2021.30 - Squeezed
TLDR:
First they ignore you,
then they laugh at you,
then they fight you, (we are here)
then you win. (we are also here)
—Mahatma Gandhi
THE STANCE
My personal opinion on where the ball might be heading.
For the past few weeks we’ve seen all manner of Bitcoin FUD fly though the screens. This week a real threat reared its head —hidden deep inside a 2,500 page infrastructure bill.
The odds that politicians are going to take the time to read through the bill and actually push to make sensible changes are estimated at Haaaahahahaaaa.
It’s not going to happen, the fight is on.
The price of Bitcoin mustn’t have heard of the bad news though. Dan Tapiero summarizes it well:
So what’s going on?
Beyond the short-term price action and the squeezes (more on this in the Price Action section) and the pumps and the dumps there’s a mostly silent groundswell underneath the noise.
Those with a trained ear to the ground know what it means. The battle may not be over yet but we’re winning.
Despite the headlines, people are slowly, steadily and increasingly accumulating Bitcoin. Institutions make big splashes when they enter and exit, many of those paper-handed whales will sell as soon as they get scared or turn a large enough profit, we’ve already seen both of these things happen.
But the number of orange-pilled individuals who understand not just the potential upside of owning Bitcoin, but the potential downside of not owning enough is growing. These are people who are not going to change their mind on fiat, there’s no stopping this tide.
You may think this is just my opinion, but Pi Prime Pi brought the receipts:
LONG BITCOIN
Recent news that keeps me bullish on Bitcoin —"long / bullish" means you have the expectation something will rise in value.
Banking on Bitcoin
News of institutional interest keeps rolling in. State Street is the second oldest bank in the USA.
Golden Tree taking a Bitcoin position is interesting as they are mostly into debt (bonds). In my opinion this lends weight to Greg Foss’ narrative of Bitcoin as insurance against default by Fiat denominated instruments.
Mining IRA
Thanks to an agreement between Choice and Compass Mining, you can now to mine Bitcoin directly into your IRA tax free. If you are a US person, I’d highly advise you look into this.
Et Tu Aramco?
Unconfirmed as of now, but there are rumors that the Saudi behemoth Aramco (3rd largest company in the world) is looking into mining Bitcoin.
Brazilian Bitcoin miner Ray Nasser allegedly said in an interview:
“We are negotiating with Aramco. All black liquid [oil] that comes out of the desert belongs to this company. All the flared gas they’re not using, and that’s public information, I can tell you, it’s enough to ‘power up’ half of the Bitcoin network today, from this company alone,”
Let’s hope this rumor doesn’t wind up like last week’s Amazon rumor, which turned out to be false.
Bigger Lightning
The capacity of the lightning network keeps growing rapidly. Most people are still sleeping on the Lightning network, but I predict once it breaks into the mainstream, it’ll land with the subtlety of thunder.
Paypal Super-App
Ever since it entered the Bitcoin space a few months ago, PayPal has been upping its game. First they announced users would be able to move their coins to their own wallets, then they increased buying limits and now they are setting to release a “super app wallet”
“The super app wallet will feature high yield savings, early access to direct deposit funds, messaging capability, “additional crypto capabilities” and more…”
—Turner Wright, Cointelegraph
Ambitious Jasmine
The Bitcoin mining space is heating up so much we may boil the polar bears after all (it’s sarcasm, people).
The Thai giant Jasmine Telecom Systems (JTS) announced ambitious plans to become: “the largest Bitcoin miner of the ten nations comprising the Association of Southeast Asian Nations (ASEAN).” —Alex McShane, Bitcoin Magazine
It seems they are basically trying to capitalize on China fumbling the ball with Bitcoin mining. Good for them.
CRYPTO WARS
crypto- | ˈˌkrɪpˌtoʊ | concealed; secret.
The monopoly over fiat money will not be given up without a fight.
ATTACK
The Bitcoin community has long been expecting an attempt from the Government to capture Bitcoin.
"The bottom line is that this regulatory storm has been brewing years. The crypto industry should have done more to head it off. Now, it may be too late."
— Jeff John Roberts, Executive Editor Decrypto.co
This week we got the opening salvo:
How it Started:
How it’s going:
It seems the government’s strategy will be to pass draconian regulations that will make pretty much everyone in crypto an outlaw.
At first glance it would seem odd that they would sneak crypto-regulation into a mammoth bill that is mostly about roads and bridges (classic US politics though), but they make the argument that they’ll fund some of this work by squeezing $28 billion (out of the $550 billion in this bill) by squeezing the crap out of the crypto industry.
If this bill goes through as planned we are all in for a wild ride. Some of these provisions may prove be impossible to enforce for Bitcoin, but other (centralized) crypto projects might not get off so easily.
A strict interpretation of these new rules would throw an icy-cold bucket of water on the US’ flourishing Bitcoin mining industry and would be as large a gaff as the one China just recently committed.
I can only imagine other countries are licking their chops at the prospect of capturing the US’ share of the Bitcoin mining industry.
Clutching Pearls
Surprising absolutely no one, the powers that be were not amused by El Salvador’s adoption of Bitcoin as legal tender.
The pushback continues with a milquetoast finger-wagging article by the IMF and a downgrade from Moody’s.
Ay Jalisco
Mexico is cracking down on unregistered exchanges.
Adding insult to injury, the regulators flipped a fat middle finger to Jalisco’s vibrant startup culture by implying the activity was the result of narco money.
I am struck by the fact that many of the cryptocurrency platforms are installed in several municipalities in the state of Jalisco,”
— Santiago Nieto Castillo, Head of Mexico’s Financial Intelligence Unit (UIF)
SHORT FIAT
Recent news that makes me bearish on the legacy financial system —Being "short / bearish" means betting it will go down in value.
Transitory…
The markets are supposed to collapse the infinitely complex state of the economy into a few simple vectors of information, like prices and interest rates.
When the government (or the Fed) intervenes in the markets, it unavoidably distorts said information. For example, the Fed is buying US treasuries as part of their QE (Quantitative Easing) program.
One could argue that in doing this they are turning debt into cash, also called monetizing the debt:
“This process may make it seem as if the Treasurys bought by the Fed don't exist, but they do exist on the Fed's balance sheet. Technically, the Treasury must pay the Fed back one day. Until then, the Fed has given the federal government more money to spend, increasing the money supply, and monetizing the debt.”
The Fed argues that it isn’t really monetizing the debt because these measures (QE) are temporary —more on this below— but regardless of how we define its actions, the end result is what we need to understand:
“The Fed wanted QE to revive the housing market. Low-interest rates also reduce returns on bonds, which turns investors toward stocks and other higher-yielding investments. For all these reasons, low interest rates help boost economic growth.”
— How the Fed Monetizes US Debt, The Balance
I ran the above quote through my BS-Extraction software and this came out:
“By making savings unprofitable, the Fed is forcing everyone to incur additional risk by requiring people to become investors / speculators if they wish to preserve the purchasing power of their money.”
This alone would be bad enough, but then we were gifted with the Fed Chair’s attempt at defining “transitory” and it’s hard not to feel like our chain is being pulled:
Despite the Fed’s soothing assurances, it seems those darned corporations are not buying into the “transitory” nature of inflation:
Good Plumbing
Good plumbing should be out of sight and out of mind.
You know how many billions of USD fit in a single Bitcoin block?
All of them.
Cashless Nirvana
Oh what a joy deeply negative yields would be. One of the many reasons to lust after a CBDC. Once a central has absolute control over your money it can impose a number of creative mechanisms (like expiration dates and negative interests) to make you dance like their financial puppet.
Cash and Bitcoin are in the way of this glorious vision. They are already working on destroying cash, Wonder what comes next?
Unconfirmed Khazakstan
Potentially positive. Will wait for details.
PRICE DISCOVERY
This is the section where I talk about price with an updated weekly price chart. If this is your first time here, there’s a “how to interpret” guide below the chart.
Squeezing Shorts
You may have heard we had a nice short squeeze this week:
What does this mean?
In simple terms, a bunch of people were betting that price would keep dropping. But despite the slew of negative news, price started to go up. This forces the shorts to decide between taking a loss now or waiting to see if price drops again.
If they decide to wait and price keeps rising their loss will be even greater. If they decide to take their loss they need to buy at the new, higher price which creates increased upward pressure on price and can trigger a chain reaction of sorts, called a short squeeze.
Dip Fishing
Price rebounded sharply off of the “No” boundary as a short-squeeze propelled prices all the way to the boundary between “Surprising” and “Low” where it was denied admission.
We will see where price settles. I’ve heard a lot of “supply shock” commentary suggesting moon is imminent, I think it will take a little longer before Bitcoin takes off again.
One thing is for sure, you should be taking your coins off the exchanges and into your wallet. If you are not confident about how to do this, book a call with me below.
Bitcoin Surfing
Bitcoin was able to get back on the board (currently sitting at $35.7k), it’s next challenge is to stay on the board and ride it back above the surface ($45k).
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.
If you recall, back in July 5th, I wrote that it was unlikely that July would print a red monthly candle (4 red monthly candles in a row would be unprecedented in a bull run), and boy did it look like I was going to be wrong for the first half of the month!
But price rallied and managed to print a modest green candle to break the red streak. Now we have a fresh month and all bets are off. I still expect a massive run up before the end of the year, but I’m not yet convinced this was the start of it.
The Calm Chart
I’ve added (hopefully discreet) monthly candles to The Calm Chart, I hope they don’t harsh your mellow.
Now take two deep breaths as you drink in the chart below.
We’re going to be just fine.
Strong hands are best built TOGETHER.
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