory.