2021W31 - WTF has happened in bitcoin this week?

Bitcoin is just math.

TLDR: Bitcoin as an investment, Bloomberg calls for $100,000, Bitcoin Miners expansion, ETF fillings, GoldenTree adds it to its balance sheet.

Hey there niblings, it’s 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.

The week has been full of excitement, at the moment of writing, bitcoin just pierced $45,000 for the first time since May, as if it was the sheriff in town. I am going to speak from the heart now, I am excited.

Often people ask, why is bitcoin rising? What make it go up today? Is it going to come back down, maybe I can get a cheaper entry point. But governments won’t allow it, right? It is a hype, and wont survive. Sadly, it is easier to do mental gymnastics to justify ourselves from losing the investment opportunity of our life times than to put a bit of time into researching why bitcoin as a technology and a new asset class.

Why is it rising? Simple, it is just math.

I understand that one could feel fear of investing putting money into something “new” or “unknown”. As humans we tend to normalize what we experience on a daily basis, let’s put up an example and compare it with our current monetary system, based on USD. Sometimes a couple of charts could speak a thousand words.

The Lost of Purchasing Power

In fact, $1 in 1913 had the same purchasing power as $26 in 2020.

The Abuse

Over 40% of the US dollars in existence were created over the last 16 months.

Volatile Long Term Appreciation & Stable Monetary Policy

Bitcoin can not be manipulated, can not be printed. And has been actively appreciating for the last 12 years and a half. When a party has a monopoly on the money issuance, according to history, it is ALWAYS abused.

And this is how the week started.

1. Bloomberg Intelligence released a report suggesting the Bitcoin price may soon approach $100,000, should historical trends continue.

2. World’s second largest company Saudi Aramco, with a market value of $1.9 trillion, reportedly looking to mine Bitcoin with flared gas.

3. North American IRA provider Choice and Bitcoin mining and hosting firm Compass Mining, announced that they are offering an IRA that will allow to mine bitcoin in a tax advantage account.

4. LibertyX, Bitcoin ATM operator, is getting acquired by Fortune 500 firm NCR Corporation. NCR has nearly 1 million ATMs around the globe.

“The news comes at a time when NCR has been more active in expanding its offerings into the Bitcoin market, following its June announcement that 650 community banks and credit unions would soon be able to offer the ability to buy, sell and hold bitcoin through its services.”

5. Marathon Digital buys another 30,000 bitcoin miners worth $120 million

6. Fidelity invested $20 million to purchase a 7.4% stake in Marathon Digital Holdings. The company also joined the wave of financial firms filing for regulatory approval to offer a bitcoin exchange-traded fund in the U.S.

7. Hut 8, publicly traded mining company, has seen its Bitcoin mining production increase by 50 percent in the wake of China's crackdown on its domestic industry.

8. Public Canadian mining firm HIVE Blockchain has announced an order of 4,000 Bitcoin mining machines.

9. Stronghold Digital Mining, a bitcoin miner powered by coal waste, has acquired a second coal refuse site in Pennsylvania with an 80 MW capacity.

10. GoldenTree, a hedge fund with $41 billion in assets under management, has reportedly added bitcoin to its balance sheet.

11. Bitcoin transfer volume just exceeded $15.8 Trillion. The “total amount of coins transferred on chain,” metric is equivalent to 70% of the United States Gross Domestic Product.

FUNDAMENTALS

So the price has risen so much, and as we know, the price is only a reflection of the current supply and demand. As bitcoin is an open network, we can scrutinize how this is looking and catalogue supply as liquid or illiquid, meaning if the addresses have not had an output higher than 25% of the total amount of bitcoin the address has held.

In this image, shared by Will, we can see that the amount of Illiquid Supply Ratio (Illiquid Supply Ratio= Illiquid supply / Cumulative supply), across time painting an accumulation trend. And it shows current levels that were only seen when price was around $53,000.

It does not mean it will appreciate, but it gives an understanding of why we just had a sudden appreciation, as there was hard accumulation while the price was downtrending. If the trend continues, we might see higher prices than $64,000 sooner than later.

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As a summary note..

The Lightning Network continues its exponential growth. At this point in time it just reached an All-Time-High in both bitcoin and USD value hosting around 2160 bitcoin, at a value close to $90 million.

My recommendation? Experiment with the technology. Download Muun Wallet for iOS or Android and if you could fund it by simply sending a bitcoin transaction to that address. After that, you can start the journey of making bitcoin micropayments across the lightning network.

Have a great weekend niblings.
Stay humble & stack sats.

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