2021W12 - WTF has happened in bitcoin this week?
Bitcoin is not a bubble.
TLDR: Bitcoin is not a bubble, Tesla allows purchases in bitcoin, pension funds officially enter the game.
Hey there niblings, its uncle Bam again, with a summary of the most insightful events in the Bitcoin space. Back at it again digesting all the important news for you.
This week has brought us multiple emotions. It started by making us think we were to see new highs in prices, to a sudden drop to low $50,000. But not to worry, bitcoin is still there, working 24/7 like clockwork.
I wanted to open the conversation by talking a little bit about bubbles. Bitcoin is not one. What is a bubble though? In the economic sense, it is described as a fast rise in an assets price, followed by a contraction, these contractions are generally described as a collapse, for instance the “tulips bubble” or the “dotcom bubble”. In the latter it was a complete catastrophe for some, but others emerged victorious from it, in example Amazon.
But what is bitcoin? It has been declared dead for possibly hundreds of times throughout its history by the mainstream media. Let us compare bitcoin bubble with the previous one by taking as a reference the pictures of @Cryptocratie
Bitcoin’s 2017 bubble. About to collapse..
And all of a sudden.. bitcoin now..
So far we have had bitcoin above $50,000 for more than 20 days, and counting. All in all this is not your typical bubble. In bitcoin, we have called them cycles. And we are in the middle of a bull cycle.
And this is how the f*#$ing week started:
0. Michael Saylor didn’t buy bitcoin again this week.
1. Belfort, best known as The Wolf of Wallstreet, has admitted to being super bear in Bitcoin in the past, and to be wrong. When the price was about $19,000 in late 2017, he told the audience it would crash, but he never expected it to recover. Now he admits that Bitcoin has great properties such as scarcity, and a much bigger base of buyers. He says the fixed supply is an advantage over stocks and expects the price to be in the $100,000.
“Spoiler alert: They all flip” – American Hodl.
2. Jerome Powell, the current Chairman of the Federal Reserve, has reiterated his opinion about Bitcoin to be a gold substitute, while speaking at an event hosted by the Bank of International Settlements (BIS). He still mentioned that “it isn’t useful as a store of value and it isn’t backed by anything.” Well, at least for now..
3. This week the Turkish Lira dropped up to 17% in a day. Bitcoin searches in Turkey spiked 566% straight afterwards, based on Google Trends numbers.
“I guess Inflationary currencies will inflate sooner or later”.
4. Tesla is now accepting Bitcoin for purchasing Tesla in the US. They are not going to convert the bitcoins back to fiat currency. They process their own payments with no intermediaries leveraging the open source and internal development of the monetary network. Europe will follow in the coming months.
Verified by @ck_SNARKS
5. Lolli team, a company focused on earning sats as cashback, has announced a $5 million fundraise led by Alexis Ohanian 776 Ventures. Between the investors in the round big profiles such as the professional tennis athlete Serena Williams and YouTube influencers such as Casey Neistat were included.
6. Singapore’s Sovereign Wealth Fund Temasek, with $306 billion in portfolios, has been buying Bitcoin since 2018.
7. Microsoft has announced the launching of ION, an open public, permission less Layer 2 Decentralized Identifier network running on top of the Bitcoin blockchain.
“DIDs are identifiers that can be used to secure access to resources, sign and verify credentials, and facilitate application data exchange. Unlike traditional usernames and email addresses, DIDs are owned and controlled by the entity itself (be it a person, device, or company), and exist independently of any external organization or trusted intermediary”
These news are great in terms of adoption. Even after Bill Gates telling us that he sees no value in Bitcoin, at the end of the day, we should to do as @DocumentingBTC tells us.
“Watch what they do, not what they say”..
8. New Zealand’s KiwiSaver Growth Strategy, a $350 million retirement plan, has reported to have allocated 5% in bitcoin. They started in October with a bitcoin price of $10,000. We can conclude that they are sitting on hefty returns. “If you are happy to invest in gold, you can’t really discount bitcoin,” – Chief Investment Officer at New Zealand Funds Management.
FUNDAMENTALS
This week was full of interesting fundamental charts being shared across the space. As usual William Clemente comes out with multiple wise takes, from where we are, to where are we going.
Let us start with where we are:
9. William Clemente shared a chart where it demonstrates that bitcoin’s illiquid supply is increasing. Basically, more coins are being moved to addresses which exercise “Hodling” as a practice. We can still not argue that there is anything close to a selling pressure in bitcoin so far. He does make an interesting take saying that short term prices are more likely to be manipulated by whales on exchanges.
And where could we go? William and Ki help us explain it with the following analysis.
10. Ki Young Ju, shares a chart of the Bitcoin velocity calculated over the last year. Money velocity is an economic metric resulting from all the aggregated value transactions divided by the money supply, or in this case the Market Capitalization. This chart is basically a defense of the position that this bull-run is not over. We still have room to grow. If we would like to compare it with the previous cycle, we probably haven’t even reached the maximum euphoria of 2017, and we are closer to an equivalence of 2016.
11. William’s chart Bitcoin Reserve Risk, is a measure that has been used to identify previous tops. So far it seems that we are still not close to it, and by comparing it to previous cycles, he arguments that if it was to play out as the last cycle, we could still have a 500% return of current prices, something close to ~$300K per bitcoin at the top of the euphoria.
As a summary note…
The purpose of this newsletter is to bring all the positive news in the Bitcoin space, for you to find conviction. It is true that bitcoin has played in cycles, with bull and bear markets that can grow exponentially and suddenly drop down to what would be nominated as an outstanding percentage (%) in traditional markets, 70-80%. But the environment is changing, and bitcoin is being adopted and recognized as ‘sound money’, the most superior asset class compared to any currency or commodity, as Michael Saylor would say. It is not only about “doubling our investments”, but about creating a better future, an inclusive one, based on a sound monetary network. When more people like Michael start to appear in the space and educating investors, it is only a matter of time until everybody sees bitcoin as a life-changing technology, and decide to never sell. Because selling would mean investing into a weaker currency, into a system which does not have the best interest for everyone. With this mindset, more ‘hodlers’ are born, and the more we hodl, the higher the price appreciation. Since it is a system which benefits every integrant of it, by nature of the network effect and game theory the buying pressure will likely exceed selling one, forever.
As a reference, I share this segment of one of Michael’s Interviews.
All in all, progress continues tbeing made. The network effect of bitcoin continues to grow, and here at WTFBitcoin, we remain bullish. Have a great weekend niblings.
Bitcoin is artificially designed to appreciate forever.
Stay humble & stack sats.
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Reference:
2. https://cointelegraph.com/news/bitcoin-is-more-a-substitute-for-gold-than-the-dollar-fed-chair-powell