2021.26 - Dragons
TLDR:
China has been leading an aggressive attack on Bitcoin and crypto. Bitcoin is holding its ground and will come out stronger.
THE STANCE
My personal opinion on where the ball might be heading.
As predicted, the FUD factory has been going all out on Bitcoin and crypto in general. Real-world actions combine with misinformation to create a potent mix of Fear, Uncertainty and Doubt.
China has been leading the charge prompting onlookers to question what type of long game they are playing, what their real motivation and intentions are being their recent actions.
While I am also skeptical that China would commit such a colossal blunder, the effect of miners shutting down in China is palpably real, mining difficulty just had one of its largest drops ever, making mining more profitable for those who were able to keep their machines on.
In this image you can see the daily revenue generated by one miner and there’s a visible uptick in July 3rd.
It will take some time before the Chinese miners can find a new home for their machines, the next few months are likely to be the most profitable that the remaining miners will ever see.
The decentralization of mining outside of China will be a huge gift for Bitcoin as it should put to rest one of the more common sources of FUD: Chinese influence on Bitcoin.
If you want to see a more detailed breakdown of how these informational wars play out CroissantEth put together a good compilation here
LONG BITCOIN
Recent news that keeps me bullish on Bitcoin —"long / bullish" means you have the expectation something will rise in value.
Bolts Fired
Jack Mallers is not one to rest on his laurels.
Taking aim at the crypto exchange industry, he just announced you’ll soon be able to use Lightning Strike to buy Bitcoin easily and for virtually no fee (0.3% as opposed to Coinbase’s 3.99%)
Besides taking a free good swipes at Coinbase and other exchanges, the announcement also gives us a glimpse of some of Strike’s upcoming features, which are very exciting.
Jack is using Bitcoin to change the way people use money and it’s beautiful to see.
NCR + BTC
The 135-year old firm is one of the largest providers of point-of-sale software for the retail and restaurant industries as well as a manufacturer of ATMs and cash registers.
It also provides banks with digital banking services and now, through a new partnership with NYDIG, it offer banks a turnkey solution through which they’ll be able to offer Bitcoin to their customers.
This is very bullish in my opinion. As much as “Big Money coming into Bitcoin” sounds exciting, institutional investors are also highly sophisticated, mercenary and agnostic in their approach to investing. The best thing for Bitcoin are hodlers with conviction and I’m confident we’ll find some of those among the banks’ 24 million customers.
Torn Legislators
There is still no agreement on Bitcoin among US legislators. I’m grateful that there are well-informed members who have taken the time to educate themselves and can articulate the case for Bitcoin, but the recent and soberly titled “America on FIRE” hearings showed that there’s a long way to go education-wise.
Meanwhile…
The process of watching the world adopt an asset like Bitcoin brings to mind a famous quote:
“The future is already here, it’s just not evenly distributed.”
—William Gibson
CRYPTO WARS
crypto- | ˈˌkrɪpˌtoʊ | concealed; secret.
The monopoly over fiat money will not be given up without a fight.
Soros Enters The Chat
There are few names as polarizing as George Soros. He joins the list of “Masters of the Universe” that will be playing with Bitcoin. This was bound to happen at some point and is part of Bitcoin’s coming of age.
The list of “Big Names” in Bitcoin has grown into a who’s who of investing. There are some people that I never expect to see on the list, like Warren Buffet and Charlie Munger, but enough of them are here to ensure one thing:
We have a wild ride ahead of us. You can rest assured that these pros will try to “shake you off the horse”. You’ll need a strong conviction to hold through Bitcoin’s next phase.
Spell out your investment thesis, learn how Bitcoin works, why it matters and how you can use it to protect your sovereignty.
You’ll need conviction for what’s coming.
SHORT FIAT
Recent news that makes me bearish on the legacy financial system —"short / bearish" means betting it will go down in value.
no Inflation
This chart is a great way of visualizing why the CPI is essentially useless: inflation does not hit all asset classes evenly.
Petrodollar Woes
I don’t know what’s going on in the world of maritime oil refining, but three accidents last week seems statistically unusual.
This reminds me of something a friend once taught me “Once is happenstance, Twice is coincidence, Three times is enemy action”
MINE
Spain’s proposed new law should serve as an urgent reminder of government’s tendency to overreach their boundaries and trample individual rights and freedoms.
Fiat Times
The Financial Times penned a rather pathetic plea to stop calling dollars “Fiat Money” the comments below the tweet are worth your time.
In the article the author explains that the dollar is not “backed by nothing” but rather backed by promises to pay.
“You may believe the US government will not be able to collect enough taxes to roll over those Treasury bills. If you are right, then yes, the dollar has no value.”
—Brendan Greely, Financial Times
The estimated US deficit for this year is north of two trillion and irony is dead.
PRICE ACTION
This is the section where WE talk about price. If this is your first time here You’ll find a “how to interpret” guide by Hovering over the "chart.
We have been hugging $35k for over 6 weeks now, I don’t know how much longer we’ll linger here but aggressive efforts to push Bitcoin below $30k have been unsuccessful so far.
My personal suspicion is that we won’t stay here much longer
How to interpret the Bitcoin Surfing chart:
Think of Bitcoin's price-action as a kite-surfer:
Bitcoin uses its board to stay above water and wants to catch some air.
When it catches air, it tends to keep rising but if it rises too fast (it's feet no longer touch the board) it can stumble.
If it falls off the board, it tends to keep falling until it regains its footing (may need to touch water or sand for that).
Water and sand arrest the fall and help it push itself back up.
If it goes up so much that it gets close to (or into) the Stratosphere, it will probably crash down all the way into the sand and may need to tap the bedrock level before pushing up again.
You see, Bitcoin has never had 4 consecutive red months during a bull run (in fact we already broke precedent by having 3). This doesn’t mean it can’t happen, but it would be a first.
This would not make sense to me but it’s true that the caliber of players trying to manipulate the price is now world-class and as we all know the market can remain irrational longer than you can remain solvent. So we stack sats and hodl patiently.
Each Candle represents one month. The Green (upward pointing) arrows mark the beginning of a bull-run (upward markets), the Red (downward-pointing) arrows mark the end. Bear (downward) markets are slightly dimmed for contrast
Of course one interpretation is that the bull run is over and we’re now in a bear market. I don’t believe this at all.
While it’s dificult (impossible?) to fully understand the Price Discovery process, it’s sometimes helps to understand some of the big tectonic movements that affect its dynamics. Like the Grayscale Arb Trade.
Grayscale Arb Trade:
Grayscale offers a fund (GBTC) that owns Bitcoin and can be traded in the stock market. For a while you could make “free money” by timing your buying and selling of it. When this stopped being true, a large engine of demand for Bitcoin was switched off.
At one point, GBTC was the only vehicle through which you could gain exposure to Bitcoin in the stock market, which meant it was the only way for certain investors and institutions to own Bitcoin. For that reason, it traded at a premium —it was more expensive to buy Bitcoin through the fund than to buy Bitcoin in the open market.
This opened the door for an arbitrage play: You could make “free money” (you could pocket the premium) if you were willing to wait 6 months. This drove great demand for the fund, which in turn, purchased large quantities of Bitcoin.
As other options started to become available for institutions / investors to gain exposure to Bitcoin globally, the premium shrank and eventually inverted. You can now '“buy Bitcoin cheaper” than market price by buying GBTC instead. This pulls demand away from Bitcoin.
Lyn Alden masterfully walks you through the whole thing:
Under the Surface
In the thread below Travis Kling brings the point home. Over the past few months there have been number of events that increased the level of uncertainty around Bitcoin. What does the China ban really mean? Are ESG investors going to shun Bitcoin? etc.
The battle between those betting on which direction this will take Bitcoin can be seen on the charts. And what the charts have shown is Bitcoiners holding the price floor despite aggressive shorting. Hodl Strong.
The Calm Chart (New!)
We’re going to be fine.
Take a breath and spend a quiet moment drinking in this chart:
Strong hands are built TOGETHER.
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