2021W2 - WTF happened in bitcoin this week?

Focus on the fundamentals

Bam

Jan 15, 2021

TLDR: The fundamentals are strong, short term price is a distraction.

This second week of the year started with intense headlines from big mainstream media sites such as CNN..

“Bitcoin plunges more than 20% in three days. It's now in a bear market” -CNN

In these moments it is important to remember ‘Why am I invested in bitcoin?”, when in doubt, just zoom out.

As we have seen over the years, it is a volatile asset, but as our friend Marty[0] says: we can not expect to have a new monetary good without going through volatility.

Now, is exactly when we stop for a moment, and think about fundamentals. Because to be honest, they are looking … great.

1. The Bitcoin Network fundamentals are looking solid:

Active Addresses: ATH (All time high)
Active entities – ATH
Difficulty – ATH
Hash Rate – ATH
Number of Whales – ATH
Illiquid supply – ATH
Non-zero Addresses - ATH
(For more information about this metrics visit: Coinmetrics)

2. It seems like whales took advantage of this dip, to fill their bags. This basically shows that big players are taking up the supply in a serious way.
(Historical number of bitcoin addresses with more than 1000 bitcoins)

3. “Bitcoin is beautiful, what started as a contrarian trade, is now becoming a consensus trade on Wall Street” – Anthony Pompliano

Pomp 🌪 @APompliano

Bitcoin has transitioned from a contrarian trade to a consensus trade on Wall Street. Next up are corporations and then central banks. Just a matter of time.

4. Billionaires are not only buying and holding the asset but evangelizing it. Michael Saylor, CEO of Micro Strategy, has started Bitcoin courses, strategy & tactics, to grow the company and create shareholder value.

Macro trends

5. Pakistan government from province, Khyber Pakhtunkhwa, has published that they are fully backing two Bitcoin mining farms. As how much hash rate will they contribute to the system? Is undisclosed.

6. Also the government of Kentucky, USA, had propose to exempt bitcoin miners from taxes. This is basically a long term bet on bitcoin, and trying to become “national leaders” in the space. This news came just some days after the report of Russia getting involved into mining on the previous wtfbitcoin’s weekly newsletter.

7. Grayscale announced their 4Q report with outstanding numbers. A company who started with over $2 billion, has reported to have grown have $27.7 in assets under management.

Podcast of the week:
Daniel Prince enlighten us in a conversation Michael, from BitcoinBeach. A great project taking on in el Zonte, in el Salvador, where the objective is to create a bitcoin circular economy. And guess what?? It has been going on for some years.
@Bitcoinbeach - Want To Live In A #Bitcoin Community On A Beach? #103

As a summary note…

So far, it seems we are still in a bull market, do not let them tell you otherwise. Throughout every bull market we have seen and will see retracements. Volatility seems to be reducing though. Maybe we will not see retracements higher than 30% such as previous cycle.